Page 94 - RusRPTJuly18

open tills in each store. Aton Equity sees the news as operationally positive for X5. According to the company's announcement, the pilot results suggest that customers will use the new machines for around 50% of their purchases.
Russia's leading retailer Magnit announced negotiating acquisition of SIA Group, one of the largest pharmaceutical distributors in the country with Marathon Group. Magnit is in intense rivalry with its main competitor X5 Group , with any move or strategic decision by both retailers closely watched by the market. "The acquisition appears to be in line with the strategy recently approved by the board to develop pharmaceutical retail," Aton Equity commented on June 7, adding that "the potential valuation is unclear at this point." Aton notes that distribution is normally a lower-margin business, with Russia’s largest pharmaceutical distributor Protek operating at an Ebitda margin of only 1.8%. SIA Group is Russia’s 5th-largest pharmaceutical distributor with RUB61bn ($1bn) in 2017 sales. SIA has 39 regional offices in Russia and a well-developed logistics network, supplying medicines to more than 44,000 pharmacies, and to medical and preventive treatment institutions.
The government has stopped drafting amendments to legislation that allow selling over-the-counter drugs not only in pharmacies, but also in grocery stores. This is reported by the newspaper Kommersant, referring to a letter from the Department of Social Development of the Government on June 27. The bill, prepared by the Ministry of Industry and Trade, enabled retail chains to sell non-prescription medicines without a license. However, the initiative was not supported by the market. In this form, the ministry passed the bill for public discussions on April 28. They ended on May 14. During this time, only 34 votes in support of the document came against the federal portal of regulatory legal acts and almost 6,000 against it.
Swedish furniture major IKEA plans to boost online sales in Russia from current 7% to 15-20% of sales in the coming 2-3 years, Vice President of the company's regional division Gerhard Peter Moritz told Tass on June 14. "We believe that interest of Russians in modern technologies creates potential for raising the online turnover to over 15% in short-term perspective," he said. IKEA launched online sales in Russia in 2013, starting with Siberia and launched online deliveries in Central Russia in 2017, which included Moscow and the Moscow region. Moritz also reiterated the plans of IKEA to open a large-scale outlet within Moscow, as well as to launch 5-7 "design studio" format stores by the end of the year. The retailer operates 14 stores in Russia, out of which three in Moscow (outside of the central ring road).
Shoemaker and retailer Obuv Rossii plans a new polymer production facility . Obuv Rossii intends to open a factory in Linevo in the Novosibirsk region, according to the company’s press release. The factory will produce seamless footwear and the bottom parts of footwear made of polymer materials. The factory is expected to start operations in 3the first quarter9 and reach full production capacity of 1.1mn shoes per year in 2023. Construction of the factory may cost RUB760nm. Given the close proximity of the planned Linevo factory and the existing one located in Berdsk, the company expects to see synergies between the two plants. The polymer footwear will be sold through Obuv’s own retail network as well as B2B. The volume of the Russian polymer footwear market grew by 21.4% y/y and reached 51.3mn pairs in 2017, according to Discovery Research Group. The market is expected to increase by another 24% in 2 years.
RUSSIA Country Report July 2018 www.intellinews.com