X5 Retail Group and Magnit announce strategic moves

Date : 07 June 2018

X5 is investing in technology, while Magnit focuses on new store concepts and developing a strategic partnership with Russian Post to drive traffic to their stores and introduce cost efficiencies. We review some of these strategic developments.

X5 will divide Pyaterochka operation into macro-regions

X5 will divide the Pyaterochka operation into five macro-regions, led by current CEO Igor Shekhterman, following the departure of Olga Naumov. Each macro-region will amount to 2,000 to 3,000 stores and focus on the operational management of the banner, while the headquarters will focus on the strategy, objectives and their achievement.

X5 will convert Perekrestok Express into Pyaterochka

Sergei Goncharov, Strategy Director of X5, announced that Perekrestok Express will be converted into Pyaterochka. The convenience banner was placed on sale in late 2017 but could not find a buyer. Although X5 will not intend to sell the Perekrestok Express network, some locations will still be sold.

X5 introduces optimises shelf availability and path to payment

X5 will launch a test system that analyses checkout queues and signals for additional cashiers to be opened. The system will also analyse on-shelf availability to signal for stock replenishment. Sergei Goncharov announced that a project under the name “All-Seeing Eye" will be set up to observe queues at the checkout and goods on the shelves. This follows a spate of technological upgrades announced earlier in 2018 that X5 is planning to add to its stores.

Magnit and Russian Post test shop-in-shop this summer

Magnit and Russian Post reached an agreement to test a Russia Mail shop-in-shop format in Moscow. The experiment to integrate grocery stores "Magnit" in the offices of "Post of Russia" will begin in June. Magnit will use its distribution network to combine deliveries of grocery and mail, and split the cost of logistics with Russian Post.

Magnit to buy pharmaceutical distributer to expand pharmacy banner

Magnit looks to build up its pharmaceutical distribution network to support the expansion of its pharmacy banner. ‘Magnit Pharmacy’ was launched as a pilot format in mid-2017 and later expanded to 50 stores in late 2017 following the success. Now Magnit plans to roll out the concept as a shop-in-shop format across its stores, numbering to up to 600 units.

 

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Amin Alkhatib, Retail Analyst CEE, IGD International: based in London, UK, Amin is responsible for shaping IGD's research in Central and Eastern Europe; as well as contributing to IGD's broader European research programme. Follow me on Twitter @Amin_IGD for further insight on the region’s retail landscape.