RULING THE RETAIL ROOST – RUSSIA’S TOP FIVE SUPERMARKET CHAINS
With a huge population and a growing middle class, Russia presents ample opportunities for a wide variety of food and beverage products
While there are hundreds of brands and retail-operators in Russia, getting to know the big players is imperative when it comes to breaking into this huge market. In fact, the Financial Times reported in 2015 that Russia’s biggest grocery retailers account for 53% of total food retail sales. Interested in distributing your products to a Russian audience? WorldFood Moscow has profiled the country’s largest grocery chains so you can see which will give your offerings the biggest penetration into the Russian market.
Russia's leading supermarket retailers
Magnit has remained Russia’s leading grocery retail company for the past few years. Just take a look at their financial results. Unaudited figures, taken from Magnit and the London Stock Exchange, showed that 2015 was a strong year for the group. Magnit’s revenue grew from $12.3 billion in 2014 $15.3 billion in 2015. Top line growth peaked at 6.6% .
But what about gross profits? Magnit posted impressive growth overall, leaping 22.81% from 2014’s total of $3.5 billion to hit $4.3 billion in 2015. 2016 is shaping to be another robust year for Magnit, with year-on-year profits hitting $1.2 billion across 2016’s first nine months. Headquartered in Krasnodar, Magnit operates a mixture of hypermarkets, supermarkets and smaller stores across the country. Store penetration is located mostly in the Western regions of Russia but is still relatively under-represented in the Moscow region.
September 2016 saw Magnit reach a total of 13,364 stores nationwide — an increase from 11,388 in 2015 — demonstrating the group’s huge growth.
Before Magnit’s rapid expansion, the X5 Retail Group were Russia’s grocery kings. Now, they slot into second place with a 6.2%. 2015 was another strong year for the group, posting their best results in four years.
X5’s figures revealed that 2015 revenues grew 27.3% to reach a record high of $13 billion. 2016 has certainly been promising for X5 Retail. A Q3 2016 financial report from the group shows year-on-year sales have grown across the year so far. As of September 2016, X5’s retail sales had grown 27.6%, reaching a total of $11.8 million. X5 trades mainly under two different banners: the core format being the Pyaterocha brand discount stores followed by the supermarket chain Perekrestok. The retail group operates just over 7,000 stores under the above brands, plus Express and Karusel branded-stores, across Russia as of January 2016.
As of September 2015, the Dixy Group has the third largest store presence across Russia’s Central, North-West and Volga and Urals regions. A total of 2,603 stores are operated by the group in these areas. Both profits and revenue increased for the group in 2015. This is a trend that can be seen for all of Russia’s major grocery retailers — despite the current embargo on food imports. Revenues saw an increase of 18.9% year-on-year to hit $4.2 billion while total profits increased 14.7% for a grand total of $1.3 million. 408 new stores were opened by the Dixy Group in the first nine months of 2016. Year-on-year profits, revenue and sales also continues to grow as of Q2 2016. Dixy’s earnings during before tax, interest, depreciation and amortization during this period grew 5.6%, reaching $76.2 million, compared with 2015’s results.
St. Petersburg’s Lenta sits in fourth place in Russia’s grocery retailing hierarchy. As of October 2016, Lenta’s store network covers 155 hypermarkets and 42 supermarkets across the breadth of the country. An additional seven, company-owned distribution centres service Lenta’s retail operations. The company has a strong track record of growth and 2016 has not bucked this trend so far.
A statement from Lenta revealed that the company’s sales accelerated across 2016’s first 3 quarters. In monetary terms, this figure stands at $1.2 billion. Total like-for-like sales also grew 4.3% compared with Q3 2015. Lenta are firm believers in the Russian food market and have predicted it to be the biggest in Europe by 2018.
While its headquarters are located in Luxembourg, the O’key Group’s main area of operation is Russia. The company operates 110 stores in a number of Russian cities including Moscow, St. Petersburg, Murmansk, Krasnodar and Volgograd. As part of their retail operations, O’key runs 70 hypermarkets. Much like its larger competitors, O’key enjoyed a period of growth across 2016’s first half. Revenue demonstrated year-on-year growth rates of 10.3% for a total of $1.2 billion. A further 16 new stores were opened across the country, although one hypermarket, four supermarkets and one discount store were closed.
The group also runs its own logistics operation, LLC O’key Logistics, and opened a brand new distribution centre in 2015. Increased ease of product delivery is an important asset to the O’key Group, as it allows the group to rapidly restock and outfit its store network.
Supermarkets weathering Russia’s food storm
Despite the on-going woes of Russia’s food and drink industry, its biggest retail chains are still performing above and beyond expectation. Demonstrable increases in revenue and profits, plus expanding store networks, suggest a certain robustness in Russian food retail operations. If you ’re interested in expanding into the Russian market, these five grocery retailers offer the biggest reach for your products. A huge store network, exciting financial growth, and solid distribution networks ensure that these chains are likely to remain top dogs for the foreseeable future.