Russia’s largest retailer, X5 Retail Group, has reported retail sales growth of 20.2% in the first quarter of its financial year, driven by growth in its selling space.
The retailer recorded a 19.7% sales growth contribution from a 26.0% rise in selling space during the period.
The first quarter saw X5 adding a net total of 580 new stores and 253,323 square metres of selling space, down 8% from its 630 store openings for the same period last year.
Meanwhile, X5’s like-for-like sales increased marginally, by 0.5%, and its traffic decreased by 1.6%, which was affected by an intense promotion environment and consumers’ high sensitivity to prices, according to the retailer.
Subdivisions
The retailer’s Perekrestok supermarkets performed best in terms of LFL sales, with 6.4% increase, followed by its Karusel hypermarkets (+3.3%).
Its store openings were overwhelmingly comprised of Pyaterochka discount stores, with 572 new openings, followed by 36 Prekrestok stores and one Karusel.
While consumer trends overall showed a high sensitivity to promotions, consumers in Moscow a tending to move away from the proximity format towards more upscale formats, indicating potential improvement in customer confidence, according to X5.
Unusually cold weather in Russia during the period led to a decline in traffic in February and March. However, this was partially compensated by an increase in the average spend, as consumers sought to make fewer trips but spending more each visit.
Loyalty Programme
X5 continued to develop its loyalty card programmes; in total, X5’s three retail formats had 41.1 million registered loyalty card users as of 31 March 2018, with penetration in traffic reaching 45% at Pyaterochka, 47% at Perekrestok and 65% at Karusel.
The company rebranded 28 supermarkets that previously operated under the O’Key brand, which were acquired at the end of 2017. They now operate under the Perekrestok brand and their sales are exceeding forecasts, according to X5.
Elsewhere, in April 2018, X5 acquired 99 former Polushka stores in Bashkortostan. Nearly all of the acquired stores are due to be integrated into the Pyaterochka chain, with the recently opened distribution centre in Ufa ensuring uninterrupted supplies across Pyaterochka's operations in Bashkortostan.
Closures
The retail group closed 126 Pyaterochka stores, 18 Perekrestok stores, one Karusel store and 27 Express stores as part of its ongoing rationalisation programme.
The Perekrestok Online service continued to expand, with the number of orders increasing from 38,000 in Q4 2017 to 52,000 in Q1 2018, while the average basket size increased from RUB 3,157 to RUB 3,337 for the same respective periods.
X5 plans to expand its online grocery operations by opening two new dark stores in Moscow and St. Petersburg by the end of the year.
The retail group also began trading on the Moscow Stock Exchange from February.
For more information on Russia's largest retail group read our exclusive A-Z of Retail: X is for X5.
© 2018 European Supermarket Magazine – your source for the latest retail news. Article by Kevin Duggan. Click subscribe to sign up to ESM: European Supermarket Magazine.
