The return of COVID-related lockdown measures in Russia is unlikely to lead to a return to panic buying, the chief executive of Magnit, Jan Dunning, has told ESM, although it is likely to usher in a "change in consumption habits".
Last week, Russia announced a series of lockdown measures after COVID cases and deaths hit all-time highs. In Moscow, all non-essential services have been closed, with only shops selling food, medicine and other essentials permitted to remain open until 7 November.
Commenting on how the measures will affect the Magnit, Dunning said that the advance warning given by the government about the re-introduction of lockdowns enabled the business to prepare.
"We've made sure that our availability is at the top level, so we have placed more orders, and we're ready," he told ESM in an interview. "Sales are actually at quite a good level; October was ahead the average for the this quarter.
"Of course, there's also quite a lot of discussion on which stores can be opened, and which should be closed, especially with regard to our cosmetics business. But I think we will manage, because there are quite a lot of 'basic' items in these stores as well."
Looking After The Team
Dunning also hailed the high vaccination rates among Magnit personnel as a reason to be confident that disruption will be minimal.
"The average vaccination level that we have in the company is close to 80%, so that helps us a lot. Also the percentage of our personnel that are ill is much lower than what you see on average, so I think that the protective measures that we took to protect our people and our customers are paying off."
As of last Thursday, around a third of Russia's population had been fully vaccinated, according to Gogov data.
In terms of the likely impact of COVID restrictions on Magnit, Dunning added, "If people have to stay at home, that's obviously very good for a retailer – they start snacking more, they start drinking more. I think the uplift for us retailers is likely to result from a change in consumption habits, rather than a return to panic buying."
Last week, Magnit reported a 27.7% increase in revenue in the third quarter of its financial year, boosted by the recent acquisition of the Dixy retail chain.
Integration Of Dixy Business
In its results statement, the retailer added that the Dixy integration will require 'additional attention and profitability improvement', however it is confident that it can lead to significant synergies in the medium-term.
Prior to the acquisition, "Dixy was a good business with regards to locations and category management, but it was not operated in a proper way, and everybody understood why," said Dunning.
"So, while we do the integration, we are keeping the Dixy management team in place. What we have changed, however, is the commercial director. I think it's important that the people in place can understand the systems that we have at Magnit."
One quick win that the group has been able to implement is aligning commercial conditions with suppliers, which has led to additional income that can be invested into operational improvements, Dunning added.
"We believe that if the stores start to look better, that will have a topline impact. And that's exactly what we are starting to see. Dixy has seen a clear change in sales trends, moving up to high single digit growth."
© 2021 European Supermarket Magazine. Article by Stephen Wynne-Jones. For more Retail news, click here. Click subscribe to sign up to ESM: European Supermarket Magazine.
