Annual Report 2015

01
Meeting Demand. Daily

X5’s ability to deliver fast, sustainable growth is made possible by our continued focus on, and successful implementation of, our strategy of building a multi-format food retail business that continuously adapts its value propositions in response to customers’ changing needs.

By focusing on intelligent growth and excellence in execution, we have been able to expand faster than the Russian food retail market average, taking market share while securing long-term and sustainable leadership among our peers.
Record revenue expansion
+
27.6%
year-on-year
To a record ₽ 808.8 billion
Primarly driven by the following factors
760.9 th. m2 of new selling
space,
up 29.6% year-on-year Approximately 80% of selling space growth was organic
Like-for-like sales up 13.7%
year-on-year, improving across all major formats
Like-for-like traffic
increased by 2.3%

year-on-year
Revenue growth of
174.9 billion
Was the highest in X5’s history

In 2015 we delivered a record
year
in terms of growth

Strategic highlights

Turnaround completed: All formats operating and growing as distinct value propositions and banners supported by the X5 corporate centre
X5 grew faster than the food retail market average, and narrowed the gap to the No 1 spot in 2015
Renewed value proposition adapted to Russian consumers’ changing needs
New store formats being deployed: 70% of Pyaterochka stores are now operating under a new concept; over 25% of Perekrestok stores are operating under a new brand
New distribution centres opened in Moscow, Voronezh, Kaluga, Kazan, Chelyabinsk and the Leningrad region
We significantly expanded our logistics operations: with the acquisition of 355 trucks, our fleet was expanded to 1,561 vehicles

Operating highlights

174.9
bn
Net retail sales growth
The highest in X5’s history
760.9
m2
ths
Selling space added
Including 668.4 ths sq. m of Pyaterochka stores — the largest expansion in a single food retail chain in Russia ever
29.6
%
 
Net selling space growth, primarily through organic expansion
1,537
New stores added
16.8
%
 
Сustomer visits
2.3
%
 
LFL traffic growth

Financial highlights

808.8
bn
Revenue
7.3
%
 
Adj. EBITDA margin
71.1
bn
Capex
27.6
%
y-o-y
Revenue growth
24.5
%
 
Gross profit margin
2.4
Net debt / EBITDA
02
Chairman
Statement

X5 aims to create value for all of its stakeholders: customers and residents of the communities where we operate, our employees in Russia, business partners, as well as shareholders from around the world. We take our obligations seriously, and we are pleased to have delivered very strong results in 2015.

Stephan DuCharme
Сhairman of the Supervisory Board

Dear Stakeholders,
As I move to the position of Chairman of the Supervisory Board from my previous role as CEO of X5 Retail Group, I am handing over the reins to a business that has undergone a significant transformation and that became the fastest-growing publicly traded food retail company in Russia in Q4 2015. X5 achieved record growth last year, while also maintaining its profitability margins and closing the gap to the No 1 spot in Russia’s food retail market at an even faster pace than the Supervisory Board and management originally hoped for.

This is no small feat given the challenging operating environment, but the X5 management team and retail formats have continued to deliver on the strategic targets set out by the Board of Directors, delivering value for our stakeholders.

The right strategic course

Looking back at the key targets that were set for the X5 team in 2015, I am very happy to say that the Company has over-delivered on every one of them.

We reached a major milestone in 2015 with the completion of X5’s transformation, as evidenced by our multi-format operating model performance across various metrics. The three key formats — Pyaterochka, Perekrestok and Karusel — accelerated their growth rates, fine-tuning their value propositions to meet the needs of their target customers.

Our
brands

Number
of stores
90
+8 y-o-y
Selling
space
390
th.
m2
+32 th. m2 y-o-y
Number
of stores
6,265
+1,476 y-o-y
Selling
space
2,423
th.
m2
+668 th. m2 y-o-y
Number
of stores
478
+75 y-o-y
Selling
space
484
th.
m2
+68 th. m2 y-o-y
03
Our business model

Our multi-format organisational structure, reinforced by central support teams and strong strategic leadership, provides us with a unique opportunity to leverage our distinct value propositions to capture greater wallet share by providing the best customer experience in the dynamic Russian food retail market.

Core brands:

Pyaterochka, a chain of conveniently located proximity stores, is one of Russia’s leading retail brands. Pyaterochka stores are focused on simple, easy and economical shopping. The brand offers quality fresh products and a non-food assortment supported by attractive promotional events and customer communication.
585.4
bn
Net retail sales (+34.3%)
72.8
%
% of X5 net retail sales
Perekrestok is the leading national supermarket chain in Russia and one of the country’s leading retail brands. Perekrestok strives to be the customer’s first choice for fresh products supported by the right assortment and price strategy.
130.1
bn
Net retail sales (+12.5%)
16.2
%
% of X5 net retail sales
Karusel is one of the largest hypermarket chains currently operating in the Russian market. It offers customers convenient one-stop shopping at fair prices in city locations with a wide range of quality food and non-food products, efficient service at cash registers, engaging weekly catalogues and a loyalty programme.
77.4
bn
Net retail sales (+11.6%)
9.6
%
% of X5 net retail sales

The Corporate Centre: X5 Retail Group acts as the corporate centre, providing overall strategic leadership and support for each of its retail formats. This includes areas like strategy, strategic marketing, M&A / partnerships, legal, IT, talent management, finance, government relations and corporate communications.

How it works
in practiceWe continue to implement innovative solutions aimed at further improving efficiency

Management of forecasting and inventory
Forecast automation for formats and their DCs
Managing transportation efficiency
  • Route optimisation and real time fleet monitoring
  • Increased efficiency of transportation usage and reduced transportation costs
Own transportation fleet and third parties logistics
Vast majority of trucks belong to X5
Analytical reports
  • Detailed ticket and customer offer analysis
  • Monitoring of promotions and product availability on shelves
Direct deliveries to stores
Specific supplies to Pyaterochka, Perekrestok & Karusel
Store efficiency management
  • Automated personnel planning based on demand and other drivers
  • Recording of worked hours and other KPIs
04
CEO
Statement

We delivered solid financial results in 2015 as well, maintaining margins as we focused on intelligent growth and efficiency: revenue increased 27.6% year-on-year to RUB 808.8 billion, while our gross profit and adjusted EBITDA margins for the year were 24.5% and 7.3%, respectively.

Igor
Shekhterman
Chief Executive Officer

Dear Stakeholders,
I am very pleased to present to you my first strategic review as the CEO of X5 Retail Group. I take over a company that has gone through important transformations, delivering significant, sustainable growth along the way.

Our strong revenue performance in 2015 was driven by a 29.6 % year-on-year increase in selling space: the Company added 760.9 th. sq. m., 80 % of which was attributable to organic growth. This is impressive not only in terms of year-on-year expansion, but also when measured by the absolute volume of space added. Like-for-like sales also made a strong contribution, up 13.7 % year-on-year. I am also happy to report that all of our formats performed well. Pyaterochka remains the top contributor to our results, accounting for 72.8 % of net retail sales in 2015.

We delivered solid financial results in 2015 as well, maintaining margins as we focused on intelligent growth and efficiency: revenue increased 27.6 % year-on-year to ₽ 808.8 billion, while our gross profit and adjusted EBITDA margins for the year were 24.5 % and 7.3 %, respectively.

Continuity in strategy and execution

I was appointed to the post of CEO in November 2015, replacing Stephan DuCharme after he had spent three years on the job. During that time, the Board of Directors, of which I was a member, had supported management in executing a significant repositioning of X5 and our formats. The strategy called for building a flexible multi-format business model capable of growing quickly and meeting the needs of a variety of target consumer groups in Russia, while maintaining a razor-sharp focus on efficiency and sustainability.

I am happy to say that X5 achieved these objectives during those three years, despite our industry spending the last 18 months facing serious macroeconomic headwinds. While many aspects of X5’s performance in 2015 were record-setting for the Company, it is helpful to look at what the Company achieved over the last few years in the context of the strategic transformation:

05
Strategic
review
Multi-format operating model
Strategic goals
  • Act as hub of customer value propositions / retail chains
  • Build a platform that enables management of a portfolio of retail chains
  • Target the largest and most profitable segments of the Russian grocery retail market
  • Retail chains can compete with each other if they serve different shopping missions and meet different customer tastes
What we did in 2015
  • Continued separation of functions between the corporate centre and trading formats
  • Elimination of duplicating functions
  • Adapting value propositions to meet the current market environment and customer needs
Constant adaptation of Value Propositions
Strategic goals
  • Distinct value propositions for each format
  • Capture maximum market share
  • Adapt to the current state of the market and customer demands, which will continue to evolve
  • Executed holistically from comprehensive category reviews of assortments to store refurbishment
What we did in 2015
  • Further improvements on assortments, promos and pricing
  • Differentiation through promos and loyalty programmes
  • New communication concept ‘Pyaterochka is helping out’ to reinforce value proposition
  • Implementation of a new private label strategy across all formats. Split of private labels across formats
  • Implementation of innovative IT solutions to launch personalised promos
Intelligent growth
Strategic goals
  • Focus on organic growth
  • Tactical regional M&A as a way of quickly reaching critical mass
  • Improved efficiency of refurbishments and new store openings
  • Partnerships
What we did in 2015
  • Addition of 760.9 th. sq. m. during 2015, 80% of which was attributable to organic growth
  • Successful integration of acquired retail chains in Samara, Mari El, Chuvashia, Orenburg and several central regions
  • Increase of LFL sales of refurbished stores by ca. 20% for Pyaterochka and Perekrestok
  • Strategic partnerships with large networks (Rostelecom, Voyentorg, MSPK, ZhTK and others)
Excellence in operational execution
Strategic goals
  • In-store execution
  • Distribution centre logistics, transportation
  • Shelf availability
What we did in 2015
  • Improved NPS across all formats
  • Decrease of tariffs for X5’s own transport fleet by up to 60% year-on-year for some routes due to improved efficiency, decrease of fuel costs by 5% per unit on average, reduction of diversions from planned routes from 20% to 4%
  • Enhancing Pyaterochka’s loyalty programme
  • Increasing efficiency of supply chains, launch of lean distribution centres programme
Strong leadership team
Strategic goals
  • Right mix of skills to execute even in tough operating environment
  • Motivation based on long-term value creation and market leadership
What we did in 2015
  • Continued assembly of a strong leadership team with substantial Russian and international expertise
  • An effective motivation scheme helped to achieve strong results

Our goals for the next 3–4 years

  • Doubling business in three-four years
  • Delivering strong top-line growth while maintaining profitability
  • Focusing on organic expansion of selling space on the back of current market opportunity
  • Developing a sustainable path increasing margins
  • Improving relationships with suppliers
  • Supporting a self-regulation strategy for Russian retail
  • Cutting losses
06
Delivering
growth

25% increase in the number of cities and towns
where we are present.

Total stores
7,020
Pyaterochka6,265
Perekrestok478
Karusel90
Express187
1
North region
Pyaterochka 146 (+62)
2
North-West region
Pyaterochka 635 (+54)
Perekrestok 47 (+8)
Karusel 17 (+1)
Distribution centres 6
(in 2015: 1 opened)
3
Central region
Pyaterochka 2,325 (+422)
Perekrestok 288 (+52)
Karusel 27 (+3)
Distribution centres 12
(in 2015: 2 opened, 2 closed)
4
Central-Chernozemny region
Pyaterochka 415 (+133)
Perekrestok 13 (+1)
Karusel 7 (N/A)
Distribution centres 3
(in 2015: 1 opened, 1 closed)
5
North-Caucasus region
Pyaterochka 457 (+153)
Perekrestok 24 (+3)
Karusel 2 (+1)
Distribution centres 2
6
Povolzhsky region
Pyaterochka 768 (+148)
Perekrestok 44 (+4)
Karusel 14 (N/A)
Distribution centres 4
(in 2015: 1 opened)
7
Volgo-Vyatsky region
Pyaterochka 467 (+104)
Perekrestok 32 (+4)
Karusel 9 (N/A)
Distribution centres 2
8
Ural region
Pyaterochka 1,003 (+358)
Perekrestok 23 (+7)
Karusel 11 (+1)
Distribution centres 6
(in 2015: 1 opened, 1 closed)
9
Western Siberia region
Pyaterochka 49 (+22)
Perekrestok 7 (N/A)
Karusel 3 (+2)
53.7
3
Central
15.2
2
North-west
8.0
6
Povolzhsky
7.7
8
Ural
5.7
7
Volgo-vyatsky
4.6
4
Central-chernozemny
3.6
5
North-Caucasus
1.0
1
North
0.6
9
Western Siberia

In accordance with the classification

of economic regions in Russia

Net selling
space
increased by 29.6%year-on-year
with X5 adding a record
760,931 m2
Pyaterochka proximity stores
Pyaterochka is our conveniently located proximity store, where customers can always find quality goods at reasonable prices.
Selling space
increase
38.1
%
y-o-y
Net retail sales
increase
34.3
%
y-o-y
07
Pyaterochka:
Full speed ahead!

Pyaterochka is our conveniently located proximity store, situated primarily in residential areas and close to shoppers’ homes, where customers can always find quality goods at reasonable prices.

It is also one of Russia’s leading national brands and one of the first modern grocery retail chains to open in Russia. Originally launched in St. Petersburg in 1999, the brand had 6,265 stores across European Russia and Western Siberia as of 31 December 2015.

Pyaterochka stores are focused on easy and economical shopping. The brand offers quality fresh products and a non-food assortment supported by attractive promotions. Stores have an average range of 4,000 PLUs, and an average size of approximately 387 sq. m.

2015 highlights

668
th.
m2
Selling space added
2.0
bn
Сustomer visits
585
bn
Net retail sales
1,476
Net stores added
1,411
Refurbished stores
25
%
y-o-y
Increase in cities and towns of operation

Pyaterochka at a glance

Pyaterochka net retail sales by region in 2015

51 %
Central
15 %
North-West
9 %
Ural
8 %
Povolzhsky
6 %
Volgo-Vyatsky
5 %
Central-Chernozemny
4 %
North-Caucasus
1 %
North
0.4 %
Western Siberia

In accordance with the classification

of economic regions in Russia

Olga Naumova
General Director of Pyaterochka

Pyaterochka delivered on all strategic fronts in 2015: we set a new record for Russia’s food retail market with 668.4 th. sq. m. of new selling space added during the year, while like-for-like sales grew 16.7% year-on-year.

We had nearly two billion customer visits in 2015, an increase of 21.0% from a year earlier. This achievement was thanks to our focus on intelligent growth and successful efforts to adapt Pyaterochka’s value proposition to meet the needs of Russian consumers.

In 2015, Pyaterochka stores reported net retail sales of RUB 585,402 million, representing a year-on-year increase of 34.3%. This was the fastest rate of growth among Russia’s top-10 food retailers, and accounted for 72.8% of X5’s total 2015 net retail sales. Pyaterochka is meeting the needs of Russian consumers and growing at a record-setting pace by delivering on all of its strategic priorities.

Increase selling space
Our priorities & what we did
  • 6,265 stores as of 31 December 2015, up 30.8% year-on-year
  • 2,423 th. sq. m. of selling space, up 38.1% year-on-year
Industrialise refurbishment programme
  • 1,411 stores refurbished in 2015 vs. 460 in 2014
Improve sales densities
  • Further improvements on assortment, promos and pricing
  • Differentiation through promos and loyalty programmes
  • Increased the average number of PLUs to 4,000, with a maximum of 5,300 PLUs in larger stores
Improve purchasing terms
  • Negotiating improved terms if margin from supplier is below a category average
  • Requiring suppliers to increase investments in promotions (more frequent promotions without sacrificing margin)
Increase SG&A and capital efficiency
  • Promo optimisation, better aged stock management, launch of network optimisation and Lean DC programmes
Improve employee motivation and development of corporate culture
  • New remuneration system
  • Flexible schedules, biometry
  • Team-building and increased employee engagements
Improve customer service systems
  • ‘Mystery Shoppers’, ‘Freshness Director’ in the stores
  • New communications concept ‘Pyaterochka is helping out’
  • Continue to develop partnerships that provide synergetic value to customers and drive additional traffic to stores

Priorities going forward

Pyaterochka is X5’s key growth engine thanks to its customer value proposition, which is especially sustainable in times of crisis. Going forward, the format will continue to focus on its key strategic priorities:

  • Maintaining a maximum growth rate, with a focus on organic growth; entry and development in new regions with full coverage of all location types as well as defending core regions where customers already prefer our value proposition; sustaining the speed of new store openings
  • Preserving current value propositions with selective improvements in perceived quality and freshness
  • Differentiation through promos (to be personalised in future) and loyalty programmes

We fine-tuned our value proposition in 2015 in response to the challenging economic situation that many of our target customers now face, helping to ensure that our customers would get what they are looking for at their local Pyaterochka stores.

This has been embodied in the ’Pyaterochka is helping out’ concept, as well as the further development of private-label products. The rebranded ‘Red Price’ private-label series has been available exclusively at Pyaterochka stores since Q2 2015, and it now re ects the store’s brand identity.
We respond to our customers’ needs promptly, and this has been re ected in Pyaterochka’s Net Promoter Score (NPS). Combined with renovations and a focus on quality service, Pyaterochka succeeded in steadily increasing its NPS from 10.8 in Q4 2014 to 18.9 in Q4 2015.
As part of our focus on adapting our value pro- position to customers’ needs, we are developing partnerships in the high-value segments of additional services, which also include mobile phone stores, repairs and everyday service kiosks, children’s stores, bakers, farmers’ markets and more. Such partnerships help to drive traffic by creating synergetic value offerings to our customers.
Perekrestok supermarkets
Perekrestok strives to be the customer’s first choice for fresh products, supported by the right complementary assortment and pricing strategy.
Selling space
increase
16.4
%
y-o-y
Net retail sales
increase
12.5
%
y-o-y
08
perekrestok:
refining service and operations

Perekrestok was one of the first modern supermarkets to open in the Russian retail space. Launched in 1995, today it is Russia’s leading national supermarket chain, with 478 stores located primarily in the largest cities of European Russia.

Perekrestok strives to be the customer’s first choice for fresh products, supported by the right complementary assortment and pricing strategy. The stores offer an assortment of 10,000 to 15,000 PLUs, with net selling space ranging from 800 to 1,600 sq. m.

2015 highlights

68
th.
m2
Net selling space added
304
mln
Сustomer visits
130
bn
Net retail sales
75
Net stores added
51
Refurbished stores

Perekrestok at a glance

Perekrestok net retail sales by region in 2015

71 %
Central
10 %
North-West
7 %
Povolzhsky
4 %
Volgo-Vyatsky
4 %
North-Caucasus
2 %
Ural
1 %
Central-Chernozemny
1 %
Western Siberia

In accordance with the classification

of economic regions in Russia

Vladimir Sorokin
General Director of Perekrestok

Perekrestok continued to develop its value proposition aimed at providing customers with an excellent shopping experience for a wide range of high-quality and fresh goods at fair prices. Service quality was one of our key areas of focus in 2015, and we made very good progress during the year, significantly improving our NPS score. We also succeeded in accelerating our decision-making and operational processes in 2015, with considerably higher numbers of store openings and renovations.

In 2015, Perekrestok stores reported net retail sales of RUB 130,144 million, representing a year-on-year increase of 12.5%, and accounting for 16.2% of X5’s total 2015 net retail sales. This marks a significant success for a supermarket chain targeting Russia’s middle class in the face of the severe economic challenges the country faced last year.

Increase number of stores
Our priorities & what we did
  • 75 net new stores, with 68 th. sq. m. of new selling space added
‘SPEED up’ decision-making process
  • Majority of investment projects approved, including reconstruction, organic growth, M&A
‘Speed up’ and ‘industrialise’ store openings
  • 51 Perekrestok stores refurbished in 2015 vs. 27 in 2014
  • Refurbishment period reduced from 50 days to 45 days
Improve sales densities
  • Improvements on assortment, promos and pricing
  • Development of a private-label strategy based on mono-brand label development. Replacement of X5’s cross-format private-label brands with Perekrestok individual brands
  • Enhancing loyalty programme for customer retention
Optimise selling space
  • Improved the efficiency of store layouts after refurbishment
Improve service
  • Higher NPS score from −27% in Q4 2014 to −2% in Q4 2015, with +5% in Moscow as a result of improved service

Priorities going forward

Perekrestok made significant progress fine-tuning its value proposition in 2015, including an updated product range, rebranding and refurbishment programme. Looking ahead, we plan to continue to accelerate growth in key target locations:

  • Development in Moscow and St. Petersburg is a priority, critical mass growth in regional cities with over 1 million population
  • Continue with our refurbishment programme; new store openings to preserve a foothold for future growth
  • Regional model trial in 2016, with roll-out starting in 2017
  • Focus on improving service and efficiency of operations

We fine-tuned our value proposition in 2015, helping to ensure that our customers get the best modern retail experience at Perekrestok stores.

Our target customers for Perekrestok know the modern retail format well, so we need to outperform our peers in areas like service, selection and quality. They expect variety as well as novelty items — but they are also rational and price-aware, meaning they need a good reason if they are to pay more for a product.
We are also opening new channels for our customers to communicate their feedback: in addition to the traditional call centre, we have opened dedicated channels on Viber and WhatsApp so that customers can reach us via these messaging platforms.
Karusel hypermarkets
Karusel hypermarkets offer customers convenient one-stop shopping at fair prices with a wide range of quality food and non-food products.
Selling space
increase
11.6
%
y-o-y
Net retail sales
increase
8.8
%
y-o-y
09
karusel:
entering a growth phase

Karusel is our national hypermarket brand and one of the largest hypermarket chains currently operating in the Russian market. X5 had been developing hypermarkets under the Perekrestok brand until the acquisition of Karusel in 2008, which significantly strengthened our position in this attractive and growing segment. As of 31 December 2015, the chain included 90 hypermarkets located in European Russia and the Urals. The stores offer a range of up to 20,000 PLUs.

Karusel hypermarkets offer customers convenient one-stop shopping at fair prices in city locations with a wide range of quality food and non-food products. The format is focused on expanding its product offer to improve the shopping experience across Karusel’s diverse customer base supported by weekly catalogues and an exciting loyalty programme.

2015 highlights

32
th.
m2
Net selling space added
129
mln
Сustomer visits
77
bn
Net retail sales
8
Net stores added
5
Refurbished stores

karusel at a glance

karusel net retail sales by region in 2015

37 %
Central
23 %
North-West
14 %
Povolzhsky
8 %
Ural
8 %
Volgo-Vyatsky
8 %
Central-Chernozemny
1 %
North-Caucasus
1 %
Western Siberia

In accordance with the classification

of economic regions in Russia

Emin Rustamov
Interim General Director of Karusel

Karusel hypermarkets give consumers everything they need for their weekly shopping in one place. In 2015, we saw an increase in LFL traffic and total sales, as well as a 10% year-on-year increase in sales densities. Karusel is on course for profitable growth going forward: we launched a new operating model pilot at three stores and achieved very positive results, and will be rolling this out in 2016 and beyond.

In 2015, Karusel hypermarkets reported net retail sales of RUB 77,443 million, representing a year-on-year increase of 11.6%, and accounting for 9.6% of X5’s total 2015 net retail sales.

New pricing policy and strong communication campaign
Our priorities & what we did
  • Completed new Karusel brand-book and store concept
  • Significant progress on category management roll-out and further improvement of assortment (introducing new products and rotating existing products) to improve Karusel’s product offer
  • Positive trend in LFL traffic, up 2.6% year-on-year, total sales growth (+9.1% LFL)
  • Sales density (sales/sq. m.) increased by 10% year-on-year)
Top-line growth
  • Net retail sales increased by 11.6% year-on-year in 2015
  • Selling space increased by 31.5 th. sq. m. (or by 8.8%) in 2015
Refurbishment programme
  • Five stores were refurbished in 2015 (three of them in Q4 2015)
New openings
  • 90 stores at year end 2015 vs. 82 stores as of 31 December 2014 (9.8% year-on-year increase)
  • Store-bank for 2016-2017 guarantees around 10 new stores per year
Improved operations
  • Operational process improvements (decentralisation of orders, shelf space adaptation to sales needs, operational effectiveness)
  • Improved service, reflected in NPS growth. In 2H 2015, NPS increased from 24 in August to 48 in December
New operational model launch: three model stores
  • Increased efficiency, with an effective and competitive operational model
  • Customer loyalty improvement, with LFL sales growth of 13.9% year-on-year and LFL traffic growth of 8.4% year-on-year in Q4 2015
  • Rolling out model for the whole chain
Private label
  • New private-label programme with focus on low- and mid-price categories
  • 230 PLUs launched in 2015, accounting for 2.2% of net retail sales (private-label products in every fifth check) by December 2015
Loyalty programme
  • New loyalty programme launched in September 2015 with greater clarity and transparency
  • The share of cardholders in total traffic increased from 21% in September to 29% in December after launch of Karusel card
  • Implementing tools for in-depth analytics and targeted marketing based on personal data collection

Priorities going forward

Development and testing the value proposition is at the core of Karusel’s strategic agenda, as well as a focus on operations and efficiencies

  • Roll-out of compact city hypermarket model with a focus on operating improvements and a better shopping experience
  • Focus on increasing sales density
  • Transition to active growth after detailed analysis of actual results of pilot models
  • Development of Karusel’s loyalty programme, promo optimisation, further development of private label
  • Focus on efficiency and bottom-line growth by improving assortment profitability, logistics- costs optimisation, loss reduction and labour-cost optimisation

We worked to refine Karusel’s value proposition in 2015, with the aim of adapting to current consumer needs, including by increasing our low-price assortment.

Our aim at Karusel is to give consumers everything they need for their weekly shopping trip. We are working on assortment optimisation by constantly introducing new products and rotating the existing range, with a focus on locally-produced goods and our own production in-store.