X5 Group

X5 Group (previously known as X5 Retail Group and commonly known as X5) is Russia's largest food retailer. In 2012, the organization of X5-Retail Group LLC was liquidated, and in 2018 X5 Group LLC was opened.
The company operates several retail formats: convenience stores under the Pyaterochka brand, supermarkets under the Perekrestok brand, and hypermarkets under the Karusel supermarket [ru] brand, as well as the Perekrestok.ru online market, the 5Post parcel and Dostavka.Pyaterochka and Perekrestok.Bystro food delivery services.
The company's global depositary receipts are listed on the London Stock Exchange (LSE) and the Moscow Stock Exchange (MSE).
Its share of the food retail market rose up from 47th to 42nd place among the world’s Top-250 retailers in the Global Powers of Retailing 2020 and took 11th place in the Top-50 fast-growing global retailers (according to Deloitte); it was ranked 41st among the Top 50 Global Retailers (according to Kantar Consulting).
In March 2021, after trials at 52 supermarkets, the group (in partnership with Visa and Sber) launched ‘pay with a glance’ biometrics at self-service checkout terminals in its supermarkets and convenience stores. The facial recognition payment system is expected to be expanded to 3,000 X5-owned stores by the end of 2021.
In 1995, the first Perekrestok store was opened in Moscow. In 1999, Pyaterochka retail chain was founded and the first store was opened in Saint Petersburg. In 2005, Pyaterochka completed an IPO on the London Stock Exchange.
X5 was founded in May 2006 after the merger of the Pyaterochka and Perekrestok retail formats. In 2008, X5 acquired the Karusel hypermarket chain.
Other major acquisitions included: 82 Paterson supermarkets (2009), more than 660 Kopeyka stores (2010), 103 Pokupochka stores in the Samara region (2014), 104 stores owned by the Rosinka Group in Southwest Russia and 100 stores owned by the Soseddushka retail chain in the Orenburg region (2015) and 99 Polushka stores in Bashkortostan (2018), as well as 85 stores Telezhka, Tverskoy kupets and Volny kupets in four regions (2019). In 2018, X5 GDRs started trading on the Moscow Exchange.
X5’s shareholder structure is as follows: CTF Holdings S.A.,47.86%; Intertrust Trustees Ltd (Axon Trust), 11.43%; X5 directors, 0.10%; treasury shares, 0.01%; shareholders with less than 3%, 40.60%.
In 2017, the Company approved its dividend policy.
The key principles of the dividend policy are as follows:
1) The dividend policy sets a target payout ratio of at least 25% of X5 Retail Group’s consolidated IFRS net profit, provided that the Company’s financial position allows for it.
2) When considering a dividend proposal to the General Meeting of Shareholders, the Supervisory Board will be guided by a target consolidated net debt/EBITDA ratio of below 2.0x, in line with the Company’s financing strategy. The ultimate decision on payment of dividends will always be subject to approval of the General Meeting of Shareholders.
2017 dividends amounted to RUB 21.6 bn and 2018 dividends amounted to RUB 25 bn, whereas the planned figure for 2019 is RUB 30 bn.
In 2012, Stephan DuCharme was appointed the Company’s CEO and the Chairman of the Management Board.
In 2015, Igor Shekhterman [ru] was appointed as the Company’s CEO and Stephan DuCharme appointed as the Chairman of Supervisory Board.
Each of the Company’s brands offers a unique customer value proposition and targets key parts of the Russian consumer population. This multifaceted strategy enables X5 Retail Group to capture a significant portion of the growth that is forecast for each of the three largest segments of Russia’s food retail market.
Pyaterochka is a retail chain of proximity food stores.
Pyaterochka launched a new store refurbishment program in 2019. The new Pyaterochka will offer almost twice as many fresh products in a selling area of around 150 sq m, which is about half of the sales floor. Vegetables, fruits and some of the perishable items are laid out in the dedicated fresh zone. On top of that, the rebranded Pyaterochka sells a wide assortment of foods to go and ready-to-eat meals and has a special area where customers can have coffee or fresh orange juice and charge their gadgets. An in-house bakery made it possible to expand the offering of bread and pastry.
In 2019, the Pyaterochka retail chain consisted of 15,354 stores with a turnover of RUB 1.37 trn.
Perekrestok is a retail chain of food supermarkets.
In May 2019, Russia’s biggest and most up-to-date smart kitchen was launched for producing semi-prepared foods for stores, allowing a 2.5-fold increase in the ready-to-eat and ready-to-cook range under the Perekrestok Chef brand in the company’s supermarkets and also boosted quality.
In February 2020 Perekrestok has begun the roll-out of new store concept. Among the highlights of the new concept are updated interior and exterior designs, and a selection of new services offered in-store. The new Perekrestok concept is designed to meet the needs of today's customers, including frequent purchases of ready-to-eat and ready-to-go products. About 50% of the selling space will be dedicated to fresh categories (fruits, vegetables, dairy products, cheese, deli meats, as well as fresh fish and meat) or salad bars, bakeries and cafés. A special area will be focused on the health foods category.
Perekrestok is Russia’s largest supermarket chain, consisting, at 2019 closing, of 852 supermarkets with a turnover of RUB 273 bn.
Karusel is a retail chain of food hypermarkets.
In 2019, Х5 Retail Group announced its decision to transform the Karusel hypermarket chain within two years: - 34 stores to become large format supermarkets managed by the Perekrestok retail chain by the beginning of 2021; - 20 stores to close by 2022; - 37 hypermarkets to continue operating under the Karusel brand.
At the close of 2019, the Karusel retail chain had 91 hypermarkets with a turnover of RUB 87 bn.
In October 2020, X5 Group launched a new hard discounter “Chizhik” in Moscow and in Balashikha with expectations of its federal expansion. A year after, 27 Chizhik hard discounters were opened in Moscow and in Moscow Oblast with 70 expected, in regions as well, by the end of the year 2021. In 2022, X5 Group announced 3000 Chizhik stores to be opened in 3 years, despite so called “cannibalization” which means audience loss in other stores of X5 group, attracted by Chizhik.
In addition to the retail chains, X5 Retail Group manages the Perekrestok.ru online supermarket and the Dostavka.Pyaterochka and Perekrestok.Bystro food and 5Post parcel delivery services.
In 2017, the Perekrestok.ru online store was introduced in Moscow and, in October 2018, in St Petersburg.
A dark store combines features of a traditional store and a warehouse: it is not intended for making purchases but the merchandising display is similar to that of a store. In contrast to a traditional warehouse, a dark store services online orders and goods are displayed individually.
As of 31 December 2019, the online supermarket had two dark stores in Moscow and one dark store in St Petersburg.
The Dostavka.Pyaterochka express delivery service was launched in 2019; orders are collected at Pyaterochka stores. For the project, the company developed its own software covering all the project’s operational and auxiliary processes. The IT system is integrated into the Х5 Retail Group infrastructure, allowing new stores to be hooked up to the service in just a few hours and goods balances to be monitored virtually in real time. There is a patented system operating for collecting orders at a store; this cuts assembly time considerably and optimises staff work. As of April 2020, the service was live in Moscow, Skhodnya, Lyubertsy and Kazan.
The Perekrestok.Bystro express delivery service was started up in 2020, with orders being collected at Perekrestok supermarkets. The software is similar to the IT system used by the Dostavka.Pyaterochka service. As of April 2020, the service was operating in Moscow.
5Post is a subdivision of X5 Retail Group, a developing service for delivering orders from online stores and marketplaces to the company’s stores. In the summer of 2018, the subdivision started opening the first lockers and order collection points.
In June 2019, X5 Retail Group and the Unitrade customs broker developed an end-to-end service for foreign online stores. Partners pick up orders from the online store warehouses in China, bring them to Russia, clear them through customs and deliver them to the X5 distribution centre in Novosibirsk. Then 5Post delivers the parcels to stores.
At the end of 2019, 5Post was managing 12 sorting facilities at Х5 Retail Group distribution centres and 8,000 postamats and order collection points. During 2019, over five million parcels were delivered to clients.
The company’s market share by revenues at the close of 2019 was 11.5%. The closest competitor was Magnit, with a food retail market share of 7.6% (together with non-food and non-retail business – 9.6%).
As of 31 December 2019, the Company operated 16,297 stores, including 15,354 Pyaterochka proximity stores, 852 Perekrestok supermarkets and 91 Karusel hypermarkets, the Perekrestok.ru online supermarket (two dark stores in Moscow and one dark store in St Petersburg) and the 5Post delivery service for online store and marketplace orders (8,000 postamats and order collection points).
In 2013, X5 Retail Group kicked off a programme to attract sublessees, and by the end of 2017, over 29,000 retail outlets were opened in X5 stores by 5,500 private enterprises. With 5,000 sublessees, Pyaterochka leads the way in the number of partners accounting for over 8% of its total selling space. More than 3,000 of them are farmers and small and medium-sized enterprises selling food and children’s goods and providing everyday services near the cash desks outside Pyaterochka’s shopping area or inside as a shop-in-shop.
In April 2017, X5 Retail Group launched a cooperation project with the Central Union of Consumer Societies of the Russian Federation (Centrosoyuz). The COOP-Pyaterochka format has the potential to add up to 1,000 stores over a three-year period. The parties have also agreed to open up to 5,000 Pyaterocka-based shop-in-shop corners by 2021 to sell farmers’ and consumer cooperatives’ products.
In November 2021, X5 Group and Alfa-Bank launched joint financial service “X5 Bank”, 49,99% each held by the retailer and by the bank with 0,02% owned by “Alfa Investments”. X5 Bank is a part of X5 Group strategy to be represented at every step of customer journey from product to purchase.
Х5 entered the innovations market in 2017: by July 2019, Х5 innovations had drawn in over 800 start-ups. Four hundred solutions underwent thorough assessment by business experts and some of them progressed to the business modelling phase. More than 100 start-ups advanced to the prototype/pilot phase and 14 projects were implemented. Х5 considers technological solutions for four key retail spheres: customer experience, operations in stores, supply chain and back office. Х5 is focusing particularly on smart shelving projects, flexible pricing systems, robotisation, automation of quality and freshness control for foodstuffs, and goods tracking.
X5 started implementing its logistics separation strategy in 2013, with a view to splitting product flows for convenience stores, on the one hand, and supermarkets and hypermarkets, on the other hand.
As of 31 December 2019, X5 Retail Group operated 42 distribution centres spanning 1.2 million sq m, including 31 centres catering to Pyaterochka and 11 centres serving the super- and hypermarket formats (Perekrestok and Karusel).
As of 31 December 2019, X5’s fleet comprises 4,124 owned trucks.