X5 Retail Group Company: overview of activities and position in the Russian market
As part of the new development strategy, X5 Retail Group plans to move to a new business model. By the end of the year there will be a store that will work in the format of “hard discounter”.
X5 Retail Group is a multi-format company, which owns a network of retail stores. It is the largest in the Russian market. X5 appeared in 2006 as a result of merger of two retail chains – “Pyaterochka” and “Perekrestok”, two years later hypermarkets “Karusel” entered the company. The controlling interest of 48% is held by Alfa Group, which is owned by well-known businessmen Mikhail Fridman, Alexey Kuzmichev and others. Intertrust Trustees owns the second large share of securities, slightly over 11%.
Last year, net profit of X5 Retail Group exceeded 28 billion rubles. The company regularly expands its network, in 2018 2934 new stores were opened, in 2019 – 2310. Now their number is more than 15 500.
X5 Retail Group is an example of a successfully implemented business model, which brings excellent results. Compared to 2018, last year’s revenue increased by more than 18%, the best value among retailers shows “Pyaterochka” and its 13.5 thousand stores – their contribution is 78.5% of total revenue.
Last year in the capital there was another object of the new format – “store without customers”, which refers to the chain “Perekrestok”. It is a shopping space, which is focused not on buyers, but on sellers. Only employees, who collect online orders and send them for delivery, may come here. According to the management, this format of stores is becoming more relevant, which means that more and more of them will appear.
X5 Retail Group is the leader on the Russian retail market, which strengthens its positions every year, taking an increasing share of the segment. For example, last year the number of stores increased by 10% compared to 2018. Almost 52% of the chain’s sales are in the Central Federal District, more than 18% are in the Volga Region, and 14.4% are in the North-West Region.
In 2016, the company entered the Siberian market. Its presence in this region is actively expanding, accounting for almost 2% of total sales.
The new format of hard discounter stores, which are scheduled to be launched by the end of this year, is an option to concentrate on a limited number of products. This option reduces the number of employees, and the variety of products is focused exclusively on the composition of the consumer basket. In addition, the hard discounter does not pay much attention to product placement.