Supermarkets are a growing feature in Russia's retail sector.
Magnit is just one such example. The discount chain focused it attention in Russia's rapidly developing regions and, throughout the years of financial crisis, has consistently grown.
Its regions strategy resulted in a solid 32.6% of revenue growth last year, well ahead of analyst expectations, while profits almost doubled to reach $803m as the company became more efficient.
Despite being the clear leader in its sector, Magnit still only controls less than 10% of Russia's organised retail – but it's rolling out new stores as fast as it can. In 2010 it opened 300 new stores; this year it plans 800-1,000 new stores, as well as 60 new hypermarkets.
Almost all chains did well though. X5 and Dixy also enjoyed good results, reporting rises in profit and revenue of around 20%.
The success is not limited to Russian companies, French chain, Auchan, for example, is also doing well in the country, with plans to roll out another 10 new mega malls this year.
In general, food is driving retail sales, as it remains a big part of most Russians' shopping baskets. Retail sales decelerated at the end of last year, falling from 7% year-on-year growth at the end of 2011 to 5.9% in December 2012. But food sales continue to grow more quickly, according to VTB Capital.
Still, analysts are expecting things to cool down this year. "The key risk for consumption will be the substantial deceleration of budget spending from 18% year-on-year last year to 2% year-on-year in 2013. This will likely reduce real income growth to only 1.5% year-on-year this year," says Natalia Orlova, chief economist with Alfa Bank. "In the banking sector, the new provisioning rules effective from March 2013 have already started to lift lending rates and will trigger a slowdown in retail loan growth this year."
