Everyday goods – Newspaper Kommersant No. 55 (7500) dated 03/31/2023

The decline in purchasing power and the slowdown in inflation continue to put pressure on the business of retailers – grocery and selling consumer goods. The ten largest chains in the fourth quarter of 2022 slowed down their growth rates in quarterly and annual terms, increasing revenue by 13.7%, to 2.12 trillion rubles. The development of trends this year threatens retailers with a decrease in profitability and an increase in costs, but the largest players will still continue to increase their market share.

The turnover of the ten largest chains of food products and consumer goods (FMCG) in the fourth quarter of 2022 increased by 13.7%, to 2.12 trillion rubles. without VAT, calculated in Infoline. Compared to the third quarter, revenue growth decreased by 6.2 percentage points (p.p.), and compared to the fourth quarter of 2021 — by 9.2 p.p.

The revenue growth rates of the largest FMCG chains are slowing down for the second quarter in a row. In the last months of 2022, in particular, the dynamics of Svetofor, one of the largest hard discounter operators in Russia, slowed down. According to Infoline, in the fourth quarter of 2022, the chain’s revenue grew by 23.5%, to RUB 113 billion, year-on-year, while in the third quarter, turnover increased by 32.5% year-on-year. In “Traffic light” “Kommersant” did not answer.

Mikhail Burmistrov, CEO of Infoline-Analytics, says that Svetofor sharply slowed down organic growth in 2022, having increased the network by 465 objects against 1.2 thousand points a year earlier, and also closed several hundred stores. In addition, the expert adds, price competition is intensifying in the market, especially since the fall of 2022, when the promo share reached record levels. According to NielsenIQ, the share of discounted products in money terms reached 61% in autumn, and non-food products – 54%.

Mercury Retail Group (Krasnoe & Beloe and Bristol networks) showed the highest revenue growth rates in the fourth quarter of 2022, increasing turnover by 31.8%, to 282.4 billion rubles, calculated in Infoline. The revenue of X5 Group (Pyaterochka, Perekrestok, Chizhik) for this period increased by 16.3%, to 702.3 billion rubles, Vkusvill — by 16%, to 57.6 billion rubles, year by year. According to Infoline, Magnit increased its revenue by 11.9% in the fourth quarter of 2022, to RUB 594 billion.

Mercury Retail Group did not respond to Kommersant, Magnit declined to comment. The X5 Group says that buyers continue to adhere to the strategy of lean consumption. This, according to the representatives of the retailer, stimulates sales in convenience stores, leads to an increase in the share of promotions and demand for goods of its own brands.

According to Infoline, in the fourth quarter, Vkusvill surpassed Metro in terms of revenue, sales of which during this period decreased by 14.1%, to 56.9 billion rubles, due to a partial failure of the IT system of the office in Germany. Metro reports say that the decline in sales by 14.1% in rubles was affected by a drop in purchasing power due to hostilities in Ukraine, as well as an attack on the IT system. In Vkusville, one of the drivers of revenue growth is delivery. Metro said that they intend to strengthen the strategic direction – servicing b2b clients of HoReCa and non-chain retail, expand the range, services and develop e-grocery.

Stores of large formats continue to face a decrease in traffic, which is also reflected in the dynamics of the turnover of such chains, Infoline points out. According to analysts, the revenue of O’Key Group in the fourth quarter increased by 2.9%, to 55.6 billion rubles, Lenta – by 0.7%, to 145.8 billion rubles, from the Russian Auchan turnover decreased by 1%, to 71.8 billion rubles. In these networks, “Kommersant” did not answer.

For the whole of 2022, according to Infoline estimates, the turnover of the ten largest FMCG networks grew by 21.3%, to 7.83 trillion rubles. without VAT. Relative to 2021, revenue growth rates increased by 5.3 p.p. X5 Group increased retail revenue by 18.3%, to 2.59 trillion rubles, Magnit — by 26.2%, to 2.28 trillion rubles ., Mercury Retail Group – by 31.9%, to 960.6 billion rubles, Infoline reported.

Marat Ibragimov, a senior analyst at Gazprombank, predicts that the slowdown in the turnover of the largest retail chains will continue in the first quarter of 2023 in the face of weak consumer demand and slowing inflation. According to Aton analysts, the latter threatens retailers with a decrease in like-for-like sales growth (LfL) and a situation where costs grow faster than revenue. A further shift in demand towards cheaper goods may have a negative impact on gross margin, and the difficult situation on the labor market may cause an increase in personnel costs, Aton points out. According to the Infoline forecast, in 2023 the growth of the turnover of the entire food retail in money terms will slow down to 5.6% against 13.4% in 2022. And the share of the ten largest retail chains in 2023, says Mr. Burmistrov, may grow from 38.5% to 41.9% year-on-year.

Alina Savitskaya