10 Jun 2019 10:22

X5 Retail expects Russian online food retail market to at least double by 2025

MOSCOW. June 10 (Interfax) - The Russian online food retail and delivery market, which is currently worth an estimated 100 billion rubles, will at least double by 2025, Russia's leading retailer, X5 Retail Group expects.

"The share of online is still small, but it will grow at a faster rate. According to our forecasts, this market will at least double by 2025. But it's fairly difficult to forecast the future here, because technology is developing so rapidly that this market might be even bigger," X5 CEO Igor Shekhterman said at the St. Petersburg International Economic Forum.

He said this refers the overall market, which not only includes online retailers, but also delivery of food from restaurants and aggregators - services that deliver groceries from stores. One of the trends on the market is the growing popularity of prepared food, which is forcing retailers to develop this category of products and compete with delivery services.

"The segments on which online stores, online platforms, aggregators and restaurants now work are essentially merging into one market. For ourselves, we position it as the food market. Accordingly, the shopper is offered a huge palette of possibilities of what can be bought. This is foremost based on the desire to save time. This is a change in the contours of the market. Accordingly, this should, of course, change the business model," Shekhterman said.

"We already no longer see ourselves as a retail company, we consider ourselves to be a player on the food market. Accordingly, when we look at the food market, this is food retail, public catering, it amounts to about 17 trillion rubles. Online accounts for 100 billion rubles of this. This is what is delivered to the shopper's home, either through aggregators, or from restaurants or online stores that sell food products," Shekhterman said.

"From here proceeds the need for digital transformation for retail. We simply have no other choice if we want to compete, survive on our market," he said.

X5 is now at the stage of a "targeted transformation." The company began two years ago by creating a big data division that now employs 200 people. The retailer has identified several processes where the application of big data analytics is most effective: automation of category management, promotions and pricing.

In addition to introducing new technologies, X5 has begun to develop new delivery channels, Shekhterman added.