Ashot Arutyunyan
“GROSMART” trade chain
Strategy Marketing Director
a_arutyunyan@elexcor.ru
Istanbul, October, 2006
Contents
I.
Company Overview
II.
Sales & Marketing
III.
Dynamics of food retail market in Russia
IV.
“Grossmart” strategy in 2007-2010
GROSSMART
2
I. Company Overview
GROSSMART
3
Company mission and aims
Company Mission
Create a national chain of
food superstores offering a
wide range of products of dayto-day demands aimed at
customers with average income
level
Company Aims
Become a market leader in
opening and managing
superstores technologies
Provide high level of service,
meeting leading standards
GROSSMART
Key Success Points
High standards of processes
and technologies
Professional management team
Wide experience in retail
business management
4
Company’s history
2006
Assignation of 15 shops to BILLA trading network and re-branding
Acquisition of ‘PI’ store chain in Vladimir city and Vladimir region (69 shops)
Target for the end of 2006 – 109 Grossmart stores in Moscow and the regions
2005
2004
Active expansion of the chain in the regional markets. Acquisition of working
chains:
- 6 stores in Moscow ( “Prodmak” chain)
- 4 stores in Kazan (“Riden” chain)
- 4 stores in Kursk (“Apelsin” chain)”
40 shops in Moscow and the regions working under the Grossmart brand
Contract on establishing a joint venture of BILLA Russia and REWE Group
Opening first BILLA supermarket, its assignation to the joint venture and rebranding of 18 supermarkets
8 Grossmart stores in Moscow and regions
2003
The number of SPAR superstores to be increased up to 18
Acquisition of “Stolitsa Sever” chain. Regional expansion. The first Grossmart
superstore in Kazan.
2002
Development of supermarkets chain as top priority. 6 SPAR supermarkets
opened
2001
Sub franchising contract with Holland company SPAR signed
The first SPAR superstore opened
GROSSMART
5
Strategic alliance with REWE Group
On the 8th of June, 2004, during the
Russian-German economic summit in
Moscow in the presence of Mr. Putin,
President of Russia, and G. Shchreder,
Federal Chancellor of Germany, holding
company “Marta” and REWE Group signed
a contract on establishing joint venture BILLA superstores chain in Russia
REWE Group is the second trade operator
in Germany after Metro group. The
company owns more than 11.5 thousand
retail stores in 13 countries in Europe, its
gross turnover is approximately 40 billion
Euros
The parties intend to invest $500 mln in BILLA Russia and increase turnover up to $3 billion
during the next 3-5 years
GROSSMART
6
Geographic presence
At present “GROSSMART” is presented by approximately 100 stores of
different formats in 14 regions of Russia
City
Number
of objects
Total
space, м2
Sales
area, м2
Moscow (and
Moscow region)
Vladimir
Voronezh
7
11 361
5 426
69
1
21 077
2 300
11 492
1 200
Yekaterinburg
1
6 325
4 000
10
11 723
6 967
4
6 141
3 607
Stavropol
1
2 500
1 200
Krasnodar
1
2 122
1 453
Ryazan
1
2 000
1 280
Saint Petersburg
1
1 160
750
Saratov
1
2 338
1 300
Tula
1
680
410
Engels
1
2 156
1 000
99
71 883
40 085
Kazan (Joshkar
Ola)
Kursk
Total
GROSSMART
7
Grossmart stores’ formats
Grossmart manages four main sub formats
Hypermarket (format D)
Supermarket (formats A. B, C)
Format
A
B
C
D
Sales area, м2
400-600
750-1000
1200-1500
4000-7000
Assortment SKU
8500
12200
14700
29000-40000
Number of stores
(in 2005)
25
8
11
1
Average space, м2
450
870
1 360
6 325
GROSSMART
8
Grossmart supermarkets
 Convenient location
 Wide assortment
 High quality of goods with
particular focus on fresh
products
 High level of service
 Application of European
operators’ experience
 Comfortable atmosphere
GROSSMART
9
II. Sales & Marketing
GROSSMART
10
Marketing Strategy
Key consumers
belong to
growing Russian
middle class
Format of “Grossmart” supermarkets is aimed at
an average consumer
Creating a strong recognizable brand
Opening 90% of new stores by 2010 in the
regions approximately
“4 P” Rule:




Product
Price
Place
Promotion
GROSSMART
11
Price strategy
Price strategy:
Competition on
regularly bought
products
Competition on regularly bought products with
such stores as “Sedmoy Continent” and
“Perekrestok”
Regular price monitoring
“Best price” and “Product of the day” promotion.
Promo price is supported in all the formats
GROSSMART
12
Loyalty Programmes
Discounts
system
Lotteries, coupons, promo on discounts on
goods of day-to-day demand, publishing
information about discounts in monthly
advertising booklets
Different
programmes for
the clients
Points collecting programme, congratulation on the
birthdays, discount programme for pensioners
Special events
Events, presents to the clients, tastings and
advertising/promo campaigns
GROSSMART
13
III. Dynamics of food retail market in Russia
GROSSMART
14
Retail turnover in Russia and
foodstuff sales
Retail turnover in Russia (billion US$)
USD bln
500
420
450
400
365
350
Following incomes growth
tendency, retail market is
rapidly developing
310
300
241
250
194
200
150
105
120
147
100
2001
2002
2003
2004
2005
2006F
2007F
2008F
Retail sales of foodstuff (billion US$), 2000-2005
125
110,9
100
Russian foodstuff market has
grown three times more since
2000
88,7
68,2
75
55,9
50
48,6
38,9
25
2000
2001
2002
Source Goskomstat, evaluation of IRG
*Source: according to Eurostat data, average growth in the first quarter of 2005 in 25 EC countries was 1.6%
GROSSMART
2003
2004
2005
15
“Grossmart” in RBC report, 2005
RBC rating, 2005
GROSSMART
Rating of the most quickly growing
companies, according to sales
space
1 place
Rating of the most quickly growing
companies, according to stores
number
2 place
Leaders in regional presence
(number of stores)
6 place
(195%)
(400%)
The market is fragmented. 5
leading players own only
6.1% of the foodstuff market
Consolidation of the market
will take place
Keeping such growth
dynamics, Grossmart aims to
enter top 10 operators group
of Russian retail foodstuff
market by 2010
(11 regions)
GROSSMART
16
Our achievements
National award “The Company of the
year 2005”, nomination “Trade chain’
Social award ”Russian trade
Olymp 2006”
“Golden Chains” prize-winner (3 awards)
2004 – Nomination “Supermarkets”
2005 – “Russian retail consolidation leader”
2006 - Nomination “Best of the best”,
“Managing company in the retail market”
category
GROSSMART
17
IV. “Grossmart” strategy for 2007-2010
GROSSMART
18
Our aims
 To be present in the majority of Russian cities with the
population more than 300 thousand people
 Enter top ten federal food retailers in Russia
GROSSMART
19
Development strategy
Strategy
Market leader in the Russian supermarkets segment on a national level
Brand recognition in the regions – 83%
Transparent and well organized business with an effective management system
Plan
Quick expansion in regional markets
 Opening of its own new stores
 Acquisition of existing operators
Stores and consumer groups’ segmentation, sub formats and consumer groups’
determination
Establishing its own trade mark
Strengthening consumer’s loyalty to the brand (quality of service, value added
services, promo campaigns and discount programs)
GROSSMART
20
Development strategy in the regions in 2006-2008
2006
Cities
Moscow and
Moscow region
48 cities with population of 100-300 thousand people in Moscow region
Tatarstan
Kazan, Naberezhniye Chelny, Nizhnekamsk, Almetyevsk, Zelenodolsk, Elabuga,
Chistopol, Cheboksary, Novocheboksarsk, Yoshkar Ola
Saratov
Saratov, Engels, Balakovo, Balashov, Volsk, Penza, Kuznetsk, Kamyshyn
Voronezh
Voronezh, Borisoglebsk, Rossosh, Piski, Stary Oskol, Lipetsk, Elets, Tambov
Kursk
Kursk, Zheleznogorsk, Orel, Gubkin, Belgorod
South
Krasnodar, Novorossiysk, Armavir, Eysk, Geledzhik, Kropotkin, Tihoretsk, Tuapse,
Slavyansk-on-Kuban, Labinsk, Anapa, Belorechensk, Krymsk, Timashevsk, Anapa,
Goryachy Klyuch, Maykop, Stavropol
2007
[Rostov-Volgograd]; [Izhevsk-Perm-Ufa]; [Ekaterinburg]
2008
[Yaroslavl-Ivanovo]; [Novgorod-Pskov]; [South Ural]
GROSSMART
21
Acquisitions programme
Advantages of acquisition:
Keeping/increasing profitability with the help of operational synergies at
aggressive business growth
Strengthening interaction with suppliers
Optimization of logistic
Optimization of business management structure
Saving on scale
Applying the standards of corporate management and reporting, according to
international standards
Choosing companies for acquisition:
Reputation of the company
Similar format, geographical coverage
Developed technologies
GROSSMART
22
Objects
GROSSMART
23
Grossmart in the regions:
Kazan, Tatarstan Republic
 10 supermarkets in Kazan
First Grossmart supermarket was open in Kazan
in 2003.
At present there are 10 shops in the city.
GROSSMART
Supermarkets in Kazan:
Total space – 13 900 sq. m.
Sales space – 7 000 sq.m.
24
Grossmart in regions:
Kursk
 4 supermarkets in Kursk
Three Grossmart supermarkets were open in Kursk in 2006



ТC «TC Triumph
TC “Crystall”
TC “Grand”
Supermarkets in Kursk.
Total space 6 141 sq.m.
Sales space – 3 607 sq.m.
The fourth Grossmart supermarket was open in
Kursk in 2006
GROSSMART
25
Grossmart in regions:
Vladimir
 2 supermarkets in Vladimir
The first Grossmart supermarket was open in Vladimir in 2006
The second one was open in July 2006


TC “Valentina”, Dvoryanskaya St., 10
Belokonskaya St., 17 B
GROSSMART
Supermarkets characteristics:
Total space – 2 026 sq.m.
Sales space – 1 145 sq.m.
26
Grossmart in the regions:
“PI”
chain in Vladimir region
69 objects in Vladimir and Vladimir region
As of June 2006, Grossmart owns 67 shops and logistic center of PI
trade chain in Vladimir and Vladimir region
Vladimir – 32 shops + warehouse
(total space 12 090 sq.m.)
Gus-Chrustalny – 10 shops
(total space: 1 536 sq.m.)
Kovrov – 18 shops
(total space: 7 436 sq.m.)
Kolchugino – 7 shops
(total space: 950 sq..m.)
PI Trade chain stores
Total space – 22 012 sq.m.
Sales space – 10 347 sq.m.
GROSSMART
27
Grossmart in regions :
HYPERMARKET in Yekaterinburg
HYPERMARKET in Yekaterinburg
 2005:
HYPERMARKET was open
entertainment center Park House
in
GROSSMART
Hypermarkets' characteristics:
Total space – 6 325 sq.m.
Sales space – 4 000 sq.m.
28
Grossmart in Moscow:
stores “near the house”
 7 shops in Moscow
 Concept – «next-door-to-home-store»
GROSSMART
Stores in Moscow
Total space – 11 361 sq.m.
Sales space – 5 426 sq.m.
29
Thank you very much for your attention!
www.marta.ru/grossmart.php