M.Video hit Eldorado – Newspaper Kommersant No. 229 (7430) dated 12/09/2022

The M.Video-Eldorado group controlled by Mikhail Gutseriev unites networks under the new Eldorado + M.Video brand in order to increase their economic efficiency. Market participants consider the decision logical in the current conditions and are confident that the group will close part of the stores, at least where brands are present in one shopping center. Other large electronics retailers also began to reduce networks: DNS closed about 150 stores, and Citilink shifted its development vector to online sales. The trend towards optimizing retail, experts believe, will continue next year due to lower demand.

In the M.Video-Eldorado group, they told Kommersant that they were uniting the brands of the M.Video and Eldorado stores. Now the stores will be called “Eldorado + M.Video”, such points have already been launched in Togliatti and Ryazan. The company is merging loyalty programs, there will also be a general stock of equipment in stores. “The merging of brands in a number of areas, including IT, logistics and marketing, has already contributed to economic efficiency and investment optimization,” explained Sergey Li, COO of M.Video-Eldorado Group.

The merger of brands will attract new customers, and attendance will increase by 10–15%, the retailer hopes: “According to the results of the pilot period, we will decide on scaling the new format.” In total, the group has 601 M.Video stores and 647 Eldorado stores in 369 cities.

M.Video bought out Eldorado in March 2018 for 45.5 billion rubles. (see Kommersant dated March 22, 2018). “Pulling two brands initially looked like a strange decision,” says one of the top managers of a large retailer. According to him, the group should immediately unite the networks. Previously, the two chains were responsible for different segments, Mikhail Burmistrov, CEO of Infoline-Analytics, explains: “Eldorado focused more on budget technology, and M.Video focused on the high price segment. But since many brands have left the Russian Federation, the difference between the segments has smoothed out.” The expert believes that the group may close part of the stores where two brands are present in one shopping center. But M.Video-Eldorado claims that the merger “will not affect the number of stores.”

Since the beginning of the year, a number of electronics and household appliances retailers have reduced their networks and shifted their focus to online sales. So, DNS closed about 150 points in different cities, and Citylink shifted the development vector to online (see Kommersant dated November 2). The retailer did not specify whether stores would be closed. Online is gradually increasing its share in the overall sales structure, MTS confirms, specifying that about 80% of the network’s buyers prefer to pick up goods from the outlet. MegaFon calls retail the main sales channel: “This year we launched a project to merge store chains with Yota, which also provides for the opening of new joint outlets. At the same time, we continue to increase online sales.”

Demand in the consumer electronics market will decrease by about a third this year, which in the short term “will lead to a transformation in retail,” says Aleksey Melnikov, managing partner of F + Tech Group: “We will see parity between online and offline sales. Large retailers will continue to reorient stores to the showroom format and increase their own e-commerce.” Mikhail Burmistrov agrees with this: “The trend of closing offline outlets will continue, or stores will begin to switch to a hybrid format, where there is both an offline store and dark stores for online orders.”

Timofey Kornev