Russian retailer M.Video-Eldorado plans to double its gross merchandise volume (GMV) to $13.5 billion by 2025, combining its large store network with e-commerce growth, CEO Alexander Izosimov told Reuters ahead of the company’s strategy day on Tuesday.
The consumer electronics retailer’s GMV, an e-commerce metric used to measure transaction volumes, increased by 15.4% in 2020 to 505 billion rubles ($6.8 billion), with a target to hit 1 trillion rubles in 2025.
M.Video operates 1,074 stores across 279 Russian cities and aims to open in at least 100 more within five years.
It also hopes to leverage the potential of Russia’s e-commerce market, which boomed last year as coronavirus lockdowns forced a switch to online shopping, and expand on its 33% online market share in consumer electronics.
“Every retailer on the planet is now trying to figure out how to move forward with the total ‘Amazonization’ of retail and trade,” Izosimov told Reuters in an interview.
M.Video’s strategy centers on its OneRetail platform, which Izosimov said aims to develop the company’s online and offline presence in a seamless way, tapping into its 19 million active customers.
“Clearly the market has not been penetrated enough,” said Izosimov, anticipating rapid development of online marketplaces and for category specialists, such as M.Video-Eldorado, while banking on physical stores still having a role after the pandemic.
With this in mind, M.Video is scaling down its involvement in e-commerce site Goods.Ru to 10% from 80%, agreeing to jointly develop the project with state-owned Sberbank.
Izosimov believes M.Video can achieve its ambitious growth target organically: “One trillion is the guiding star, and we can deliver it, keeping our EBITDA margin within the historical range of 5-7%.”
M.Video will cap spending at 2% of GMV, he said, implying current annual capex of around $137 million, but reaching up to $269 million should the company achieve its 1-trillion-rouble GMV target.
Shares in M.Video jumped by around 6% on Tuesday after the company announced plans to pay 100% of net income as dividends, a move that Izosimov acknowledged, along with capital structure restrictions, could limit spending.
Asked about a long-time prospect of a possible secondary share offering, Izosimov said: “Restricted liquidity is generally not great for companies. If there is a chance and the right conditions to increase liquidity on the market, (the shareholders) might potentially be ready to do that.”
