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Russia: Discounter Chizik (owned by X5 group) wants to grow to 3,000 stores coming years

Against the background of the current economic situation, more and more retail market experts are recording the growing interest of Russians in the discount format.

A year ago, there were 29 Chizik discount stores and as of November 30th already 419 stores and that number is changing daily. By the end of the year, Chizik plans to realize more than 500 stores!

"The strategic goal of X5 is to open 3,000 stores in three years and become a leader in the segment of hard discounting in Russia. All our efforts are aimed to that goal and our tasks are quite simple: we need to open high-quality stores in decent locations at a very high pace. We need to increase our portfolio of our own brands, and these brands must meet our quality standards. We need a team of people who will share the ideology of our project. And when we accomplish all these tasks, we will have a federal network of discounters, which consumers will love", says Ilya Yakubson, CEO of X5's Chizik.

This year Chizik has already reached the Urals by opening discount stores in Yekaterinburg, Chelyabinsk and Perm. So far, these are the most remote regions from the capital city of Moscow.

"We make discounters for people who want to be rational, who do not want to overpay and strive to get high quality brands at a much lower price. Therefore, our stores are modern, cheerful, bright and with good trading equipment. And, when we say that the discounter is hard, we mean that there is basically one SKU per customer need. The width and depth of the Chizik assortment is limited, but at the same time it gives the best price-quality ratio", explains Yakubson.

"One of the distinctive features of the Chizhik concept is the high proportion of the afore-mentioned own brands (so-called private labels) in the range. Today, private label (PL) makes up about 40% of Chizik's product range. By the end of next year, it should reach the level of 60%. Initially, the assortment covers 24 umbrella private labels, and still growing. Private label is necessary for a sustainable profitability and PLs help us to differentiate ourselves from other discounter networks", claims Yakubson. "We want the consumer to come to our store, not only because of the lowest price, but also because only here the customer can purchase for example the dairy products of "Svetaevo". Same to many other private label products which can only be bought at Chizik".

"Given that there is only one SKU per customer need, it is very important for us that the supplier is reliable. Suppliers can submit a collaboration proposal to the X5 vendor portal. We understand who produces which product, and after that the potential supplier will receive mailings about the ongoing tenders for the production of this type of product. In other words, if we decide to change suppliers or issue additional SKUs, we will inform everyone in the supplier panel for this product".

"Blind tests are organized by specialized marketing agencies, in which a large number of random consumers participates. This is a fairly serious chain of various tests that ultimately lead to the right choice of product and so supplier. After all, our task is to develop our own brand of a high quality".

"As the business grows, we will need several suppliers for the same products. For example, to bring the goods to the Urals will be very costly. So, we need to find suppliers at that region which are able to produce the same product as we sell in Moscow. Next to that, we need to source typical regional products which are known in the Urals, but not so known in other regions, and vice versa", according to the CEO.

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