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The strategies of largest Russian retail chains during pandemic

World Food Moscow's forum of the leaders of food retail market: The strategies of largest Russian retail chains during pandemic © World Food Moscow
© World Food Moscow

 

As predicted earlier, Covid-19 keeps on threatening the health of the citizens from many countries, and to those countries’ economics consequently. The managers of all the businesses speculates over the approaches to be chosen, and schemes to be adopted.

No wonder, the World Food Moscow’s forum of the leaders of food retail market where top managers of the largest Russian retail brands spoke about their strategies during the spring’ upsurge of the pandemic, created large interest of the audience.

To provide the safety of the staff, 80 special “backup” shifts were organized by Piaterochka (part of X5 Group) in their distribution centres, said Sergey Goncharov, general manager. In case a single person of the shift got ill, the entire shift was dismissed for the confinement to be replaced by the backup team.

To support consumers, Magnit brand organised the collection
of food for people in difficult situation, encouraged its staff to volunteer in taking food to aged people confined in their homes. In every city and town, dozens and hundreds of employees contributed to these initiatives, related Ruslan Ismailov, deputy general director.

During the panics of the beginning of the pandemic, food stocks of some products were drained in no time, said Yohannes Tolay, general manager of Auchan Retail Russia. Nonetheless, company’s IT department managed to fix the delivery within the shortest period.

Thanks to the fast response to the challenges, flexibility and solidarity, our business obtained positive results, informed Martin Shumaher, general director of Metro C&C.

Operating through small stores, it was challenging to accomplish the safety requirements. However, we arranged the app delivery; by August, we have delivered some 900,000 orders, informed Evgeniy Rimskiy, purchase executive.
With the decrease of consumers’ income, Lenta redirected its offer toward cheaper assortment, said Yup Van Vreden, purchase and supplies director. We intend to be closer to our clients.

Marita Koskinene, general director of Prisma, is sure costumers’ safety becomes the basic value and the priority for the retailers. On the other hand, we realized that distance work is very efficient too, she stated.  

The Forum was held in the frame of World Food Moscow Exhibition last September.

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Russian retail market tendencies: consolidation and online trade growth

Russian retail market tendencies: consolidation and online trade growth

In April and May 2020, the food sales on Russian retail market has decrease by 9.2% and 8.6% respectively, comparing to April-May 2019. At the same time, the share of top 10 FMCG retailers has grown and has reached 35% by the end of June 2020. The number of stores belonging to top-200 retailers exceeds 67,000 shops, or 1,500 more than six months ago; their congregated area has expanded by 300,000 m2. All these figures confirm the tendency of retail market consolidation.

Another trend is the evolution of online trade and food delivery market. Since March 2020, numerous companies have been developing this channel of sales, both well established retailers and absolutely new players. For example, one of the most aggressive player is SberMarket, a platform of FMCG delivery designed by Sberbank (state bank of Russia). Created in the end of 2019, it has grown into the second largest merchant of food online (after X5 Group), leaving behind Utkonos, the retailer specialized exceptionally on FMCG deliveries since 2000.

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Russian retailers discussed the current state of affairs and steps to undertake

Russian retailers discussed the current state of affairs and steps to undertake

Since this week, the state of self-isolation is imposed to the residents of Moscow and Moscow region. Local authorities believe that this measure will prevent further spread of Covid-19.

B2B Conference Group (BBCG), the leading organiser of business summits, Academy of Retail and RBK.Pro organised an imperative meeting of retail CEO and experts with the aim to clarify the issues related to Covid-19 situation. The summit was held as on-line conference. The speakers, among others, were E. Konnova, head of corporative communications of Х5 Retail Group; D. Sologub, president of Azbuka Vkusa chain; S. Korolev, co-founder of healthy food delivery service JustFood; G. Kunis, co-founder and general manager of food delivery service iGooods; and S. Egorov, purchase director for food category of Selgros chain. The participants of the conference named the following predominant tends:

  • Home cooking;
  • Income decline;
  • E-commerce became one of the important employer;
  • Healthy lifestyle is no more a niche segment; it developed into the basic need. People happen to concern more about their health and food safety. 
  • Boost of the demand of local products.

The following measures were offered to food business as kind of remedy:

  • Changing of HORECA assortment, dark kitchen format extension;
  • Introduction of courses for consumers such as cook at home, healthy food, anti-stress;
  • Formation of “public logistic” sense through the in-store slogan “Take away for your elderly neighbours”;
  • Sharing of services between restaurants and delivery services, etc.

BBCG is going to have regular on-line meetings in order to follow the changing circumstances; to survive and to overcome the crisis, the businesses are to be most flexible.

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FROM´s vision of the apple campaign in the Russian Market

Italian apple sales to Russia are facing a difficult time. According to Nicola Zanotelli, the General Manager of FROM, the apple consortium of the Italian Alps for Russia, the main challenge is to be found in the in-depth restructuring of the market, with a changing client base and unclear development so far. “The market dynamics are very hard to predict – currency fluctuation, non-transparent companies, challenging management of claims – this risk is still preventing the market environment from developing into a structured system with more clean sales channels”, says Zanotelli.  Nevertheless, the FROM consortium was able to further develop its presence and consolidate the relationships with those recognised as strategic clients. Sales figures recorded for the years 2011-2 and 2012-13 reached 31,000 and 19,000 tons, and this year is likely to end up with a volume of around 25,000 t.
“This past season was a very difficult one: sellers entered the market with the wrong price positioning, still recalling the high prices of the previous season, but later on it turned out that the sales failed to match the needed decumulation for some apple varieties, so we witnessed a clear market drop around March-April. Luckily after the price adjustment the sales took off again and all apples which needed to be were sold”, explains Zanotelli. At the same time, FROM was supporting retail clients with marketing activities at point of sale. The ultimate aim is to both increase standardised volumes and stabilise prices to the mutual benefit of the whole value chain.
For the coming season, the FROM’s target will be to further deepen the relationships with loyal clients, while also striving to expand their marketing activities through direct contact with end consumers.  FROM is also offering processed apple products, such as fresh apple juice with no additives, as well as their fresh cut apples offered in handy 80g bags.