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Magnit and X5 have been investing in a range of supply chain initiatives to boost cost efficiencies. This is crucial to both retailers as they look to protect their profit margins, so they can sustain their 1,000-plus annual store opening strategies. From consolidated delivery to various transport modes, we look at how Russia’s top two retailers are looking to benefit.

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X5 launched an online store, Perekrestok.ru, in April 2017, to service the Moscow area. Now it plans to open fulfilment centres for the online store, otherwise known as ‘dark stores’.

‘Dark stores’ aid Perekrestok fulfilment stores to focus on in-store

X5’s Prekrestok.ru is currently supported by a number of Perekrestok hybrid-stores that are supermarket units combined with a warehouse. The online store services the Moscow area only and takes on around 500 orders a day. The ‘dark stores’ aim to relieve pressure from the Perekrestok hybrid stores as warehouse staff must fulfil online orders alongside in-store stocking. The ‘dark stores’ focus on online shopping only, helping them to process orders faster.

Perekrestok.ru could expand to St. Petersburg

Reports by local media that Vladimir Sorokin, General Director of Perekrestok, stated the potential opening of dark stores in Moscow and St Petersburg. Since the online operation is currently limited to the Moscow area, Mr Sorokin indicates expansion of the online store to St Petersburg.

Russian anti-competition authority put pressure on store expansion

In 2017, store expansion in St Petersburg and the surrounding area by X5 and Lenta increased competition in the area and has caught the attention of the Federal Antimonopoly Service (FAS). Mr Sorokin commented that Perekrestok is looking for additional sources of attracting customers. Potential restrictions by the FAS in opening new stores in Moscow and St. Petersburg will delay network expansion, so opening ‘dark stores’ is an alternative.

X5 Retail Group has opened a new distribution centre (DC) in the Siberian Federal District, Russia.

17,000 sq m facility

The 17,000 sq m DC is located in Novosibirsk, in the south of the Siberian Federal District and is X5’s first in the region. It will supply all 186 Pyaterochka stores in the Kemerovo, Novosibirsk, Omsk and Altai regions. The temperature-controlled facility will become the focal point for local producers, which provide 25% of Pyaterochka’s product range in the region.

Sustaining the Pyaterochka expansion

In the third quarter of 2017, X5 opened three new distribution centres in Moscow and two of the eastern regions to support Pyaterochka’s dynamic store expansion. X5 will continue to modernise the banner’s store refurbishment to fit its regional supermarket model and sustain an ongoing rationalisation programme with some closures of Pyaterochka.

X5 Retail Group has announced plans in implementing its bold growth strategy across Russia.

Pyaterochka to focus on local

X5 and Centrosoyuz (the Central Union of Consumer Societies of the Russian Federation) have unveiled plans to launch up to 5,000 Pyaterochka fresh food shop-in-shops by 2021 to expand on Pyaterochka's fresh food offer. The retail units will sell goods from local farmers and consumer cooperatives and focus on the fresh food needs of the local customer.

Online Perekrestok rolled out

X5 has also announced the expansion of its Perekrestok online service pilot scheme with the potential to implement a click & collect service in the future. The service will deliver in south-west Moscow and some neighbouring towns in the Moscow Region for a minimum order of RUB 2,000. Perekrestok uses a specially built hybrid store that combines features of a regular supermarket and a dark store that allows the inclusion of its entire product range.

Presentations

31/07/2018
An essential summary of supply chain priorities, latest network developments, and other key statistics for X5 Retail Group.

The ‘last mile’ is becoming an increasingly competitive place, as the food industry and disruptors continue to create solutions that make online shopping even more convenient.

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A practical one day workshop for all roles in suppliers, to help develop your understanding of the vital part that supply chains play in underpinning FMCG businesses.