Updated: Dec 16, 2022
Largest Russian supermarket chain Magnit plans to continue the rapid roll-out of discount stores next year as shoppers across the country turn to cut-price options amid a recession that is further squeezing living standards.
Magnit reached the opening of 700 My Price discount stores in 63 subjects in Russia. Most openings appeared in the Volga district with 50 stores. My Price continues to show strong results: the growth of comparable sales in the third quarter exceeded 50% compared to the same period in 2021, and the average check increased by almost 20% and already exceeded the indicator of convenience stores in November.
"We have opened 45 stores every month this year and plan to maintain a similar pace of expansion in 2023. We consider discounters to be a large segment of our business in the future," deputy CEO Ruslan Ismailov said on Thursday, as Magnit announced the opening of its 700th discount store.
"Magnit operates the My Price format just from mid-2020 and is distinguished by a small retail space (100 - 250 sq m) and an assortment of about 2,000 items, while the investment in My Price discount stores is 40% lower than the comparable size of the Magnit convenience store, which provides an attractive level of return on investment", according to the Deputy CEO Ruslan Ismailov at Magnit.
"We continue to scale the format and increase its attractiveness for customers, including through the range. High operational efficiency allows us to translate savings into prices on the shelf and create the most interesting price offers", said Ismailov.
Inflation has surged in Russia this year and real wages have fallen as the economy suffers from the fallout of heavy Western sanctions. Real wages, which are adjusted for inflation, fell 1.4% year-on-year in September, according to the latest official statistics - the latest economic hardship for Russian households, who have seen almost a decade of falling living standards.
Amid the economic pressure, discount chains selling everything from food and fashion to takeaway coffee and household goods have taken off across the country. Magnit said sales in its discount format - which operates under the 'My Price' brand - were growing strongly, up 50% on a like-for-like basis in the third quarter compared to the same period of 2021.
The chain said it was both opening new locations and reformatting existing stores to tap into the growing demand for low-cost goods. A majority of the discount stores were in small towns and cities with a population of under 100,000, added Magnit.
Also, the share of own brands is growing and is now 20%. The company plans to increase it to 50% and in the near future launch a separate line of private labels for discounters. Now prices in discounters are on average 15% lower than for similar positions in convenience stores.
Source: www.retail.ru/news/magnit-otkryl-700-diskaunterov-moya-tsena-15-dekabrya-2022-223820/ and www.esmmagazine.com/retail/russias-magnit-races-to-open-discount-stores-as-living-standards-slump-228632?preview=true
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