“We used to compare ourselves with offline players, but we now say that we work in the food market and our competitors not only count traditional players, but also digital companies … and fast-food restaurants,” Shekhterman said.
E-commerce has flourished in Russia over the past decade, prompting brick-and-mortar retailers to invest in online services and delivery. In recent years, grocers have also felt the pinch from thriving online meals ordering companies.
“We see that this need is growing everywhere, it really is a trend: people want to cook less,” Shekhterman said.
Even as Russians buy fewer and cheaper items due to falling disposable incomes, consumer’s drive toward convenient food is only expected to rise, according to Shekhterman.
To meet this need, X5 opened this year its own ready-to-eat food production facility to cater to the Moscow region and plans to open a similar factory in St Petersburg in 2020-2021.
X5 also continues to expand the product range of its online shop perekrestok.ru and expects it to break even on the EBITDA level in 2021-2022, Shekhterman said.
Most of X5’s over 15,000 stores are Pyaterochka low-cost neighborhood shops, and its second key format are more upscale Perekrestok supermarkets.
X5, which boosted sales 18% last year as it added 2,310 stores on a net basis, is on track to open a net 1,800 stores in 2019, Shekhterman said, adding that 2020 opening numbers were unlikely to be higher.