2 August 2022

X5 accelerates hard discounter expansion, plans to have up to 500 stores in 11 regions by year end

Moscow, 2 August 2022 – X5 Group (“X5” or the “Company”, LSE and MOEX ticker: FIVE), a leading Russian food retailer, announces its decision to accelerate the expansion of its Chizhik hard discounter chain by increasing the number of store openings in 2022 to more than 400. As a result, the chain’s footprint will include up to 500 hard discounters spanning 11 regions of Russia by the end of the year.

X5 revised its plans in response to Chizhik’s strong performance backed by an efficient business model, as well as strong customer demand and positive feedback on the chain’s pilot launch. 

Igor Shekhterman, CEO of X5 Group, commented:

“We are more than happy with Chizhik’s performance, as it confirms the unique relevance of this format for our customersAt the same timethe high margins achieved by X5 in Q2 2022 created additional opportunities to increase our investment in the chain’s development. We aim to make Chizhik available to as many people as possible in the shortest amount of time in light of the chain’s social relevance – it helps to improve peoples’ quality of life by offering affordable and high-quality foods at low prices. In additionChizhik’s accelerated development is set to create new jobs in a variety of sectors, including retail, food production, logistics and agriculture.

X5 plans to bring Chizhik to three new Russian regions in 2022, with anticipated store openings in Yekaterinburg, Perm and Chelyabinsk in Q3. In addition, the chain will launch new distribution centres in Yekaterinburg and Moscow.

Chizhik also intends to increase the share of private labels in its turnover to 50% by the end of the year. Currently, private labels account for close to 40% of turnover with an assortment spanning approximately 300 SKUs, including dairy products, grocery, canned meats, beverages and ice cream. The quality of the chain’s private labels – including Svetaevo, Verner, Shchedry God, Greenola, Axl, Tafo and others – quickly garnered customer interest, leading to a sales performance that surpassed the Company’s expectations. The chain’s private-label goods are produced and supplied by over 100 agricultural and food production SMEs.

Chizhik’s unique value proposition combines attractive prices with high product quality. The format’s pricing policy is based on a significantly more affordable food basket compared to the market average and is built around the motto “low price every day”, meaning that the retail chain maintains consistently low prices on its entire product range. The store’s visual design embodies simplicity and incorporates modern trends with its wide aisles, easily readable price tags and convenient product display.

Chizhik currently has more than 150 stores in Moscow and the Moscow Region, as well as in the Republic of Bashkortostan, Tver, Tula, Vladimir, Nizhny Novgorod, Voronezh, and Lipetsk regions. The chain’s distribution centres have already begun operating in Ufa and the Voronezh Region.