15 August 2022

X5 opens first hard discounters and DC it the Urals

Yekaterinburg, 15 August 2022 – X5 Group (“X5” or the “Company”, LSE and MOEX ticker: FIVE), a leading Russian food retailer, announces the launch of a new distribution centre (DC) in Yekaterinburg for its Chizhik hard discounter chain. The Company has also opened a total of eight new Chizhik stores in the Sverdlovsk and Chelyabinsk regions, as well as in Perm Territory.

In the Sverdlovsk Region, X5 simultaneously opened three Chizhik stores for customers in Yekaterinburg and another store in Revda[1]. By late August, the Company plans to open 11 more hard discounters across the region, to reach a total of 40 by year-end. X5 additionally opened two hard discounters apiece in the cities of Chelyabinsk[2] and Perm.[3]

In accordance with its target operating model, the Chizhik retail chain opened its own DC in Yekaterinburg before entering the region. The facility was inaugurated by X5 Group President Ekaterina Lobacheva and Sverdlovsk Region Governor Evgeny Kuyvashev. The 18,700-sq m DC will receive shipments from over 200 of the chain’s partners, with more than 200 local employees supporting its seamless operation.

“Chizhik has proven to be the format of choice for rational consumers, and it continues its active expansion on the wave of increasing consumer interest. We are pleased to see that the chain is gaining a foothold in the Urals and hope to see local customers embrace the hard discounter model, along with its socially important mission of providing affordable and quality produce,” said X5 Group President Ekaterina Lobacheva at the opening ceremony.

“The Sverdlovsk region is one of the largest regions in the country in terms of retail turnover. And we do a lot to maintain this trend: we develop the necessary infrastructure, work to attract new companies and create conditions for the expansion of our regular partners. But our priority is to provide every resident of the region, regardless of their place of residence and income level, with high-quality, healthy and affordable products. The management of X5 Group is doing a lot for retail chain development and is strengthening cooperation with our manufacturers“, said Sverdlovsk Region Governor Evgeny Kuyvashev.

The DC will serve 250 stores in the Sverdlovsk and Chelyabinsk regions and the Perm Territory.

The advantages of the facility include a multi-format operation model, which enables shipping of ultra-fresh and frozen products, groceries and alcohol thanks to the facility’s ability to meet various storage requirements. X5 uses its own fleet of delivery vehicles to transport products from the DC, with drivers assigned specifically to Chizhik. This helps to ensure an excellent level of service and streamline interactions within the supply chain. Together with the first DC in the Sverdlovsk Region, Chizhik is launching a regional office in Yekaterinburg to efficiently monitor all store and DC processes.

Chizhik’s unique value proposition combines attractive prices with high product quality. The format’s pricing policy is based on a more accessible 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 for the entire product range. The store’s visual design embodies simplicity and incorporates modern trends with its wide passages, easy-to-read price tags, and products offered in boxes and pallets. The product range comprises around 800 SKUs, including 300 private labels that have already proven popular among customers. These include brands such as Svetaevo, Verner, Shchedry God, Greenola, Axl, Tafo and others.

Chizhik stores currently operate in Moscow and the Moscow Region, as well as in the Republic of Bashkortostan, Tver, Tula, Vladimir, Nizhny Novgorod, Voronezh and Lipetsk regions. In 2022, X5 plans to open more than 400 new Chizhik stores in line with its strategy to accelerate the expansion of its hard discounter network.

[1] Yekaterinburg: 47 Volgogradskaya St., 2 Krestinskogo St., 24 Serafimy Deryabinoy St.; Revda: 9 Michurina St.

[2] Chelyabinsk: 63 Rossiyskaya St., 23 Zaltsmana St.

[3] Perm: 31 Mekhanoshina St., 258 Kosmonavtov Highway.