X5 entrusts assortment management to customers

Moscow, 19 June 2020 – X5 Retail Group ("X5" or the "Company"), a leading Russian food retailer that operates the Pyaterochka, Perekrestok and Karusel chains (LSE and MOEX ticker: "FIVE"), has begun to implement new assortment management practices. Pyaterochka was the first X5 format to launch the "Feedback" project. Whenever a customer buys anything with their Pyaterochka loyalty card, they can rate the product via the mobile app. Products with the lowest ratings are removed from the assortment, producers are engaged to improve goods with low ratings and highly rated ones get extra promotion in stores and online.

A pilot of this project was launched in late 2019, during which over 35 million ratings were received from 3.5 million mobile app users. The average product rating in Pyaterochka is currently 4.83 out of five. Going forward, price tags in stores will highlight top-rated products.

Customers can also specify reasons for low ratings. Collected data is used to improve the assortment: all ratings and negative feedback are communicated to suppliers in real time to help improve quality. Based on the data collected, the formula/composition and packaging of over 300 SKUs are being improved. App users who review items and leave their comments will receive push notifications describing the improvements made as a result of their feedback.

If a product rating plummets, the causes and possible changes in the formula will be researched. If the product rating remains low, the product will be delisted.

Sergey Goncharov, General Director of Pyaterochka said: "Pyaterochka is continuously improving to further strengthen our guests' trust. We hear their voices and respond to their wishes and comments, and this helps us to become even better. Our goal is to maximise the engagement of mobile app users with the 'Feedback' project in order to get the most relevant assessment from store guests. With our guests' support, we will manage our assortment, selecting only the best products."

Each active mobile app user today on average rates 10 products per month. Personalised promotions and discounts are offered to active "Feedback" project contributors.

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