Page 6 - bnemagazine bne_December 2021_20211203.pdf

6 I Companies & Markets bne December 2021
Pyaterochka CEO sees growing demand for convenience in a post- COVID world
Theo Normanton in Moscow
As consolidation continues apace in the Russian food retail market, a dramatic shift in consumer behaviour is keeping sector leaders on their toes. A confluence of socio-economic factors, compounded by a spate of COVID-19 lockdowns, has driven up demand for innovative shopping solutions which necessitate digitisation, automation and increased choice. For retailers, this has meant upheaval as they scramble to implement new models which will capture customers in this morphing market structure.
One change in consumer habits with particularly weighty implications for the retail sector is a growing preference for shopping locally at so-called proximity stores. To effectively meet this demand for conveniently located local shops, large retailers are re-structuring their physical networks, investing heavily in local tailoring and re-imagining their approach to customer experience.
Pyaterochka, the proximity format of Russia’s largest grocery retailer X5 Group, has been particularly successful in this endeavour. It became Russia’s favourite brand during the pandemic and has maintained that position in 2021. In an exclusive interview with bne IntelliNews, Pyaterochka’s CEO Sergei Goncharov discusses some of the factors driving this revolution in the food retail ecosystem and how vendors are responding to them.
Store expansion
With more than 17,600 stores across the country, convenience retail chain Pyaterochka has continued growing throughout the pandemic. Photo credit: X5 Group.
Local appeal
Pyaterochka is Russia’s largest retail chain, with more than 17,600 stores across the country. That figure is 8% greater than it was last year, an indication of Pyaterochka’s rapid expansion during the pandemic. Indeed, the chain claims to be the only nationwide food retailer in Russia which kept opening new stores throughout the coronacrisis.
“The pandemic has not only been a challenge for us, it also has become an opportunity to improve our leadership position,” Goncharov said. “Sales for last year amounted to close to RUB1.8 trillion (about $28bn). In nine months of this year we have reached sales of RUB1.3 trillion – an 11% increase year on year.”
Much of this may be down to the recent global trend which has seen shoppers spurn large hypermarkets in favour of corner shops and proximity stores. The pandemic has been a catalyst in this regard, with neighbourhood stores becoming increasingly popular among people reluctant to travel to busy shopping centres or those who are working from home. This phenomenon is not unique to Russia. Paul Martin, the UK head of retail at KPMG, wrote in a report on the industry that “the home really has become the hub... This will only further boost local high streets, with independent and convenience retailers well positioned to take advantage of suburban and town regional centres.”
3Q20
4Q20
1Q21
2Q21
3Q21
y/y
# of stores, total
17,352
17,707
17,959
18,295
18,648
7.5%
Pyaterochka
16,385
16,709
16,960
17,268
17,600
7.4%
Perekrestok
910
933
940
968
980
7.7%
Karusel
57
56
49
40
34
-40.4%
Total Selling space, sqm
7,679,755
7,840,055
7,935,579
8,062,903
8,212,057
6.9%
Selling space (net added), sqm
169,494
160,300
95,524
127,324
149,154
-12.0%
Net # of stores
327
355
252
336
353
8.0%
Source: X5 Retail Group, BCS GM
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