Magnit has said that sales in its 'My Price' discounter portfolio have shown a 30% like-for-like sales uplift, with the Russian retailer planning to increase the number of outlets under the banner to 200 by year-end.
This will include 50 new stores, built from the ground up, and will position Magnit as the largest discounter store operator among Russia's federal retailers. Magnit currently operates 76 My Price discounter outlets.
Most My Price outlets occupy locations that formerly housed convenience stores, and the retailer has said that all have demonstrated positive EBITDA and net income gains after conversion.
Operational Cost Savings
In addition, operational expenses are lower – the average My Price discounter has five employees, compared to 11 in a typical convenience store. The locations also benefit from lower lease costs compared to convenience stores, require less space, see 30%–40% faster stock rotation, and are more flexible in terms of location, Magnit said.
The retailer said that it has plans for My Price to become a 'substantial business segment' within the overall company ecosystem, and will unveil a new distinctive design for its new discounter openings in due course.
It also plans to streamline its SKU assortment, and expand the range of non-food and private label items it offers.
Store Format In Demand
“Over the last few years, we have seen a growing customer demand for a store format that would offer a basic assortment of affordable products, private labels and high level of service," commented Ruslan Ismailov, Magnit’s deputy CEO and director of retail chain management.
"In our opinion, My Price discounters are a perfect fit to capture this demand. Given the scale of our business, including our own production capabilities, Magnit is best positioned to build a truly competitive format that may potentially become a substantial segment of our business. Today, we work on improving the CVP and continue expanding the pilot, with the final decision on roll-out coming sometime next year.”
Magnit began piloting My Price discounters in July 2020 Each My Price outlet covers between 150 and 200 square metres of space, and carry a range of around 2,000 SKUs. Some 65% of the assortment in each store is comprised of lower price segment items.
Magnit recently announced that its virtual payment card scheme has achieved five million subscribers since its launch in December of last year.