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potential inefficiencies and overlaps, given that the store size of MediaMarket is twice that typical for M.video and Eldorado." The bank believes that the number of stores post-deal will be increased by means of splitting them between the Eldorado or M.Video brands, or adding m.mobile stores (M.Video’s mobile retailer). Analysts believe the deal is a tacit admition by the German company that they cannot effectively compete with the Russian companies on their home market.
Russian two largest retailers Magnit and X5 Group, entangled in intense rivalry over the last few years, have both announced major top management reshuffles. The CEO of Magnit Khachatur Pombukhchan has left the company, while an ex-CEO of X5's leading format Pyaterochka Olga Naumova will become the new chief executive officer of Magnit. At the same time investor relations head of Magnit Tim Post will become the head of global strategic partnerships and ecosystems at X5, while ex-CEO of Magnit Cosmetics and Pharmacy divisions Sergei Goncharov will become a new CEO of X5's Pyaterochka. X5 also appoints Vadim Kapustin, former Marketing & Planning Director, as the new Director of Strategy and added heavyweights Karl-Heinz Holland and Nadia Shourabura to its supervisory board. "We see this [management reshuffle] as more evidence the new shareholders of Magnit taking seriously their task of fixing up its operations. They are ready to make decisive steps to recover the operational excellence & restore hopefully the confidence of investors," BCS Global Markets commented on June 22. BCS reminds that Olga Naumova, the new CEO of Magnit, has "become food retail industry superstars with X5." Reportedly within Magnit she was given carte blanche to do all necessary changes including further management reshuffling, if necessary. The analysts see the news as supportive of BCS's recent Buy call on Magnit's GDR's. "While we continue to believe that fundamental recovery – meaning the LFL [like-for-like] traffic breakdown – is UNLIKELY to be seen until end of year, we see the sell-off in the name (GDRs, which are in MSCI Russia, lost ~20% in the last 30 days) as excessive," BCS commented.
Russia's leading retailer X5 Group launched a pilot project to test the “Vyruchai-Kassa” self-service checkout machines with voice assistance in Russian, English and Chinese at two of its Pyaterochka format stores in Moscow. Another 10 stores to be equipped to offer the service by end-2018, the company reports. A store employee will help customers to use the new machines and will check the IDs of customers buying alcohol and cigarettes. The new equipment is expected to reduce queuing and increase the number of
RUSSIA Country Report July 2018 www.intellinews.com