ST. PETERSBURG — Russian budget hypermarket chain Lenta is looking to roll out a smaller grocery store format to more cities after its pilot project in Moscow proved successful, its chief executive said in an interview.
While Russia's economy lurches into recession and a decline in the ruble has fueled inflation, Lenta, backed by U.S. private equity firm TPG and Russian bank VTB, hopes its low-price focus will help attract cash-strapped consumers. It forecast sales growth of 34 to 38 percent in 2015, indicating it could keep pace with last year's 34.5 percent growth to 194 billion rubles ($3.2 billion). "Since October, every month has come in stronger than a month before. And the first days of March are quite encouraging," CEO Jan Dunning said. Russia's sixth-largest food retailer by sales said it plans to open 10-15 supermarkets this year in and around Moscow, as well as adding 20-25 hypermarkets in various regions. It has opened 24 smaller supermarkets, each with a sales area of around 1,000 square meters in the Moscow area over the past two years, and sees potential for more. Its standard hypermarkets have a sales area of 7,000 square meters. "We have decided to [consider] rolling it out to other cities," Dunning said of the smaller format. "It's past the pilot phase and we will also be growing it in Moscow," added the Dutchman in an interview at the company's headquarters in St. Petersburg. Russian annual inflation is running at around 17 percent, spurred also by a food import ban, imposed by Moscow last year in retaliation for Western sanctions over the Ukraine crisis. Households have reduced spending, benefiting budget retailers such as Lenta and Magnit, and have cut back on non-essentials, primarily non-food purchases.
