Russian Retail Chain Magnit (MCX listed) 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.
"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.
Inflation has surged in Russia this year and real wages have fallen as the economy suffers from the fallout of what the Kremlin calls a 'special military operation' in Ukraine and 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, it added.