‘Many well-known brands have given way to our domestic producers’

Experts about the state of affairs, trends and development of grocery retail in Tatarstan

‘Many well-known brands have given way to our domestic producers’
Photo: Karina Abroskina

The reduction in imports, difficulties with the import of products, the curtailment of loyalty programmes and an increase in the volume of local products have been noted by several large retailers of Tatarstan at once, commenting on the situation in the grocery retail market. At the same time, there is no question of suspending development — companies continue to open dozens of new stores in the region. For example, Verny chain alone in Kazan has opened six hypermarkets in recent months, three more are expected. Read more about how the industry is adapting to the sanctions war, finding a replacement for missing imported goods and adjusting to the purchasing power of Tatarstan citizens in new conditions in the review of Realnoe Vremya.

Less packaging, a new range and a trend for finished products

Grocery retail in Russia, like the whole business, is undergoing a reboot. Industry representatives note that if back in March it was unclear how the consumer and demand would behave, where to get technological equipment and spare parts, how to replace imported ingredients, then by the summer a certain vector of development has already been outlined. Although difficulties with supplies still remain.

Yury Chikirov, the director general of Reagentstvo Company, draws attention to that, despite the many problems faced by businesses due to Western sanctions, the food retail sector is far from the most affected, nevertheless, serious changes are taking place:

“Grocery retail can be characterised by the main idea: 'Everyone needs food everyday.' This segment, in my opinion, is the most protected, unlike other industries. On the market, of course, now it is the time for many brands to leave, there is a narrowing and replacement of assortment matrices going, not all networks are ready for this. Taking into account inflation, there is a change in the volume of packages, as a rule, their decrease, as well as a common increase in prices. In terms of commercial real estate, owners with lease agreements tied to trade turnover feel more confident.”

Grocery retail in Russia, like the whole business, is undergoing a reboot. Photo: Maksim Platonov

At the same time, representatives of large retail chains note a growing interest of buyers in finished products, and many both federal and regional chains are developing their own production. The trend is the category of snacks: sandwiches, shawarma and so on.

'Many well-known brands have given way to our domestic producers'

Guzel Ananyeva, the executive director of Bahetle chain of stores, told Realnoe Vremya that another trend was the appearance on the shelves of more products from local manufacturers. Thus, retail chains are replacing the goods of companies that have left the Russian market.

“There is a reduction in imports, certain difficulties with the import of products. More local producers are entering the market. In the craft beer segment, for example, there are a lot of interesting novelties, in cheese, in confectionery there are offers from local producers. The range is expanding. Many well-known brands have given way to our domestic producers. The product is not bad. If we talk about beer, then it is 'live', does not have a long shelf life, which is produced in large factories. But the quality is decent.”

At the same time, the preferences of buyers, compared with the beginning of spring, have changed a lot. Guzel Ananyeva notes that long-term storage products have ceased to be in demand.

“Consumer demand is recovering. The average check is growing, people began to prefer more expensive goods. In the spring, consumers bought long-term storage goods, prepared for uncertainty, and now they are actively taking perishable dairy products, vegetables, fruits, and gastronomy. Buckwheat, sugar, salt — all this is not in demand now. It is clear that people bought this in the spring.”

Now they are actively buying perishable dairy products, vegetables, fruits, and gastronomy. Photo: Anton Zhuravlev

“The capacities of federal and regional grocery retailers are incommensurable”

At the same time, Guzel Ananyeva noted that Bakhetle chain has no plans to open new stores in the near future. Realnoe Vremya sent inquiries to X5 Retail Group and Verny supermarket chain to learn about the details of the development of grocery chains in Tatarstan. According to information from the Verny website, the chain has recently opened three new stores in Kazan, and in the near future it is planning to open another one — in the village of Kuyuki in the Pestrechinsky district.

The issue of development is essential for the whole business. Large grocery chains also faced a number of problematic issues that adjusted the development plans of even the strongest market participants. Nevertheless, as Vladimir Shaykhiev, the deputy director general of A-Development, told Realnoe Vremya, these are only adjustments on the scale of large companies:

“It is clear that the situation of grocery retailers has changed. This is primarily due to the recent events, there has been an increase in the cost of projects, firstly, it is an increase in the cost of repair work, and secondly, an increase in the cost of logistics, since all their equipment is foreign. Plus deadlines. All this, of course, has affected their economy. Therefore, from the point of view of development, there are certain adjustments in rental rates, vacation periods, and so on. In general, the three retailers (Pyaterochka, Magnit, Verny) are developing, they all have plans for development, there are just adjustments for conditions.”

Federal players, according to Vladimir Shaykhiev, have a serious advantage over regional networks. As an example, the transaction between Edelweiss and Magnit draws attention to itself.

“The capacities of federal and regional grocery retailers are incommensurable. Even from the point of view of the purchase of products, volumes. It should be understood that the larger the volumes, the lower the price. Of course, federal chains have advantage in this regard. They also benefit by purchasing building materials from the same supplier in huge quantities, naturally, the discount is higher than a single object. This also have an effect the from the point of view of economy. Edelweiss regional network decided to concede to federal players in the competition. They signed a contract, at one point closed a large number of stores in favour of Magnit. It is not worth arguing that Magnit is now inferior to its competitors in terms of the number of stores being opened. They may be losing somewhere, but the fact that they took the Edelweiss objects, it turned out to be a good step for them.”

The change in the structure of the market in favour of federal participants is also noted by the director general of REAGENTSTVO company, Yury Chikirov, in his opinion, due to a possible reduction in purchasing power, the most serious growth will be observed in the segment of low-price stores:

“We are observing the withdrawal of the regional networks Edelweiss, Essen, Bakhetle due to competitive losses. At the same time, there is an active reformation in X5 (closure of the stores of Perekrestok chain). We know firsthand about the active development of low-price networks, such as Svetofor, Nakhodka, Dobrotsen and others, which have very ambitious plans to open new outlets.”

There is a potential for opening new outlets

The priority in the placement of retail outlets is also unchanged. Grocery chains are still trying to open new stores in large residential areas that guarantee a constant flow of customers. Vladimir Shaykhiev, the deputy director general of A-Development, notes that competition is one of the incentives to increase the coverage area, and the potential here is still not exhausted and it is growing due to the introduction of new residential complexes.

“There is a potential for opening new outlets. Many residential complexes are being build. In every normal residential complex, we do not take into account detached houses, the developer is already laying the ground floor in such a way that a grocery store could immediately be there. That is, approximately an area of 350 to 600 square metres, so that a grocery retailer can be 'planted' there, full-fledged unloading zones, internal logistics zones are created, all standards are taken into account, and the store immediately comes into comfortable conditions. This is a question of infrastructure, now many developers are going the right way. They don't just design houses, they lay down the entire infrastructure. In this regard, Unistroy is very interesting. They built a small micro-district shopping centre in Tsarevo Village residential complex, which provides residents with everything they need. That is, they already provided that we should have, for example, a grocery store, an alcohol store, a catering service, they have a coworking there. This is an infrastructural approach — not to just commission anyone, but to provide the residents of the residential complex with good infrastructure. This is the most correct approach, and, of course, the grocery retailer occupies the main overall share both in terms of space and in terms of other necessities.”

Due to technical problems, Perekrestok and Pyaterochka, owned by X5 Group, temporarily stopped paying with loyalty cards

The sanctions blow to grocery retail has been felt by many buyers. Due to technical problems, Perekrestok and Pyaterochka, owned by X5 Group, temporarily stopped paying with loyalty cards. The processing that discount cards worked with has stopped serving in Russia, and transferring data to a new one takes a lot of time. Besides, loyalty programmes in many grocery chains have been cut or changed, and there are fewer and fewer generous discounts. In the spring, grocery retailers experienced problems due to the lack of a receipt tape, packaging problems and due to a logistical crisis.

Emil Ziyangirov