Perekryostok supermarket readies for investment

The group of banks consisted of German operation Raiffeisen Zentralbank Oesterreich and the UK's HSBC, and the first tranche of the loan was reported to have been transferred last week, with the total funding taking place over a two year period

The loan is significant because it is the first of its kind for a Russian supermarket chain. In recent years big western supermarket chains such as Spar, Metro, Auchan and Carrefour have all established themselves with varying degrees of success. However the market has proved a tough one to crack and despite heavy discounting, Perekryostok has continued to maintain its stronghold on the market.

Now that the Russian supermarket chain has managed to secure future finances, many experts believe that that its stronghold can be maintained, with the possibility of strengthening its position as future store openings increase.

Store expansion is giving Perekryostok reason for increased optimism, too. The retailer estimates that its turnover in the year ahead will increase from $400 million in 2003 to $700 million in 2004. Some of this increase will be accounted for by the newly acquired Spar Middle Volga chain, a regional franchise of the Austrian-owned Spar chain, but other new store openings planned for the year ahead are expected to have an impact too.

The acquisition pushes the retailers outlets up by seven to a total of 67. This accounts for nearly 100,000 square metres of retail space. The company was originally founded in May 1995 as part of the Alfa-Group.

Although still relatively undeveloped, the Russian supermarket sector shows plenty of scope for further development. On a global level Russian incomes remain low, but the percentage of income spent on wealth, currently estimated to be around 69 per cent of disposable income, remains extremely high. This factor leads many industry analysts to conclude that there is still much potential for the development of the food retail sector in Russia.