2. History economic activity: history of creation and development of the enterprise, legal form, types of activities, organizational management structure, functions structural divisions, rights and responsibilities of a merchandiser.
Pyaterochka is the largest Russian chain of economy class supermarkets, founded in January 1999.
On May 21, 2002, a Commercial Concession Agreement was signed between Agrotorg LLC and VISANT-Torg CJSC, Voronezh.
The company CJSC VISANT-torg undertakes to create the Pyaterochka trademark in Voronezh, consisting of 30 stores with a more expanded assortment, but the company will not stop there, it will continue to develop. On November 10, 2002, the first Pyaterochka store was opened in Voronezh.
In July 2003 The Pyaterochka chain of stores in Voronezh was awarded a certificate of honor from the Governor of the region, Mr. V. G. Kulakov, for high economic indicators and improvement trade service population.
In December 2004, the Pyaterochka chain of stores was recognized as the “Most Dynamically Developing Company” based on the results of the annual regional competition “Person of the Year 2003”.
On June 4, 2004, the Pyaterochka chain of stores in Voronezh became the leader in the rating of “Best concession chain of stores “Pyaterochka” 2004.” in the category “Minimum costs on the Internet”.
September 24, 2004 The Pyaterochka chain of stores became the winner of the TOP-200 Russian retail" in the category "Discounter Chain".
May 25, 2005 The chain of stores “Pyaterochka” in Voronezh becomes the leader in the rating “Best concession chain of stores “Pyaterochka” 2005.” in the category “Comprehensive indicator of the efficiency and pace of development of the Network (among Sales Networks operating for more than 1.5 years).”
October 20, 2006 The Pyaterochka chain of stores in Voronezh became the winner of the 2006 Concessionary Distribution Networks rating in the category “Highest average monthly turnover per store and lowest costs 2005-2006.”
On December 18, 2009, the 27th Pyaterochka store was opened in Voronezh. The Pyaterochka company was named so because in its work it adheres to the following five principles:
1. High quality goods;
2. Low prices;
3. Wide stable range;
4. The best store location;
5. High standard quality of service.
The company declares the following goals:
1. Creation of a new type of trading system;
2. Ensuring customer satisfaction;
3. Promotion of goods from domestic manufacturers to the market.
Company mission: Positioning the company among other market participants in external environment.
the main objective company: Creation of the most efficient sales network in Voronezh.
There are elements corporate culture:
1. Work culture in the office and stores;
2. Compliance with the training rules for company employees;
3. Form style;
4. Corporate colors (red and yellow);
5. Working environment at the sites of the Pyaterochka retail chain;
6. Life according to the company's laws;
7. Company symbols: company flag, anthem;
8. Awards (partner’s passport, Pyaterochka badge, Thanksgiving letters, certificates of honor);
9. Competitions and ceremonies: Best in profession, The best shop, Opening of a store, Awarding badges, Awarding winners in competitions;
11. Sports competitions;
12. Corporate newspaper"News from Pyaterochka."
A numbering system has been developed for stores in Voronezh: the numbers of stores located on the left bank begin with 1, for example:
11-Leninsky Prospekt
12-ost. Volgogradskaya
13-st. Perevertkina
14-ost. Ilyich
15-ost. Dimitrova
16-ost. Ostuzhevo
17-ost. Suvorov.
In the South-Western region they begin with 2:
21-ost. Komarova,
22-st. Marshak,
23-st. O. Dundich,
24-st. Patriots Avenue.
In Severny on 3:
31 st. Vl. Nevsky,
32-st. Lizyukova,
33-ost. Northern Supermarket,
35-ost. Diet,
36-street Vl. Nevsky, ost Temple,
38-ost. School.
In the Leninsky district they begin with 4:
41 st. Moiseeva,
42-st. Voroshilova,
44-st. Revolutions of 1905
In the Kominternovsky district they begin with 5:
52-Moskovsky Avenue. 42-b,
53-ost. Monument to Glory,
55-st. Running,
56-st. Kholzunova.
In the Central region they begin with 6:
61 st. Koltsovskaya, stop. Railway station,
62-st. Lomonosova, 114e, stop. Institute of Genetics.
Store opening hours:
For buyers from 9 to 22-00
For staff from 8-15 to 23-00
The store operates in two shifts: 1) from 8-15 to 22-00; 2) from 10-00 to 24-00.
After the working day, personnel are transported.
Advantages of working in the company:
Each applicant is registered in accordance with the Labor Code of the Russian Federation;
Paid holiday;
Paid sick leave.
An employee who has worked for 6 months receives a monthly salary increase in the amount of 500 rubles, an employee who has worked for 1 year receives 1,000 rubles, an employee who has worked for 1.5 years receives a salary increase in the amount of 1,500 rubles. It is possible to work part-time outside of the schedule - on weekends, as a substitute, etc.
For the holiday ( New Year, June 1) children are given gifts. Vouchers to sanatoriums and children's camps are awarded.
Competitions are held to determine the title of best employee, and the winner is awarded movie tickets. The best of the best is also selected, who is also awarded cash prizes and vouchers.
Competitions are held between stores, and cash prizes are awarded to winning places. The entire life of the company is reflected in the newspaper.
Organizational structure store.
Figure 1 shows the organizational structure of the store:
Figure 1 – Organizational structure of the store.
All store employees bear collective financial responsibility.
UM – store manager (makes orders for goods within 5 working days).
ZUM – deputy store manager (2 ZUMs). Work with staff, make requests for perishable goods, carry out collection Money.
PT – goods receptionist. They accept goods and act as deputy department store managers.
KZP – controller of the cash register area. Supervises the work of cashiers. They keep magazines. They keep track of the payment.
OTZ is the operator of the trading floor.
Seller – sells goods in the departments of cooking, gastronomy, vegetables and fruits.
Packer - packages weighted goods.
OG – loader operator. The goods are unloaded and delivered to the sales floor.
An area of responsibility is a group of goods assigned to an employee in which he performs his functional duties.
Functional responsibilities, the same for all employees:
1. knowledge of the product range;
2. knowledge of product characteristics;
3. control of quality and quantity of goods;
4. control of implementation deadlines;
5. pre-sale preparation of goods;
6. display of goods;
7. maintaining cleanliness in the workplace;
8. assistance to customers in choosing a product;
9. friendly customer service;
10. control of price accuracy;
11. visual tracking of the trading floor;
12. measures to prevent theft in stores;
13. participation in inventories.
Additional responsibilities of checkout supervisors:
1. Organization of the work of cashiers in the sales area;
2. assisting cashiers in solving problems;
3. knowledge of the design and operating rules of cash registers (CCM);
4. journaling;
5. control of payment for goods by customers and store employees.
Additional duties of cashiers:
1. knowledge of the design and operating rules of the cash register;
2. knowledge and strict adherence to payment rules by buyers;
3. control over solvent monetary units.
Additional responsibilities of sellers and packers:
1. knowledge of the design and operation of electric scales;
2. knowledge and compliance with customer service rules;
3. knowledge and compliance with the rules and regulations of product packaging.
Operators and loaders have no additional responsibilities.
Inner order rules:
At 8-10, there should already be a zoom manager, a merchandiser and a security guard in the store. At 8-15 there must be 2 employees on duty (only with their presence the store opens). Cashiers and cash registers must be present at 8-20. All staff must be present in the store by 8:30. At 8:31 the store doors close and those who do not arrive on time are considered late. At 8-40 there is a morning meeting, attendance is checked, the results of the past day are discussed, plans are made for the current day. The meeting lasts no more than 10 minutes in total. At 8:50 the staff goes to their areas of responsibility and prepares the store for opening. At 9:00 the store doors open to customers. Leaving the store without permission during working hours is prohibited. Everything that the employee brings with him must be signed. It is not allowed to use telephones, it is not allowed to talk except on work topics.
The staff is given 1 hour for lunch, which can be divided into several parts; before leaving upon returning from lunch, the staff must also check in. There should not be more than 3 people in the room for eating.
The store closes 5 minutes later. After all customers have left, the employee can make their purchases, which are paid at the checkout with an outstanding check. He leaves his purchase in the storage room or on the table, then returns to the sales floor to prepare his area of responsibility for the next day.
3. Study of trade and technological processes: basic business processes(transportation, acceptance, storage, preparation of goods for sale, display on the sales floor, sales, settlement with the buyer) and their influence on the formation of the range and quality of goods sold.
So-called economical supermarkets serve about 60% of the population. In addition, buyers from wholesale markets may become potential clients of such stores. And this already constitutes a significant share of buyers. The excellent people from Pyaterochka considered that economical supermarkets pay for themselves much faster than hypermarkets, and the market shares are approximately the same.
Targeting the poor part of the population dictates the following condition: prices must be low. The main indicator for comparison is small wholesale markets. If in supermarkets the trade margin is about 40%, then in Pyaterochka it is only 10-12%. As a result, products are 10-15% cheaper than in the retail market, and 20-30% cheaper than in supermarkets and hypermarkets.
But a retail network cannot function without profit, therefore, it is necessary to reduce costs so much that a gentle markup ceases to be an unaffordable luxury.
Rationality, reliability and efficiency have become the basic principles of the company. Maximum efficient use of available retail space: every square meter is occupied, be it products or an advertising stand. The range includes only the most hot goods and changes with consumer demand. Available retail space are for rent. Save on design and equipment trading floors, on the number of services for consumers.
Reduce costs for servicing the product: logistics, delivery, pre-sale preparation etc. These costs represent approximately 85% of the retail markup. At Pyaterochka they are five times lower than the average regional supermarket. Pyaterochka uses its own vehicles. The company even has its own construction division. His work made it possible to reduce the construction time for stores to four months.
Now about 75% of goods sold through the Pyaterochka retail chain are Russian-made goods. The company works with 500 suppliers. Sergei Lepkovich explains: “It’s no secret that today foreign manufacturers, selling their goods through foreign networks, set dumping prices through contractual relations and thereby reduce buyers’ interest in Russian goods. The example of Pyaterochka, as a company that has created an effective structure for the discounter format as a company that has significantly shortened the chain of intermediaries and reduced all costs to a minimum, proves that it has now become possible to successfully compete with Western chains.
Pyaterochka practices a mutually beneficial form of working with suppliers. The network takes on part of the costs of logistics and delivery of products, as well as promoting the product on the market, freeing the manufacturer from the difficulties associated with the process of marketing and advertising. The manufacturer reduces its prices. As a result, the demand for cheaper products is growing and the volume of sales in stores is increasing. The manufacturer, in turn, increases the volume of output and, accordingly, receives additional profit. That is why the main requirements for suppliers are the minimum cost of production, high quality goods and packaging, compliance with delivery schedules and convenient logistics.
Transnational corporations set the same prices for all market participants. Moreover, up to 30% of the cost of branded goods comes from advertising costs. Russian manufacturers Meanwhile, they have relatively small budgets for promoting their products. But they have a better price-quality ratio, a more flexible pricing and distribution policy. Research has shown that consumer demand for products of Russian brands has recently increased significantly. Therefore, in the near future, Pyaterochka plans to change the assortment, remove some of the transnational branded goods from it and replace them with domestic analogues of Dranitsyn E.V. "Pyaterochka". Philosophy of economical business.// Magazine “TopManager”, No. 19, 2007.- P.14. .
It is interesting that Pyaterochka does not invest money in market research. The network doesn't even have a marketing department. It’s just that all employees regularly conduct interviews with clients, finding out their preferences. The results of the surveys are summarized weekly, and representatives of all services responsible for product distribution and accounting become familiar with them. Based on this data, assortment decisions are made.
The speed and accuracy of business processes at Pyaterochka is considered one of the main indicators of network efficiency. Comprehensive automation trade, strict adherence to schemes and constant monitoring also help reduce costs. There is a division within the company that regularly checks logistics, assessing the quality, speed and cost of processes and the risk associated with them.
Procurement of goods and pricing in stores occurs centrally. All areas of the company’s work, from the most complex logistics operations to the most basic ones, are described in business processes. They are structured and included in the information and management system.
Pyaterochka considers automation and implementation of IT technologies to be its strategic task. Installed in stores one system electronic document management"Pyaterochka+". It was developed by the company’s specialists, taking into account all the specifics of the retail network. The system automates and simplifies logistics, purchasing, sales and product distribution in stores. This made it possible to reduce costs, operation time and labor costs by more than 30% Dranitsyna E.V. "Pyaterochka". Philosophy of economical business.// Magazine “TopManager”, No. 19, 2007.- P. 16..
Since December 2000, Pyaterochka has united its suppliers into a single information network. There is a purchasing portal on the Internet.
By the end of this year, Pyaterochka will transfer the management of all commodity flows to a single automated computer system, Avtozakupschik. The system will allow you to purchase goods for the entire network using Email and control the entire process of passing goods from receipt at the warehouse to sale in the store, and also fully guarantees the confidentiality of information and related electronic contacts. At the same time, the time for placing an order is significantly reduced. This will make the network more flexible and supplier-friendly.
Unlike many others, Pyaterochka does not require retail experience from its future franchising partners, but, on the contrary, welcomes its complete absence and considers this “freedom from the burden of past mistakes.” The company does not distribute franchises for individual stores: the company's management prefers to sell the right to open entire networks of 20-30 retail outlets in the regions.
“The cost of purchasing our technology is from 500 to 750 thousand dollars, depending on the region that purchases it,” says Felix Stetoy, vice president of communications and brand policy. - Investment volume - from 3 to 5 million dollars over 2 years. And then the network comes into its own own funds. Within 3.5 years she gets on her feet. In the classic version, the chain consists of 30 stores, training center, warehouse complex. Royalties are negotiated separately and are minimal.”
We can conclude that Pyaterochka won the battle for customers and retail space and acquired stable suppliers. After this, a comprehensive struggle for quality unfolded - the quality of goods and services. This was a consequence of changing consumer demands. Having recovered from the financial crisis, buyers are once again thinking about prestige.
The company's specialists estimate that 90% of its assortment is designed for buyers with an income of $300 per family. In accordance with this idea, a new advertising strategy. Now the buyer can return any product he doesn’t like to the store, even without a receipt.
Labor productivity affects cost reduction as much as anything else. According to the staffing schedule, each store employs 17-20 people per shift, while in the supermarket there are 60-70. The daily actions of each employee are verified, calculated and standardized for more rational use time. If necessary, employees simply replace each other.
The Pyaterochka trading house, which has recently been actively developing its franchising business, uses the following concepts. The largest number of Pyaterochkas operate in the “university” format (as they call it in the company). In the press it is often referred to as a “soft discounter”. The sales area of such a store is about 700 square meters. m. In parallel with this, two years ago a project of the “super-university” format appeared. Now there are already four such stores, each with an area of more than 2000 square meters. m. The “nonfood” group has been significantly expanded there - non-food and related products.
Marketing complex of the Pyaterochka retail chain
The assortment of the Pyaterochka retail chain includes only the most popular goods and changes along with consumer demand. Transnational corporations set the same prices for all market participants. Moreover, up to 30% of the cost of branded goods comes from advertising costs. Russian manufacturers, meanwhile, have relatively small budgets for promoting their products, but they have a better price-quality ratio and a more flexible pricing and distribution policy. Research has shown that consumer demand for products of Russian brands has recently increased significantly. Therefore, now about 70% of goods sold through the Pyaterochka retail chain are Russian-made goods. The share of locally produced goods is increasing, according to data for 2010 amounting to about 30%.
Assortment matrix of the store in 2010 has undergone significant changes: the share of low-price segment goods has increased; there was a reduction in the assortment by 15-20% from 2500 - 3500 SKU to 1,800 - 2,800SKU (unit of one product group, brand, grade in one type of packaging of one container) due to goods that are in the least demand. Pyaterochka, as a soft discounter store, is characterized by the predominance of food products - up to 94% of the total assortment.
Pyaterochka continues to develop its own private label.
Purchasing specialists develop product specifications, and then contact supplier firms and negotiate their production. Setting lower prices for such goods is possible due to savings from the purchase of large quantities, insignificant costs for packaging, promotion, for which the network is responsible directly, and not the supplier company. The chain's brand is not used in private labeling, which reduces the risk of transferring negative consumer attitudes toward the brand to attitudes toward the retail chain. Examples of Pyaterochka private labels are “Vologda Lace” (dairy products), “Pavlovskaya Farm” (sausages), “Groza” ( drinking water), "Vinogor" (wine), etc. Since the Perekrestok and Pyaterochka networks are part of X5 Retail Group, most of these chains’ own brands are also represented in other chains of the group. For example, in Perekrestok you can buy trade marks chain "Pyaterochka" and, conversely, in "Pyaterochka" you can buy some brands of "Perekrestok". In 2011 it is planned to increase the share of private labels by 40% (in 2010 the component was 10% of the total assortment). By introducing private labels into circulation, Pyaterochka gives sales an additional impetus and not only increases sales volumes, but also creates new incentives for customers thanks to obvious advantages such goods due to the attractive price-quality ratio.
Pyaterochka practices an effective form of working with suppliers. The company works with 500 suppliers. The network takes on part of the costs of logistics and delivery of products, as well as promoting the product on the market, freeing the manufacturer from the difficulties associated with the process of marketing and advertising. The manufacturer reduces its prices. As a result, the demand for cheaper products is growing and the volume of sales in stores is increasing. The manufacturer, in turn, increases the volume of output and, accordingly, receives additional profit. That is why the main requirements for suppliers are the minimum cost of production, high quality of goods and packaging, adherence to delivery schedules and convenient logistics.
Procurement of goods and pricing in stores occurs centrally. Since December 2000, Pyaterochka has united its suppliers into a single information network. There is a purchasing portal on the Internet.
All areas of the company's work - from the most complex logistics operations to the most basic - are described in business processes. They are structured and included in the information and management system. Pyaterochka considers automation and implementation of IT technologies to be its strategic task. The stores have installed a unified electronic document management system “Pyaterochka+”. It was developed by the company’s specialists, taking into account all the specifics of the retail network. The system automates and simplifies logistics, purchasing, sales and product distribution in stores. This allows you to reduce costs, operation time and labor costs by more than 30%. The system allows you to purchase goods for the entire network using e-mail and control the entire process of goods from receipt at the warehouse to sale in the store, and also fully guarantees the confidentiality of information and related electronic contacts. At the same time, the time for placing an order is significantly reduced. This makes the network more flexible and supplier-friendly.
Pyaterochka's target audience is 110 million Russians: 60% women and 40% men; 70% employed and 30% unemployed; 40-65+ years old, average and below average income, pensioners, office workers, workers.
Targeting the poor part of the population dictates the following condition: prices must be low. The main indicator for comparison is small wholesale markets. If in supermarkets the trade margin is about 40%, then in Pyaterochka it is only 10-12%. As a result, products are 10-15% cheaper than in the retail market, and 20-30% cheaper than in supermarkets and hypermarkets.
These categories of buyers are focused on the basic assortment and low prices, therefore, Pyaterochka’s pricing strategy is that of a price leader: “100% of the assortment at the lowest prices on the market.” This is possible due to the containment of purchase prices due to: the growing volume of purchases, strict payment discipline, reducing deferred payments, Maximum effective use of the available retail space: every square meter is occupied, be it products or an advertising stand. Vacant retail space is available for rent. They save on the design and equipment of trading floors and on the number of services for consumers. The costs of servicing the product are also reduced: logistics, delivery, pre-sale preparation, etc. These costs represent approximately 85% of the retail markup. At Pyaterochka they are 5 times lower than the average regional supermarket. Pyaterochka uses its own vehicles. The company even has its own construction division. His work made it possible to reduce the construction time for stores to four months.
From point of view pricing policy Discounters are divided into soft and hard. A rigid format in the classical sense implies premises of up to 1000 square meters, goods on pallets, self-service, a minimum markup and, as a result, a very low price. Pyaterochka used this format for the first few years after opening, but subsequently abandoned it in favor of a “soft discounter” - a more popular principle of market strategy in Russia due to the fact that today, in addition to price factor The choice of store is greatly influenced by such factors as comfort, wide range and a range of additional services.
Labor productivity affects cost reduction as much as anything else. According to the staffing schedule, each store employs 17-20 people per shift, while in the supermarket there are 60-70. The daily actions of each employee are verified, calculated and standardized for a more rational use of time. If necessary, employees simply replace each other.
Advertising is of great importance in promoting the Pyaterochka retail chain. For the new stage of development of the Pyaterochka chain, the slogan chosen is “The closest low prices!”, which most accurately reflects the change in well-known stores. Over the years, the company has already changed its advertising slogan twice: having started work in 1999 during the years of crisis, Pyaterochka focused on the price of goods, operating in the format of a “hard” discounter under the slogan “Low prices every day!”
Gradually, moving into the soft discounter format, the chain offered its customers an additional advantage - guaranteed product quality and an “easy” exchange or return of purchased products in case of complaints about the product. The slogan was dedicated to this stage: “Quality guarantees and low prices!”
In 2009, the company began a store renovation program: stores are equipped with new shelving and refrigeration equipment, cash registers, ventilation and air conditioning systems, lighting.
“For us, not only low prices and quality of goods are important, but also the appearance and internal view shops. Pyaterochka should be convenient, comfortable and modern; it should be a pleasure to shop here. We have moved to a new stage of development: stores are becoming better and closer to customers. The new advertising slogan reflects these changes,” says Oleg Vysotsky, Manager of the Pyaterochka chain.
The same slogan is present in television advertising and advertising on various radio stations. Commercial network Pyaterochka often sponsors various radio sections. For example: weather forecast, traffic situation, etc., which also helps promote the brand.
An important element in stimulating sales in the Pyaterochka network are weekly promotions: “Successful purchase”, “Sale using the Pyaterochka card”. The promotion provides for the sale, promotion or advertising of non-food products in all stores of the Pyaterochka chain.
Requirements for the product in the "Successful Purchase" promotion
1. The product must meet certain criteria for this species goods.
2. The period for selling the product is one week, then it is rotated.
3. The promotion is held in the Pyaterochka chain in Moscow and St. Petersburg.
4. Display of goods - on separate equipment when entering/exiting (depending on the store layout) to the store.
5. The pricing policy for goods participating in the promotion is below the minimum price of the local market (St. Petersburg, Moscow)
6. All goods not sold during the promotion are returned to the supplier.
Since the creation of Pyaterochka stores, a large number of celebrities and interesting personalities have visited them. The Pyaterochka chain periodically holds promotions to promote certain brands. Exclusive rights to provide personnel for such actions were received advertising agencies SAC and Bounty Euro RSCG. Today the Pyaterochka company is a sponsor of the Russian national football team.
I took over as Chief Executive Officer in November 2015, succeeding Stéphane Ducharme, who served in this role for three years. During that period, with the support of the Board of Directors, of which I was a member, the company's management carried out a large-scale program to reposition the X5 Retail Group and its retail chains. The new strategy provided for the formation of a flexible multi-format business model capable of ensuring rapid growth and adaptation to changes in the needs of Russian customers, as well as strict adherence to the principles of efficient operation and long-term development.
I am proud to announce that over three years the company has managed to successfully implement its goals, including in the context of the tense macroeconomic situation of the last year and a half. Despite the fact that in 2015 X5 managed to achieve record results for the company in a number of indicators, to assess the effectiveness of strategic transformations it is necessary to take into account the achievements of the last three years:
- Revenue in 2012–2015: growth by 64.7% to RUB 808.8 billion.
- Store traffic 2012–2015: 37.6% increase to 2.5 billion visits
- Retail space in 2012–2015: increase by 69.2% to 3,333 thousand m2
- Number of stores 2012–2015: 84.6% increase to 7,020
- X5 stores are represented in nine Russian federal districts, where 88% of the country's population lives.
Having achieved truly significant results, the company was able to become a leader in growth rates, surpassing the ten largest companies in the Russian food retail market and the market as a whole in terms of this indicator.
achieving strategic goals
In 2015, X5 Retail Group achieved significant results in achieving five main strategic objectives:
Multi-format operating model: We managed to put stores in three main formats on a trajectory of sustainable independent growth. Thus, the net retail revenue of the Pyaterochka chain, whose value proposition best meets the changing needs of customers, grew by 34.3%; the revenue of the Perekrestok chain was by 12.5%, and the revenue of the Karusel chain was by 11.6% compared to 2014. Thus, the growth rate of revenue of X5 retail chains significantly exceeded the overall market indicators against the backdrop of an increase in retail turnover in Russia of only 8.3%.
The retail space of Pyaterochka chain stores in 2015 increased by 668.4 thousand m2 due to the opening of 1,476 new stores, which is a record figure not only for X5, but also for the Russian retail market as a whole. The Perekrestok and Karusel chains also continued their expansion, adding 75 and 8 new stores, respectively. The net retail space of the Perekrestok chain increased by 68.2 thousand m2, and the Karusel chain increased by 31.5 thousand m2.
Improved value proposition: Each of X5’s formats is aimed at specific groups of the Russian population and in the reporting year, we actively worked to adapt its value proposition to the changing needs of customers and difficult market conditions, which, among other things, allowed us to maximize our share of customer spending and the company’s market share.
A deep understanding of customer needs and the ability to adapt to ongoing changes would not be possible without the implementation of IT systems in all divisions of the company that allow analyzing the current market situation and providing a more complete understanding of customer preferences and demand trends.
Balanced growth: Given the relatively low presence of modern retail chains on the market, to achieve our goals we must make full use of the potential of organic growth. Our business development specialists of all formats have extensive industry experience and are among the best experts on the market on issues such as determining the optimal location for a store, promptly opening new facilities, carrying out reconstruction work with closing the store for a minimum period.
To select new store locations, we use the latest analytical technologies and, in addition, have in-house resources to conduct transactions for the acquisition of land and the construction of retail facilities. This allows us to make decisions quickly, control costs and open new stores on time. Although the company is focused on organic growth, X5 also has ample opportunities to participate in mergers and acquisitions, so it can quickly enter the market in a new region or strengthen its position in its main regions of presence.
Operating efficiency: The sustainable growth that the company has achieved has been made possible thanks to high operational standards and constant efforts to improve its efficiency. X5 Retail Group is one of the largest users of SAP solutions in the retail industry: our innovative IT platform allows you to analyze data on billions of purchases in real time. Finance department specialists play an important role in monitoring and analyzing key performance indicators of our formats and competitors’ networks, as well as in improving forecasting accuracy.
In addition, we have achieved a significant increase in transport and logistics capacity by increasing the efficiency of distribution centers and significantly increasing our own transport fleet.
Highly Qualified Guide: One of the most important factors of our success is the experienced managers who head the retail networks of each of the formats and the X5 corporate center. Having assumed the duties of Chief Executive Officer, I am confident that the company will not slow down its growth rate thanks to the first-class specialists who, together with me, manage X5 Retail Group. During the several months that I worked alongside Stéphane Ducharme as he transitioned to the position of Chairman of the Supervisory Board, I was impressed by the high level of professionalism of X5's employees.
industry situation
Despite the significant deterioration in most of Russia's main economic indicators, our company managed to achieve significant growth in the reporting year. In our opinion, the difficult economic situation will continue throughout 2016 and early 2017.
Prices for domestically produced products will continue to rise, and real wage growth will slow down or even decline. This leads to a reduction in the share of food costs in consumers' budgets and influences the behavior of consumers who try to make each store visit less expensive, look for the best deals, choose cheaper items and postpone large purchases.
Such trends complicate not only the company’s work, but also the situation in the retail industry as a whole. However, X5 is ready for such difficulties: our multi-format operating model allows us to cover various social classes of the Russian population, and constant work on optimizing the value proposition of retail chains makes it possible to satisfy the changing needs of customers from each class.
X5 strives to provide every Russian with the opportunity to buy groceries in modern stores that guarantee access to quality goods at affordable prices, and this is our main advantage, especially when working with consumers who have been most exposed to negative changes in the economy. Therefore, we are increasing the number of promotions and expanding the range of goods in the lower price segment, and, as part of supporting the most vulnerable groups of customers, pensioners are now offered the opportunity to purchase socially significant products at special prices that do not cancel the discounts already provided to them in our stores.
In the long term, we take an optimistic view of the development of the Russian retail market, as traditional retail formats and small regional chains are gradually giving way to leading market players.
prospects
Despite the difficult economic situation, X5's results in 2015 significantly exceeded those of the ten largest Russian retailers and the market as a whole, while profitability was maintained at the target level. In the fourth quarter of 2015, we took first place among public retail companies in terms of growth in net retail revenue, creating an excellent basis for strengthening the company’s position in 2016.
The current market environment for us is a time of new opportunities, which we plan to effectively use in the future for strategic growth and further development of the company.
To date, we have already made significant progress in transforming our business, but we do not plan to stop there. Our strategic priorities include improving the operating model, further increasing operational efficiency, improving value propositions, and, of course, maintaining a leading position in the market as it transitions from traditional to modern trading formats.
One of the most important tasks for me personally is the development of the X5 corporate center, not only in terms of increasing the efficiency of managing our brands, but also in the context of expanding its ability to use the potential of the current situation in the sector with maximum benefit for the company.
We have modernized our IT infrastructure and will continue to implement innovative technological solutions in all divisions of the company, which should have a positive impact on both our performance indicators and the accuracy of forecasting the preferences and behavior of Russian consumers. We will also continue to develop our transport and logistics infrastructure, which will enable us to achieve additional efficiency gains.
As the business grows and adapts to the needs of our customers, we work to benefit all stakeholders: customers receive an optimal value proposition, suppliers receive the opportunity to sell products through our large retail networks, and shareholders benefit from participating in the sustainable growth of a business of this size.
I would like to once again thank our customers, whose loyalty is the key to our success, as well as our suppliers, shareholders and members of the company's Supervisory Board for the support they have provided us throughout the year.
In addition, I would like to express my gratitude to the management and the entire team of X5 Retail Group for their highly professional work and responsible attitude towards the tasks set last year. Our employees are the basis for the success of X5 Retail Group today and in the future, and I am grateful for the opportunity given to me to work in a new position in such a team to create and develop the largest food retailer in Russia.
Igor Shekhterman
Chief executive officer
