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8 I Companies & Markets bne December 2021
Income of the top ten biggest retailers in the first half of 2021
which track the movement of goods from distribution centres to stores. That also includes automated replenishment. We also launched a new demand forecasting system based on machine learning which helped us to improve forecast accuracy by 5-13%, depending on the region and category
of goods.”
The rate of change over the past two years has clearly been staggering, but it is showing no signs of slowing. To retain loyal customers, retailers must keep pace. Pyaterochka is betting on a new format of store, focusing on fresh products and convenience.
“We launched our new format stores about two years ago and have already opened more than 4,000 stores,” Goncharov said. “Basically, the new format is the only format for us,” he added. “We’ve been using all the know-how that we’ve gathered over these past two years and our focus is on going farther into
the regions of Russia, as well as optimising investment costs and capex in existing stores so that we can be present in more locations and bring prices down for our customers.”
As the economic reverberations of coronavirus (COVID-19) continue to have an impact on Russians’ mobility and spending habits, it is difficult to predict what is around the corner for food retailers. The current trends – e-groceries and proximity stores – are still far from reaching full market penetration, and the immediate goal for retailers will be capturing market share as these trends continue to catch on.
This means that analysis and improvement of services continues in earnest, driven by the potential for significant growth. As Goncharov explained: “The projects that will help us achieve our goals are focused on increasing
our operational efficiency, optimising labour costs and improving our customer value proposition. A lot of thought and digital products are going into that, and that’s what excites me the most.”
A Pyaterochka store (photo: X5 Group)
X5 Retail Group
supermarkets
RUB1.05 trillion ($14.1bn)
Magnit
supermarkets
RUB801.6bn
Bristol and Krasnoe & Beloe
retail
RUB330bn
Wildberries
e-commerce
RUB241.3bn
DNS
retail
RUB227.2bn
Lenta
supermarkets
RUB214.9bn
M.Video Eldorado
consumer electronics
RUB212.8bn
Leroy Merlin
DIY
RUB207bn
Ozon
e-commerce
RUB141.9bn
Svetofor
discount retail
RUB120.5bn
Source: Infoline
In February 2020, the company was delivering around 300 orders a day; now it is delivering approximately 40,000 per day. With its ability to scale up quickly in response
to changing market demands, Pyaterochka has become somewhat of a nucleus for parent company X5’s digital operations. “Pyaterochka is becoming a physical hub for X5 digital businesses by operating such things as pick-
up points for 5Post – X5’s logistic delivery service – and assembling delivery orders from online-hypermarket Vprok.ru Perekrestok,” said Goncharov.
Greater digitisation has also helped the retailer get more feedback from customers.
Pyaterochka’s mobile app had almost 9mn monthly active users as of September this year, from whom the chain has collected more than 400mn product reviews as well as creating NPS scores for its individual stores. It has also used customer feedback to develop or improve more than 3,000 stock keeping units (SKUs) in Pyaterochka’s assortment.
Keeping pace
Meeting the seismic shifts in consumer behaviour is no small feat – especially in a country the size of Russia. Pyaterochka is the biggest employer in X5 Group, with stores in more than 3,300 cities spanning over 6,500 km of Russian territory (from Kaliningrad in the West to Irkutsk in the East, where the chain will be opening a store next month). Improving businesses efficiency across such a large area requires
a complex mix of modern technology, automation and a nimble distribution network.
Goncharov’s description of improving efficiency at Pyaterochka brought home the scale of the operation: “We employ about 5,000 trucks that service our 34 distribution centres. We’ve spent a lot of time in the past few years focusing on the development of our IT systems,
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