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Auchan Retail appoints a new president and launches its first pedestrian Drive in France. Meanwhile, the retailer has also announced plans to modernise its stores in Russia.

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Chinese ecommerce retailer Alibaba has agreed to take a 10% stake in one of Russia’s biggest tech players, to boost its development in Russia.

Alibaba will own 48% of AliExpress Russia

Alibaba will own 48% of AliExpress Russia as a result of the deal signed with Russian Direct Investment Fund (RDIF), mobile operator Megafon and internet group The three Russian companies will have a combined 52% stake in the ecommerce platform after contributing cash, shares and other assets. Megafon will swap its 10% stake in for a 24% stake in AliExpress Russia. will contribute its Pandao ecommerce business and cash in exchange for a 15% stake in AliExpress Russia, and RDIF will acquire a 13% stake in AliExpress Russia.

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As Auchan looks to continue to embed its Vision 2025 strategy, we look at developments in Hungary, Poland, Russia and Spain where it is investing for the long term.

Auchan expanding its private label range in Russia

Auchan Russia has relaunched several of its private label products with new packaging to make them stand out on-shelf as part of the evolution of its strategy in the country. Aimed at improving their quality perception with shoppers, the product’s packaging has been updated, with pricing taking them into the mid-tier and premium price brackets. Mid-tier ranges will be packaged with a red design, while the premium range will be gold. The relaunched products will appear in all its hypermarkets first.

Auchan completes its business integration in Poland…

After announcing plans to integrate its businesses in Poland, as part of its efforts to simplify its operations and streamline them under one banner, Auchan has said it has now completed the initiative. Auchan Poland said the step was key to helping it build ‘excellence in omnichannel retailing’ and would benefit both employees and shoppers.

…While in Spain it expands its presence in proximity formats

In its half year results Auchan highlighted the positive performance it was seeing in Spain, driven by its proximity formats in the country. While rebranding existing stores under the Auchan name has been key, a part of the strategy has seen it open new sites. To this end, the retailer has opened two new stores, one under the Alcampo Supermercado brand and one under the Mi Alcampo banner in Madrid and Logroño respectively.

Auchan Hungary forecasts 10% in net turnover for 2018

Auchan Hungary’s chief executive, Dominique Ducoux, has forecast the retailer will see a more than 10% rise in net turnover in 2018. Ducoux made the projection as he reported that Auchan Hungary generated a net turnover of HUF309.5 bn (US$1.1bn) between 1 April 2017 and 31 March 2018, a 5.4% rise on the previous year. He also said profit after tax rose almost 6% to HUF3.8bn (US$13.4m).

Last year’s growth and the forecast for this year’s continued advance are being driven by the retailer’s store expansion programme and investment in its operations more generally. Auchan Hungary spent HUF10.0bn (US$35.3m) in 2017 and is set to invest between HUG10.0bn and HUF12.0bn (US$35.3m to US$42.4m) in the present financial year. Expansion is focused on proximity formats, such as supermarkets and convenience stores.

The leading retailers in Russia, such as X5 and Magnit, have reported weakened financial performance in the first half of 2018.

Source: IGD Research

Sharp drop in LFL sales growth at X5

X5’s sales grew by 19.8% to RUB731,198m (€9,961m) year-on-year, as the like-for-like sales growth slowed down from 6.9% to 0.8% in the same period. The decline was driven by the performance of Pyaterochka and impact of the weather in the first quarter of the year. However, the retailer posted better like-for-like growth of 1% in the second quarter of 2018 because of improved weather conditions and the expansion of fresh food assortment from local supply chains that helped generate additional traffic.

Magnit’s business transformation impacts like-for-like sales

Magnit reported year-on-year sales growth of 7.2% to RUB595,263m (€8,109m), an improvement from the 6.4% growth achieved during the same period in the previous year. However, like-for-like sales growth further declined to -4.5% in 2018 (compared to -3.1% in H1 2017). The retailer attributed the decline in year-on-year sales to food deflation that caused a lower basket spend, and the Easter holidays falling just before shoppers’ monthly salary payments. According to Magnit CEO, Olga Naumova, the slowdown in like-for-like sales was expected as the retailer continues to undergo a large-scale business transformation.

Ms. Naumova said, "We are doing fundamental work to become as close to customers as possible, in all positions, to meet their needs and interests. The decrease in the growth rate of revenue is quite natural for such changes".

Lenta outperforming its competitors

Lenta’s sales grew by 18.2% to RUB193,200m (€2,631m). Its like-for-like sales growth increased to 4.8%, in contrast to the negative like-for-like sales performance of 1.8% in H1 2017. This was attributed to an increase of new shoppers in the hypermarket format and a rise in frequency of visits to its supermarkets. Also, the retailer offered options for shoppers to trade up within a category, such as soft drinks, to encourage spend on higher price point products like 100% juice or nectar beverage. This helped increase basket spend and offset the impact of food price deflation.

Okey Group continues sales decline with supermarket disposal

Okey reported a year-on-year sales fall of 8.7% to reach RUB88,068m (€1,270m), a weak result when compared to the same period in 2017 when it grew by 2.7%. The retailer’s like-for-like sales growth continued to be negative at -2.5% in 2018, compared to -2.3% last year. The retailer attributed the decline in the year-on-year performance to the sale of its supermarkets in St Petersburg to X5. Excluding the supermarket disposal, Okey reported a 2.5% decline in year-on-year sales because of food deflation and strong competition in its key trading areas, such as St Petersburg and Moscow.

Metro reported a drop in sales and Dixy did not report

Metro’s total sales contracted by 9.6% in the first half to RUB112,603m (€1,534m), as the like-for-like sales growth fell by 8.8%. Metro is implementing a new pricing policy, under the concept ‘buy more, pay less’, to boost sales. The wholesaler offers bulk discounts to attract more independent traders, hotels, and restaurants. Dixy Group did not report its half-year results for 2018 as it delisted from the Moscow Stock Exchange at the end of 2017.

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