Retailer M.video-Eldorado plans to open stores in new territories

The management of M.Video-Eldorado announced that the retailer plans to open stores in “new territories.” The network did not specify which regions were meant. Now the retail network is represented in all regions, except for the territories annexed to the Russian Federation during the conflict with Ukraine, as well as remote areas of the Far East and the Arctic. Experts associate both directions of expansion with high risks.

The M.Video-Eldorado chain expects to “develop new territories” by opening compact format stores (see. “Kommersant” dated April 4, 2023), said the group’s chief executive officer Sergei Li during the presentation of operating and financial results group for 2023: “This will be one of our growth drivers for the coming year.”

The management of M.Video-Eldorado did not explicitly clarify whether this refers to the DPR, LPR, Kherson and Zaporozhye regions annexed to the Russian Federation in 2022. The group’s financial director, Anna Garmanova, only added that they see “quite large opportunities to enter those regions of the Russian Federation where we are not yet represented—the Far East and everything connected with it.” “There are quite a large number of cities where we can enter. Therefore, now we will focus on this direction, but Russia is large, and all the territories are loved,” she explained.

According to presence map network, it is not represented in Chukotka, Kamchatka and the Kuril Islands, in the Nenets Autonomous Okrug and on the islands of the Russian Arctic, as well as in Crimea and the territories annexed in 2022.

At the same time, Mr. Lee emphasized that “there are hundreds of cities where the main competitor is present and we are not present.” According to TelecomDaily CEO Denis Kuskov, the top manager meant the DNS network, “which was founded in Vladivostok and initially implemented a different expansion strategy across regions.” The press service of M.Video-Eldorado told Kommersant that they are “assessing the competitive environment for all market participants, including DNS.”

The prospects for M.Video-Eldorado in remote regions, including the Far East, depend on investments in logistics and courier delivery, Mr. Kuskov believes. “The compact store model justifies itself; the chain does not need to open order pick-up points. But at the same time, buyers should have the understanding that they will be able to quickly receive the ordered goods from the nearest point of sale,” the expert believes.

Possible plans to enter Crimea and the territories annexed in 2022 “involve a number of sanctions risks,” believes Maria Udodova, a lawyer in the compliance and sanctions law practice of BGP Litigation. According to her, the very fact of doing business in these regions can already serve as a basis for blocking sanctions from Washington. US export control rules also separately establish restrictions in relation to these territories, the lawyer clarifies.

“Problems can arise for any person who supplies goods with American components,” notes Ms. Udodova. Contractors who take a conservative approach, she adds, may “prefer not to do business with individuals operating in so-called toxic areas.”

Yuri Litvinenko