GROSSMART4 Company mission and aims Company Mission Company Aims Key Success Points Create a national chain of food superstores offering a wide range of products of day- to-day demands aimed at customers with average income level Become a market leader in opening and managing superstores technologies Provide high level of service, meeting leading standards High standards of processes and technologies Professional management team Wide experience in retail business management
GROSSMART5 2001 Development of supermarkets chain as top priority. 6 SPAR supermarkets opened Sub franchising contract with Holland company SPAR signed The first SPAR superstore opened The number of SPAR superstores to be increased up to 18 Acquisition of Stolitsa Sever chain. Regional expansion. The first Grossmart superstore in Kazan. Contract on establishing a joint venture of BILLA Russia and REWE Group Opening first BILLA supermarket, its assignation to the joint venture and re- branding of 18 supermarkets 8 Grossmart stores in Moscow and regions Active expansion of the chain in the regional markets. Acquisition of working chains: - 6 stores in Moscow ( Prodmak chain) - 4 stores in Kazan (Riden chain) - 4 stores in Kursk (Apelsin chain) 40 shops in Moscow and the regions working under the Grossmart brand Assignation of 15 shops to BILLA trading network and re-branding Acquisition of PI store chain in Vladimir city and Vladimir region (69 shops) Target for the end of 2006 – 109 Grossmart stores in Moscow and the regions 2002 2005 2003 2004 2006 Companys history
GROSSMART6 The parties intend to invest $500 mln in BILLA Russia and increase turnover up to $3 billion during the next 3-5 years Strategic alliance with REWE Group On the 8 th of June, 2004, during the Russian-German economic summit in Moscow in the presence of Mr. Putin, President of Russia, and G. Shchreder, Federal Chancellor of Germany, holding company Marta and REWE Group signed a contract on establishing joint venture - BILLA superstores chain in Russia REWE Group is the second trade operator in Germany after Metro group. The company owns more than 11.5 thousand retail stores in 13 countries in Europe, its gross turnover is approximately 40 billion Euros
GROSSMART7 Geographic presence City Number of objects Total space, м2 Sales area, м2 Moscow (and Moscow region) 711 3615 426 Vladimir6921 07711 492 Voronezh12 3001 200 Yekaterinburg16 3254 000 Kazan (Joshkar Ola) 1011 7236 967 Kursk46 1413 607 Stavropol12 5001 200 Krasnodar12 1221 453 Ryazan12 0001 280 Saint Petersburg11 160750 Saratov12 3381 300 Tula1680410 Engels12 1561 000 Total9971 88340 085 At present GROSSMART is presented by approximately 100 stores of different formats in 14 regions of Russia
GROSSMART8 Grossmart stores formats Hypermarket (format D) Supermarket (formats A. B, C) Grossmart manages four main sub formats FormatABCD Sales area, м 2 400-600750-10001200-15004000-7000 Assortment SKU8500122001470029000-40000 Number of stores (in 2005) 258111 Average space, м 2 4508701 3606 325
GROSSMART9 Grossmart supermarkets Convenient location Wide assortment High quality of goods with particular focus on fresh products High level of service Application of European operators experience Comfortable atmosphere
GROSSMART11 Marketing Strategy Format of Grossmart supermarkets is aimed at an average consumer Creating a strong recognizable brand Opening 90% of new stores by 2010 in the regions approximately 4 P Rule: Product Price Place Promotion Key consumers belong to growing Russian middle class
GROSSMART12 Price strategy Competition on regularly bought products with such stores as Sedmoy Continent and Perekrestok Regular price monitoring Best price and Product of the day promotion. Promo price is supported in all the formats Price strategy: Competition on regularly bought products
GROSSMART13 Loyalty Programmes Lotteries, coupons, promo on discounts on goods of day-to-day demand, publishing information about discounts in monthly advertising booklets Discounts system Points collecting programme, congratulation on the birthdays, discount programme for pensioners Events, presents to the clients, tastings and advertising/promo campaigns Different programmes for the clients Special events
GROSSMART14 III. Dynamics of food retail market in Russia
GROSSMART15 Retail turnover in Russia (billion US$) Source Goskomstat, evaluation of IRG *Source: according to Eurostat data, average growth in the first quarter of 2005 in 25 EC countries was 1.6% Following incomes growth tendency, retail market is rapidly developing Retail turnover in Russia and foodstuff sales Russian foodstuff market has grown three times more since 2000 Retail sales of foodstuff (billion US$), 2000-2005
GROSSMART16 Grossmart in RBC report, 2005 RBC rating, 2005GROSSMART Rating of the most quickly growing companies, according to sales space 1 place (195%) Rating of the most quickly growing companies, according to stores number 2 place (400%) Leaders in regional presence (number of stores) 6 place (11 regions) The market is fragmented. 5 leading players own only 6.1% of the foodstuff market Consolidation of the market will take place Keeping such growth dynamics, Grossmart aims to enter top 10 operators group of Russian retail foodstuff market by 2010
GROSSMART17 Our achievements 2004 – Nomination Supermarkets 2005 – Russian retail consolidation leader 2006 - Nomination Best of the best, Managing company in the retail market category Golden Chains prize-winner (3 awards) National award The Company of the year 2005, nomination Trade chain Social award Russian trade Olymp 2006
GROSSMART18 IV.Grossmart strategy for 2007-2010
GROSSMART19 Our aims To be present in the majority of Russian cities with the population more than 300 thousand people Enter top ten federal food retailers in Russia
GROSSMART20 Development strategy Strategy Market leader in the Russian supermarkets segment on a national level Brand recognition in the regions – 83% Transparent and well organized business with an effective management system Plan Quick expansion in regional markets Opening of its own new stores Acquisition of existing operators Stores and consumer groups segmentation, sub formats and consumer groups determination Establishing its own trade mark Strengthening consumers loyalty to the brand (quality of service, value added services, promo campaigns and discount programs)
GROSSMART21 Development strategy in the regions in 2006-2008 Cities Moscow and Moscow region 48 cities with population of 100-300 thousand people in Moscow region Tatarstan Kazan, Naberezhniye Chelny, Nizhnekamsk, Almetyevsk, Zelenodolsk, Elabuga, Chistopol, Cheboksary, Novocheboksarsk, Yoshkar Ola SaratovSaratov, Engels, Balakovo, Balashov, Volsk, Penza, Kuznetsk, Kamyshyn VoronezhVoronezh, Borisoglebsk, Rossosh, Piski, Stary Oskol, Lipetsk, Elets, Tambov KurskKursk, Zheleznogorsk, Orel, Gubkin, Belgorod South Krasnodar, Novorossiysk, Armavir, Eysk, Geledzhik, Kropotkin, Tihoretsk, Tuapse, Slavyansk-on-Kuban, Labinsk, Anapa, Belorechensk, Krymsk, Timashevsk, Anapa, Goryachy Klyuch, Maykop, Stavropol [Rostov-Volgograd]; [Izhevsk-Perm-Ufa]; [Ekaterinburg] [Yaroslavl-Ivanovo]; [Novgorod-Pskov]; [South Ural] 2007 2008 2006
GROSSMART22 Acquisitions programme Advantages of acquisition: Keeping/increasing profitability with the help of operational synergies at aggressive business growth Strengthening interaction with suppliers Optimization of logistic Optimization of business management structure Saving on scale Applying the standards of corporate management and reporting, according to international standards Choosing companies for acquisition: Reputation of the company Similar format, geographical coverage Developed technologies
GROSSMART24 Grossmart in the regions: Kazan, Tatarstan Republic 10 supermarkets in Kazan Supermarkets in Kazan: Total space – 13 900 sq. m. Sales space – 7 000 sq.m. First Grossmart supermarket was open in Kazan in 2003. At present there are 10 shops in the city.
GROSSMART25 Grossmart in regions: Kursk Three Grossmart supermarkets were open in Kursk in 2006 Supermarkets in Kursk. Total space 6 141 sq.m. Sales space – 3 607 sq.m. 4 supermarkets in Kursk The fourth Grossmart supermarket was open in Kursk in 2006 ТC «TC Triumph TC Crystall TC Grand
GROSSMART26 Grossmart in regions: Vladimir TC Valentina, Dvoryanskaya St., 10 Belokonskaya St., 17 B Supermarkets characteristics: Total space – 2 026 sq.m. Sales space – 1 145 sq.m. The first Grossmart supermarket was open in Vladimir in 2006 The second one was open in July 2006 2 supermarkets in Vladimir
GROSSMART27 69 objects in Vladimir and Vladimir region PI Trade chain stores Total space – 22 012 sq.m. Sales space – 10 347 sq.m. As of June 2006, Grossmart owns 67 shops and logistic center of PI trade chain in Vladimir and Vladimir region Vladimir – 32 shops + warehouse (total space 12 090 sq.m.) Gus-Chrustalny – 10 shops (total space: 1 536 sq.m.) Kovrov – 18 shops (total space: 7 436 sq.m.) Kolchugino – 7 shops (total space: 950 sq..m.) Grossmart in the regions: PI chain in Vladimir region
GROSSMART28 Grossmart in regions : HYPERMARKET in Yekaterinburg HYPERMARKET in Yekaterinburg 2005: HYPERMARKET was open in entertainment center Park House Hypermarkets' characteristics: Total space – 6 325 sq.m. Sales space – 4 000 sq.m.
GROSSMART29 Grossmart in Moscow: stores near the house Stores in Moscow Total space – 11 361 sq.m. Sales space – 5 426 sq.m. 7 shops in Moscow Concept – «next-door-to-home-store»
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