Pyaterochka boosts sales with new stores
sales rise of 10 per cent for the second quarter of 2006, as it
moves to expand store space.
The Pyaterochka banner saw a like-for-like sales increase of seven per cent in the period, whilst its Perekriostok chain saw an overall like-for-like sales growth of 14 per cent.
Pyaterochka opened 20 new soft-discount stores and seven supermarkets under the Perekriostok fascia in the second quarter, boosting profits and tapping into the growing demand for cheap, convenient supermarkets across rural Russia.
It now owns 524 supermarkets throughout the country.
The company said earlier this year it will also strengthen its position through the renegotiation of supply contracts, as possibilities for cost savings in other areas dry up.
It said the reorganisation of its purchasing plans will focus specifically on the centralisation of its buying in three core areas: the Urals, Southern Russia and Povolzhiye, along with an increase in the number of goods to be channeled through logistics centres.
The planned move will involve the introduction of in-house logistics leading to a target 2-3 per cent increase on margins for the retailer.
The company also told analysts it hopes to boost efficiency through a continued effort of buying out its remaining franchises during 2006.
In a recent report examining Russia industry analysts PricewaterhouseCoopers' (PwC), claimed: "While retailers put pressure on their suppliers to reduce quality of procurement, build their own distribution centres and implement modern technologies, they still experience difficulties in this area, especially on regional levels where physical/territorial remoteness has a large impact."
"In the near future, the quality of supply systems will become a major success factor for most retailers. The company capable of building an efficient logistics system and consequently managing the product range in outlets in line with customers' demand will be a winner."
In terms of the retailers chosen direction for the format of new stores, PwC's report predicts that because of rising incomes in Russia a demand for quality will materialise, making modern formats more affordable to the population, expecting the market share to double in three to four years.
