X5 Retail Group has launched a new Perekrestok supermarket concept in Moscow and acquired a local chain in the Samara region.
New supermarket concept
After a successful relaunch of Pyaterochka discount store concept, X5 Retail Group has launched a new Perekrestok supermarket concept in Moscow. The store concept has a new outdoor design including an updated logo, improved store navigation and better use of sales area. The assortment has been expanded in product categories like bakery, fish, seafood and ready meals. X5 will develop the Perekrestok network in three subformats with sales area of 800, 1,000 and 1,500 square metres, located in shopping malls, residential areas and on high streets. The current network of 389 Perekrestok stores will be refurbished to the new concept in the next three to four years.
Acquisition in Central Russia
X5 Retail Group has improved its market position in the Samara region (Central Russia) through the acquisition of Agrotorg-Samara chain. Argortorg-Samara, X5’s former franchisee, operates 116 stores with estimated revenue of RUB3 billion in the first half of 2014.
Our view (IGD)
The rebranding of Perekrestok supermarket to a new concept was a smart move to differentiate itself from rivals especially in Moscow, where the competition is already strong. The expansion of fresh product ranges proved successful at X5’s new Pyaterochka discount concept and its success may be replicated at Perekrestoks.
The acquisition of Agortorg-Samara could suggest a move back to X5 Retail Group’s strategy of store expansion via M&A. In the last couple of years, X5 has developed its store networks through organic expansion only.