Photo: Legion Media

As RBC found out, the German chain of fixed-price stores Euroshop is entering the Russian market. She will work under an exclusive franchise contract with the Saransk company Euroshop Russland.

The German network comes to Russia

In Moscow, by the end of the year, 15 stores should open under the brand of the German chain of fixed-price stores Euroshop, a broker working in the commercial real estate market told RBC. According to him, a company associated with a German chain is looking for premises of 200–300 sq. m. m in access areas of the capital and a warehouse in the Moscow region. A Euroshop representative confirmed information about entering the Russian market, noting that the company's stores will open in Russia “at the latest in 2016.”

Euroshop is one of Europe's leading chains of fixed-price stores (all products cost €1), which operates 225 stores in Germany. The range includes household goods, textiles, toys, stationery, as well as some types of food (cookies, chewing gum, candies and other products).

In Russia, stores under the Euroshop brand will begin to open the Saransk company Euroshop Russland, which is “the exclusive franchising partner for the creation of single-price stores under the Euroshop brand in Russia,” a representative of the German chain said in a written response.

Euroshop Russland LLC was registered in Saransk in October 2014. A company representative confirmed to RBC the cooperation with the German chain, but did not specify how the partnership would be structured. According to him, they have been conducting preparatory work to open a chain of stores in Russia over the past year and a half. He also clarified that the first stores will begin to open in Saransk, the next launches will take place in Moscow, Penza, Saratov and other cities.

A representative of Euroshop Russland did not disclose current plans for the number of openings, but confirmed that information on one of the industry forums, dated June 2015, was posted by a company employee. There, in particular, it was said that the Euroshop Russland company planned to launch five Euroshop stores in Saransk starting from November 1 of this year, and then open another 20 points in Moscow, Nizhny Novgorod, Ulyanovsk and Saratov. By the end of 2016, according to information on the forum, the company was going to launch 200 stores, and in the long term create a network of up to 2 thousand points in Russia. For comparison: the Fix Price network now has about 1,930 stores.

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It is interesting that the co-owners of Euroshop Russland (through Capital Business Reserve) are Georgy Kazakov and Fyodor Romanov, who several years ago were co-owners of the franchisee of the largest fixed price network in Russia, Fix Price in Saransk. Georgy Kazakov did not respond to calls and letters from RBC. General Director of Best Price (Fix Price operating company) Dmitry Kirsanov says that he remembers Kazakov as a Fix Price franchisee, but could not clarify how their cooperation ended.

Dmitry Kirsanov also has not heard about Euroshop’s plans to enter Russia. The co-owner of another Russian chain of fixed-price stores, Zaodno, Oscar Hartmann, also has no information about the new player.

Concept popular

Euroshop will have few competitors in Russia: so far, only entrepreneurs Sergey Lomakin and Artem Khachatryan have created a large network of fixed-price stores Fix Price. They founded it in 2007, immediately after selling their shares in the Kopeyka discount chain. Last year, Fix Price took fourth place in RBC's ranking of the fastest growing companies. According to SPARK-Interfax, in 2014, Fix Price revenue amounted to 41.8 billion rubles, net profit - 1.3 billion rubles. At the end of 2014, the network took 32nd place in the INFOLine-Analytics rating of the largest retailers in Russia. This year, according to the forecast of INFOILne-Analytics CEO Mikhail Burmistrov, the network’s revenue will exceed 50 billion rubles.

Fix Price has no serious competitors in this niche yet. In 2014, Oscar Hartmann and his partners began to develop a network similar in format, “Zaodno”. At the end of last year, 38% of the network was acquired by co-owner of Norilsk Nickel Vladimir Potanin. Zaodno now has about 60 stores. This year, several fixed-price stores under the Fan Price brand were opened by the founder of Pyaterochka, Andrey Rogachev.

“At the same time” differs from Fix Price primarily in prices: Fix Price sells all goods for 45 rubles, and “At the same time” offers customers a price range of 39 rubles, 69 rubles. and 99 rub. depending on the product category. Fan Price, unlike its main competitor, sells alcohol at retail outlets. As Fix Price suppliers previously explained to RBC, chains of this format “play with margins”: their markup on a number of items may be minimal, only 5%, but they earn money on other goods that in China (where the bulk of the range is usually supplied) cost the supplier just a few rubles.

It will be difficult for the new Euroshop chain to enter the market, says Mikhail Burmistrov; it will be difficult for the company to provide the same assortment and prices as Fix Price, since there is no such scale of procurement and established logistics. “Gross margins in this segment are declining because the cost of imported goods has increased more than retail prices have increased,” notes Burmistrov. At the end of last year, it estimated gross margins at about 60%.

According to INFOLine-Analytics, until now foreign chains of fixed price stores have not been represented in Russia. The most famous company in the world operating under the concept of fixed prices is the American Dollar Tree chain, which has more than 5.3 thousand stores in the USA and Canada. All products in the chain stores can be purchased for $1. The company's revenue at the end of 2014 amounted to $8.6 billion, net profit - $599 million. Also well known in the world are the Canadian Dollarama chain with more than 900 stores across the country, where everything can be bought within three Canadian dollars, and the English Poundland, which owns more than over 500 stores across the UK. All online products are priced at £1.

During the crisis, the segment of fixed price stores turned out to be one of the most stable. According to the international consulting company Colliers International, vacancy on Moscow shopping streets in the first half of 2015 increased from 8.5 to 11.8%. However, the largest number of requests for premises in street retail in the first half of the year came from low-price retail chains; the company cited the Fix Price and Zaodno chains of stores as examples. According to the Fix Price presentation, by the end of 2015 the network should have 2,300 points, by the end of 2016 - 2,990. The presentation "At the same time" states that by the end of the year one hundred stores will be opened, and by 2020 - 750 points.

With the participation of Ksenia Shamakina

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