Russian retail market

Magnit establishes subsidiary in Altay Territory

Written by

Magnit, the largest Russian retailer in terms of revenues, has registered an affiliate office for Tander (the chain’s operator) in Barnaul, with a plan to enter the Altay Territory market. The first of the company’s stores in the region is expected to open in September 2014.

The company had previously announced its intention to build a logistics centre in the neighbouring Novosibirsk Province, to cover the needs of nearby regions, including the Altay Territory. The construction period is 2013-2014. The amount invested in the project will be RUB 1.5bn (€33m).

Overall, at the end of 2013 Magnit was operating 7,407 grocery stores in Russia. In addition, the retail giant had 686 cosmetics stores (the Magnit Kosmetik brand).

www.ceeretail.com

Magnit reported slower sales growth

Written by

OAO Magnit (MGNT), Russia’s largest retailer, reported slower sales growth in December as consumer-spending weakened, sending the shares down the most in about 18 months.

Revenue rose almost 23 percent from a year earlier to 63.6 billion rubles ($1.9 billion), less than November’s 29 percent growth, Krasnodar, Russia-based Magnit said in a statement today. Convenience stores led the slowdown as consumers switched to hypermarkets and open markets for New Year shopping.

Magnit fell as much as 6 percent in London trading, the steepest drop since July 6, 2012. The stock was down 4.9 percent to $60.35 at 8:30 a.m. in the U.K. capital.

Magnit’s slowdown may cause investors to revise growth prospects for the entire Russian retail sector, said Natalia Kolupaeva, an analyst at ZAO Raiffeisenbank in Moscow.

Russian gross domestic product grew 1.2 percent in the third quarter, missing estimates. Economic growth has slowed every quarter since President Vladimir Putin won a third Kremlin term in March 2012. Russian retail sales grew 4.5 percent in November, according to Federal Statistics Service.

www.bloomberg.com

New Lenta store in Perm

Written by

Saint Petersburg retailer Lenta has opened its new store in Perm on December 25, has said Yana Mogileva, a press agent of the retailer.

Initially the opening of the store was postponed several times due to technical problems.

As far as future plans are concerned, the retailer doesn’t plan to open new stores in Perm prior to 2015.

Today Lenta is present in 44 cities of Russia. The official website of the company states that Lenta stores are opened seven days a week. Also, the retailer offers to its customers products at a price not less than 5% below the average market price. It’s specified that Lenta reduces its costs of warehouse storage by placing some of its commodity stocks in salesrooms.

www.retailer.ru

Magnit sets up transport arm in Hungary

Written by

Russia’s biggest food retailer, Magnit, will set up a transport company in eastern Hungary creating around 1,500 jobs, Hungarian foreign affairs state secretary Peter Szijjarto was quoted as saying on Friday.

National news agency MTI reported Szijjarto as saying that Magnit’s road haulage arm will have a fleet of 1,000 trucks, which will transport foodstuff from European Union member states including Hungary to the retailer’s shops in Russia.

Magnit, earlier this year, overtook rival X5 as Russia’s No.1 grocery chain by revenue.

www.freshplaza.com

Russian retail slips into stagnation

Written by

Russian retail is slipping into a state close to stagnation. Sharp slowdown in business confidence index (BCI) bears evidence of it. BCI has dropped to +3% for the first time in 4.5 years of surveys. Some experts believe that we are witnessing major changes in the driving forces of the Russian economy. Its “artificial engines”, such as retail and financial sector, can’t stimulate the growth anymore.

In concerns of consumers’ demand, it stoped its growth in the last quarter of 2013 and that’s why there can be seen the shift of households from the spending model to the saving one. The situation has worsened by potential consumers’ high debt burden: arrear of Russian credit users by the end of 2013 is about 25% of their aggregate income. As consuming power decreased, retailers’ basic financial rates continued to drop. Experts are also predicting further economic downturn in the beginning of 2014.

Against the background of this economic downturn employment rate remained almost the same.
By statistics trading companies’ revenues in the end of 2013 have shown one of the worst results in past 4 years. In first quarter of 2014 about 20% of entrepreneurs are expecting a revenues decline.
Georgy Ostapkovich, the expert of the Center of conjuncture research, says this negative tendency of market condition cannot be overcome in short run.

www.retailer.ru

Land considers business in Altay Teritory

Written by

The premium grocery retailer Land is negotiating on the lease of premises in the Plaza shopping centre in Barnaul. The outlet would operate as a Land franchise store. The retailer claims that it has signed a franchise agreement with a Barnaul partner.

Today, Land operates nine stores in St. Petersburg, and another, in Narodnogo Opolchenia Avenue in the city, has been opened on 12 December. The Barnaul launch will represent a totally new regional market for the network.

In 2012 the company’s annual revenues came to RUB 2.5bn (€55m). As PMR reported in November, in 2013 the company expects to boost its revenues by 28-30% year on year, to RUB 3.2bn (€71m), excluding VAT.

www.ceeretail.com

November sales rose by 28.7% for Russian retailer Magnit

Written by

Russia’s biggest food retailer Magnit said on Tuesday its sales rose by 28.7 percent in November, year-on-year, to 50.2 billion roubles ($1.5 billion) after a rise of 27 percent in the previous month.

Magnit, which this year overtook rival X5 as Russia’s No.1 grocery chain by revenue, said the November result brought sales for the first 11 months of the year to 516 billion roubles, up 30 percent on the year.

The company opened 181 stores last month, bringing its total to 7,920. Fast expansion will help it grow revenues by 28-29 percent this year, while next year’s growth is likely to slow to 25-27 percent, the company has said.

www.freshplaza.com

Magnit opens new distribution centre

Written by

Magnit, Russia’s largest retailer by sales, has said that it will open a new distribution centre in Yaroslavl.

Located to the north-east of Moscow, Yaroslavl is a transportation hub connected to the rest of Russia via national and regional roads, railways and waterways.

Magnit’s new distribution facility is about 58,904 square metres in size. The company said that the new facility would “improve the quality of service in central regions”.

Magnit has focused on expanding its sales in Russia through a programme of aggressive store openings. In the first nine months of this year, to the end of September, Magnit increased its selling space by over 25%, opening 762 stores throughout Russia. As a result of this strategy, the company expects full-year sales to climb by 28-29%.

The group operates 20 distribution centres with a total capacity of around 542,031 square metres.

www.freshplaza.com

Azbuka Vkusa will buy SVA Trading

Written by

Moscow premium retailer “Azbuka Vkusa” will close a deal and buy the company “SVA Trading” (owned by Sergei Inozemtsev and his partners) in February 2014. Right now “SVA Trading” is a business owned by “SPAR”.

Early last week, “Azbuka Vkusa” has received an approval from the Federal Antimonopoly Service of Russia to purchase eight “SPAR” stores, a warehouse and manufacturing facilities. The total shopping floor space of the stores accounts for 10.1 thousand square meters. However, the company doesn’t hurry to make a purchase. “In December, during the peak season, the absorption of another business can be too much for the company,” – said a top-manager of the company.

Right now the deal value is undisclosed. Earlier it was stated that “SVA Trading” assets were worth $ 85-105 million.

“Azbuka Vkusa” plans to operate “SVA Trading” stores under its own brand within 3 months after the deal is closed.

In 2014 “Azbuka Vkusa” will expand its chain of stores by at least 20 new joints (including eight “SVA Trading” stores). The opening is planned to be conducted in Moscow, Moscow Region and St. Petersburg.

www.retailer.ru

Retailers are considering next year to be recessionary

Written by

Retailers are considering next year 2014 to be recessionary and are ready that clients’ switching to economic segment. The situation is also sharpened by consequences of “demographic collapse” of 90s. Due to this there is a lack of consumers now. By experts’ opinion, in 2014 clients will be highly price oriented, part of them will chose discounters. Retailers are also predicting lots of takeovers and mergers.

According to analytical company «Romir» data, the rate of everyday buying activity in October 2013 decreased by 1% in comparison with September 2013. Nominal decline of the rate happened for the first time since 2008. In comparison with October 2012 the rate increased only by 1% in nominal terms, but in fact if taking into account the inflation the rate decreased by 5% in real terms.

In Tuesday Ministry of economic development and trade of the Russian Federation announced the estimate of basic macroeconomic rates for 2013-2015. Macroeconomic forecasts turned to be not so shiny: growth was about 1.4% instead of planned 1.8%, industrial output increased only by 0.1%, and investment rate grew up only by 0.2% instead of planned 2.5%.

www.retailer.ru