Retailers have approached the house – Kommersant FM
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Large retailers are mastering the convenience store format. The first outlet of the new Okolo network has opened in Moscow. It will be developed as a franchise by X5 Retail Group. The first partner was an individual entrepreneur. The new store’s assortment includes food, alcohol and household chemicals. Some products are sold in large packages with a “cheaper in bulk” promotion. There is also an area selling hot coffee and baked goods.
How promising is this format? And who will you have to compete with? Chairman of the Board of the Association of Retail Market Experts Andrey Karpov noted that there are not many large players in this niche yet: “There are certain restrictions on the expansion of X5 itself, which are provided for by antimonopoly legislation. Partnership development allows you to bypass them and expand to some extent.
The main competitors in this case will be noname stores, which still exist, “Products”, “24 hours” and the like. This niche has not yet been filled by large system players with market power that will influence purchase prices for such trading formats. There will be certain experiments, including the selection of an assortment matrix and price parameters.
One of X5’s latest projects is Chizhik stores. They were tested for a year and deliberately opened next to competitors and with their own stores door to door. We were simply studying the demand for this or that product.”
According to Kommersant FM’s interlocutors, in addition to independent stores, competitors of the Okolo chain will also be Vkusville and Krasnoe i Beloe. The main question is whether the retailer will be able to provide competitive prices, because this is not easy to do, says the head of the Infoline-Analytics company, Mikhail Burmistrov:
“The demand for the convenience store format is growing. For the buyer, in addition to price, an important factor is time costs. A store close to home and work with an in-demand assortment of high-traffic items can be very effective.
The potential is clear. The main point is how competitive the product will be for franchise partners – “Vkusvilla”, “Red and White” and small formats operating 24 hours. The latter, unfortunately, are not always transparent regarding taxes and due to this they can receive some additional advantages in competition with bona fide players.”
X5 Retail Group now manages the Pyaterochka, Perekrestok and Chizhik retail chains. The company’s net profit in the third quarter of 2023 increased by 85% and reached almost 30 billion rubles.
Everything is clear with us – Telegram channel “Kommersant FM”.
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