Growth strategy

The key drivers of our mid- to long-term growth strategy:

Long-Term Targets for 2017-2020:

Leverage data-driven customer insights from loyalty card to improve conventional commercial approach and to add new tools to the commercial toolkit:

  • Become a top-3 multi-format food retailer and the biggest hypermarket player in Russia, enabling further benefits of scale in supplier terms and fixed cost efficiency;

  • Continuous focus on profitable growth, carefully balancing capex and returns (target IRR of 20%) with the aim to continue to deliver market-leading returns;

  • Maintain healthy balance sheet with conservative approach to leverage;

  • Continue investing in management development to ensure Lenta’s retail team remains one of the most effective in the industry;

  • Double total selling space by the end of 2020; and

  • Develop alternative models to add to our growth.

Hypermarket development:

  • Open organically 150-200K sqm per year, with long-term potential for about 400 additional hypermarkets in target cities;

  • Primary focus on Moscow, St. Petersburg and largest cities in medium term – Combined with continuing roll-out to existing and new smaller cities; and

  • Capex and cost initiatives to drive returns and enable coverage of smaller catchment areas.

Supermarket development:

  • Significantly increase number of store openings to deliver around 8x increase in selling space by 2020 (15-20% of total selling space);

  • Extend the network around existing DCs starting in 2017; and

  • Primarily focus on rent with 20-30% ownership.

Delivering profitable like-­for-­like growth:

Leverage data-driven customer insights from loyalty card to improve conventional commercial approach and to add new tools to the commercial toolkit:

  • Know the relevant basket of our customers to drive price checks and pricing decisions

  • Promotions management: know which offers are appreciate by which customers and how they react on pricing of the offers

  • Category management: make assortment decisions based on understanding of customer needs and the changes in these needs

  • Merchandizing and store layout: design the store around the shopping behavior of our most important customers

  • Regular mass media marketing decisions

  • Develop direct marketing tools using various media: coupon at till, e-mail, SMS, regular mail, self-service kiosks in store.


Strengthening existing presence:

Target to be the first or second in terms of local market share:

  • Leverage existing brand equity to deliver faster ramp up of new stores

  • Leverage existing local expertise and supply chain infrastructure;

  • Deepen penetration in existing markets using multiple formats of stores to come closer to the customer and to add more convenience

  • Improve service levels in existing stores with too high sales pressure by opening new conveniently located stores for existing and new customers