X5

Magnit and Lenta conquering Siberia

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Magnit and Lenta, along with a local chain, Holiday Klassik, will be the key retailers in the region in the future. Their market penetration in the region will grow faster than those like X5 and Auchan, while product availability on their shelves may become better thanks to the investment into distribution centres.

Russia’s leading market player Magnit, which has operated a distribution centre in Omsk since 2012, recently launched a 19,000 square metre leased distribution centre in Novosibirsk. Investment in logistics facilities clearly shows retailers’ focus on the store expansion in Siberia. Magnit opened its first store in Siberia in 2010 and expand the network to 120 by the end of 2013.

St Peterburg based Lenta opened its first hypermarket in Siberia in 2006 and since then it has opened 17 large outlets. In addition to that it opened a 37,500 sq m distribution centre in Novosibirsk last year. The retailer recently opened its first hypermarket in Krasnoyarsk and it is building its sixth store in Novosibirsk while a new store is planned for Novokuznetsk.

Auchan operates two Auchan hypermarkets and two Auchan City compact hypermarkets, X5 runs 25 small stores and one hypermarket while O’Key has five hypermarkets and one supermarket. In contrast to them Dixy Group and Rewe Group have not penetrated the region yet.

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“Green” retailers

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Greenpeace made an annual rating called “Green supermarket” where Russian retailers are rated by the level of contribution in recycling problem solvation. First places were taken by “Auchan” and “Dixy”.

Experts were comparing and estimating 10 biggest supermarket networks – “Auchan”, “Dixy”, Х5 Retail Group, “Lenta”, “O’kay”, “Magnit”, “Holiday classic”, “Maria Ra”, “Sedmoy Continent” , and “Monyetka”. These retailers were estimated by 20 criteria such as receiving packaging for further recycling, reduction of packaging, a possibility of using own packaging for catchweight goods, a presence of goods with ecofriendly packaging.

“Auchan” took the first place due to the opening recycling centers in St. Petersburg and the possibility of buying catchweight goods. “Dixy” was also pointed out because of the presence of recycling centers in Moscow and the sale of original non-disposable bags.

“O’kay”, “Sedmoy Continent”, and “Monyetka” are turned to be at the end of the rating list.

“Unfortunately, even leaders of our list are far from being “green” retailers. However, most of them are changing their policy: refusing from free plastic bags, letting do weighting of fruit and vegetables without packaging, and even opening recycling centers. Directors of stores understand that such actions are attracting attention of new clients and making their stores more competitive on the market,” – Rashid Alimov, a coordinator of “Greenpeace Toxic Program”, said.

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X5 Retail Group Q1 retail sales up 13.9%

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X5 Retail Group N.V., a Russian food retailer, reported first-quarter retail sales of RUR 143.90 billion; an increase of 13.9% from RUR 126.30 billion, previous year. Like for like sales improved 6.3% during the quarter.

X5 Retail Group N.V. operates several retail formats: the chain of economy class stores under the Pyaterochka brand, the supermarket chain under the Perekrestok brand, the hypermarket chain under the Karusel brand, Express convenience stores under various brands and the online retail channel under the E5.RU brand. At 31 March 2014, X5 had 4,618 company-operated stores.

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Slowdown in Pyaterochka refurbishment process

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The X5 Retail Group, a prominent grocery retailer, has announced that the total number of Pyaterochkadiscounters to be refurbished this year will be less than previously planned. This is because the project has proven to be more challenging than the company had estimated.

The retailer had planned to revamp 1,100 stores in 2014 and to complete the refurbishment of the entire chain by the end of 2015. The average cost of reformatting one establishment is $360,000 (€259,000). In October 2013 X5 planned to spend between $160m and $440m (€115-317m) on this over 18 months.

At the end of last year, X5 was operating 4,544 stores in total. These included 3,822 Pyaterochka discounters, 390 Perekrestok supermarkets, 83 Karusel hypermarkets, and 189 differently branded express stores.

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X5 revenue growth accelerates amid Russian retail slowdown

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X5 Retail Group NV posted the strongest quarterly sales growth in two years as it closed the gap on competitors including OAO Magnit and O’Key Group SA.

Fourth-quarter sales rose 12 percent to 150 billion rubles ($4.4 billion), benefiting from an improved product assortment and promotional activity, the Moscow-based grocer said today in a statement. That compares with growth of 6.6 percent in the previous three months.

The increase in sales beat the 8 percent estimate of VTB Capital, sending the shares up as much as 7.1 percent.

“This is surprising given that Magnit, O’Key and M.video reported a slowdown in fourth-quarter sales, citing weakening consumer spending,” VTB Capital analyst Ivan Kushch said.

While X5’s accelerating sales bucked the trend, the overall growth rate is still the weakest of its main rivals, according to Kushch. “We need to see if the company’s turnaround is sustainable,” he said. “Fourth-quarter growth was largely driven by promotional price declines, which may have hurt profits.”

Magnit, Russia’s biggest retailer, said this month that revenue rose almost 23 percent from a year earlier in December, less than November’s 29 percent growth. O’Key also reported weaker growth, while electronics retailer M.video said same-store sales declined in the fourth quarter.

X5 Retail shares rose 4.8 percent to $18.50 at 8:24 a.m. in London, where the stock has its main listing.

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Foreign Retail Chains Fail to Seize Control over Russian Retail Market

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Foreign retail chains in Russia haven’t succeeded in replacing domestic retailers yet. According to INFOLine agency, in 2010 the share of national retail chains was as large as 77.5%. Western retailers occupied the DIY segment, where Castorama, OBI, Leroy Merlin, K-Rauta and others control almost 73% of the market. International food retail chains couldn’t raise their share in the Russian market. Among other reasons experts mention Carrefour’s and Walmart’s misadventures in Russia. Domestic retail survived due to the rapid growth of the largest food retail operators like Magnit and X5.

Source: www.retail.ru