In order to save “Pyaterochka”, “Perekrestok” and “Carousel” will be expected to purchase fruits and vegetables abroad
Photo: TASS/AP/Rajanish Kakade
X5 Retail Group (“Pyaterochka”, “Perekrestok” and “Karusel”), whose principal owner is the Russian billionaire Mikhail Fridman, the first of the chains will begin to buy imported veggies and fruits, the company intends to increase the share of direct imports up to 100% in the next three years. Now the retailer directly buys abroad about 20% of fruits and vegetables. Experts say that such a scheme, requiring high costs of logistics, may be beneficial not for all categories of products.
By the end of 2019 X5 Retail Group wants to switch to 100 percent direct import of fruit and vegetables in which it will enter into all contracts with foreign suppliers directly and to import products independently. This “Izvestia” said a company representative.
— The direct import network independently concludes treaties with foreign manufacturer, and therefore knows the exact price of the products, can control the timing of shipment and delivery, which is impossible when dealing with distributors — they say in the X5.
In 2015 the retailer is self-supplying from abroad to 20% of imported products — mainly fruits and vegetables. Now the company has more than 100 contracts with foreign producers.
After signing the contract with the manufacturer, the retailer will independently provide the products to Russia, where he uses the services of customs brokers and logistics partners that provide services of freight forwarding products using their warehouses, explained in a trading network. Such a scheme for direct import allows the network to purchase products is almost 5% less than if the network has signed contracts with a wholesale partner in Russia.
Another 5% savings will give the retailer’s own logistics in Russia. This X5 until the end of 2016 will open two warehouses leased premises, which will be supplied exclusively to the company’s products from abroad. This scheme also reduces the duration of the trip fruit and vegetables from abroad for three days. This year the company will start to operate warehouses in St. Petersburg and Novorossiysk for 6 thousand square meters each, in 2017 will be connected and one in the Central Federal district. Primarily created for the warehouses will be processed oranges, tangerines, lemons, peaches and nectarines.
Trading network works with suppliers of the EEU and the CIS, and also from Georgia, Syria, Iran, Morocco, Serbia, Macedonia, Moldova, Egypt, Israel, China, India, South Africa, New Zealand, Mexico, Ecuador, Colombia, Argentina and Chile.
The company expects by the end of this year, the average share of foreign fruit and vegetables, shipped directly, amount to about 50% of the total import volume in this category. Recall that in the III quarter of 2016 sales of fruit and vegetables (domestic and imported) in retail networks “Perekrestok” and “Pyaterochka” amounted to 7-8%. The volume of imports in each category are different, the average value of imported network products in X5 were not able to clarify.
The head of the Agency FruitNews Irina Goat emphasizes that none of the trading network does not work with direct import 100%.
This can be disadvantageous because of the small volume of deliveries in each category with the high cost of logistics, she said.
According to Irina Koziy, in monetary terms, is now the largest turnover direct import from “Magnet”, but “an assessment of the cost of supply is difficult — the level of procurement is constantly changing”. The expert emphasizes that the main motive of the transition of networks to such a scheme procurement stems from the fact that the internal market offers importers may be limited to companies and not to satisfy their requests.
In “Dixie”, “Izvestia” said that depending on the season, the proportion of direct shipments may reach nearly half of the total import of fruits and vegetables. In the next two years the company intends to double the number of its contracts with foreign producers. In addition to fruits, the network independently and imports alcoholic beverages.
In “the Tape” said that in 2015, more than 96% of all products presented in the network, it was procured in Russia, the remaining production was accounted for by imports. Lenta prefer to bring in non-food products.