The retailer parts ways with another franchise partner

X5 Retail Group (Pyaterochka, Perekrestok and Karusel chains) continues to reduce the number of its franchise stores. The retailer did not renew the contract with its Saratov partner Volgatorg, thus losing 122 points of sale. Now X5 Retail Group prefers to open its own stores in what were once partner areas.

The fact that the agreement between X5 and Volgatorg LLC in the Saratov region, which has opened 122 Pyaterochka stores here since 2003, will not be renewed, was told to Kommersant by a source close to the federal retailer, and was confirmed by X5 itself. “We made a mutual decision not to renew the contract; within a month after its expiration, our former franchisee will remove the Pyaterochka signs from his points,” said Vladimir Rusanov, head of the X5 press service.

According to him, the company can already open stores in the region under the Pyaterochka+ brand; according to the plan, ten federal Pyaterochka stores can appear as early as October. Now X5 is represented in Saratov and the region by three Perekrestok supermarkets and the Karusel hypermarket. The main shareholder of Volgatorg LLC, Igor Kovalev, believes that the time has come to work independently. “We have grown and become stronger, we stand firmly on our feet.” According to him, store revenue in 2012 amounted to 5 billion rubles. (almost $165 million at the 2012 exchange rate). The entire division of X5’s own Pyaterochka — more than 3.2 thousand stores — earned $10.2 billion in 2012.

X5 Retail Group manages more than 3.8 thousand stores. The largest shareholder is Alfa Group (47.86%). In 2012, according to X5 itself, it controlled 5.6% of the market, Magnit - 5.1%. Revenue in 2012 was $15.7 billion, the number of stores was more than 3.8 thousand points.

Now X5 operates 293 stores under the classic franchise (excluding its partner in Saratov) - these franchisees are located in the Republic of Tatarstan (there are also 150 of its own stores here), the Volgograd region, the Republic of Dagestan and the Republic of Moldova (X5 does not have its own stores here). At the end of 2011, according to X5’s reporting, the number of franchise points was 658.

It was this year that X5 began to part with its partners, then the contracts with Visant-torg in Voronezh (32 stores), with Agrotorg-Samara in Samara (99 stores) and with Salyut-torg expired and were not renegotiated. in Bashkiria (48 stores). In 2012, relations with the Dvortsovy Ryad-MS franchisee in Ulyanovsk (41 stores) ceased. X5 itself recovered losses - with its own stores; in these regions the company opened 239 discounters.

In 2009, X5 decided to use a new reverse franchising system as its main one. Its essence was that the federal retailer gives its brand and product to the partner, and takes the proceeds of the franchise store for itself, paying the counterparty a commission. When calculating it, a single formula is used - this is approximately half of the store’s EBITDA. With a classic franchise, the partner received a brand and paid a royalty of 0.1-0.3% of revenue.

All previous partners were offered to switch to a reverse franchise upon expiration of the contract; the same scheme was offered to new partners. Currently, 92 stores in the capital region operate under this program: Perekrestki, Pyaterochki, Perekrestki-express and Kopeyki. X5 itself is calmly reacting to the reduction of its franchise division.

Dixy President Ilya Yakubson notes that “now organic growth provides insane development prospects, while a franchise makes sense only in a saturated market.”

Evgenia Pertseva

X5 Retail Group stands its ground

X5 Retail Group stands its ground