VkusVill's Romanovskaya to head X5's integrated e-grocery unit
MOSCOW. July 18 (Interfax) - X5 Retail Group has completed the process announced a year ago of spinning off its online business into a separate entity, X5 Digital, and Larisa Romanovskaya, who previously managed e-commerce at VkusVill, will head it, X5 said in a statement.
The new entity will oversee X5's e-grocery services, including the express delivery technology platform, the infrastructure of small dark stores that ensure delivery of Pyaterochka and Perekrestok products in 40 minutes, and the infrastructure of large dark stores with an expanded assortment of products, including from Vprok.ru, the statement said.
It will continue to develop within the company, although X5 previously considered the possibility of an initial public offering for its online business, private placement, and bringing in a strategic investor.
"As we moved forward with the spin-off of our online business, we discussed various scenarios for developing X5's online businesses, both on our own and in partnership with companies actively growing in adjacent e-commerce segments. In particular, we considered monetization through a partial sale and the creation of additional shareholder value. In the end, we decided to keep X5 Digital within the group," X5 Group Director of Strategy and Business Development Vladimir Salakhutdinov was quoted as saying in the statement.
"In today's market environment, reliance on our own infrastructure and commercial capabilities will help to develop our online businesses with maximum speed and flexibility. This efficient online economic model creates new growth opportunities, while monetization through market capitalization, in our opinion, has no prospects at the moment," Salakhutdinov said.
The retailer plans to begin work with external sales channels, including connecting delivery aggregators. The Magnit retailer, X5's closest competitor, has begun to develop its online services with the help of partners.
X5 is the largest retailer in Russia by revenue. X5's revenue grew 18.6% in Q2 to 647.28 billion rubles, including offline sales growth of 18.2% to 632.57 billion rubles. X5's digital businesses grew 38.4% to 14.711 billion rubles in Q2, slowing from 79.9% growth in Q1. Outside of express delivery from Pyaterochka and Perekrestok stores and the Perekrestok Vprok.ru online hypermarket, X5's digital business includes the 5Post delivery service and the Mnogo Lososya food delivery service.
The GMV of express delivery services and the online hypermarket rose 34.1% year-on-year in April-June to 15.9 billion rubles including VAT, promo codes, and bonuses. Growth slowed from 77% the previous quarter.
"In April 2022, the number of online hypermarket and express delivery orders reached 100,000 on peak days," the statement said.
Express delivery services were available from 1,718 stores, including 1,007 Pyaterochka proximity stores and 711 Perekrestok supermarkets, and 45 dark stores in 54 regions as of the end of June. Perekrestok Vprok.ru was present in 82 Russian regions, as a delivery service in eight and for customer pickup in 74.