High-profile announcements 2019: opening and closing of DIY retailers
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Grand plans of Leroy Merlin
Let's start with the most ambitious news about upcoming discoveries. A lot of new retail outlets for construction, repair and decoration will appear. Most of them are promised to us this year by the market leader - the French Leroy Merlin network. Last year, 90 large retailer stores successfully operated in Russia. By the end of 2019, it is planned to add 22 more to them. Thus, the company's share in the Russian market, which is almost 13%, will increase further. This will be a big step in the direction of increasing the share to a quarter planned by 2022.
The number of 22 new stores will include 2-3 Moscow non-standard formats. Small areas from one and a half to 2 thousand square meters will make it possible to place them not outside the Moscow Ring Road, but in more accessible places for buyers. The proximity to metro stations is assumed. But which of the areas with high residential development fell on the leadership of Leroy Merlin, has not yet been reported. These points in Moscow will specialize mainly in decor and household goods, rather than repair.
Since space will be limited, and it will be difficult to equip them with spacious warehouses, a number of positions in trading floors will serve as samples that can be familiarized with before ordering goods at home. Customer services will come to the fore in small-format stores in 2019. Forecasts of specialists on the annual revenue of the store with an area of 1,500 square meters. m. range from 150 to 330 million rubles. Considering the total turnover of Leroy Merlin for the previous year over 270 billion rubles, this amount may seem insignificant. But if the new format shows itself well and takes root, perhaps profits will go to a different level.
In addition to hypermarkets in Russia, new ones will appear in neighboring countries. This year, the second store is expected to open in Kazakhstan, and the next year, Belarus will enter the Belarusian market. The first Minsk Leroy Merlin covers an area of 10,000 square meters. m
Fulfillment of all these tasks will bring the French company closer to achieving long-term goals: to bring the number of stores in 3 countries to one and a half hundred, and sales to more than 550 billion rubles. by 2021.
OBI is not far behind and is also experimenting
By the way, this year the OBI from Germany, which occupies an honorable third place in the Russian market, is going to develop an unusual sales format. What is unusual for the network itself, and for other DIY retailers, and for Russia as a whole. The fashion for temporary, pop-up outlets, also called pop-ups, is approaching us from Europe. Therefore, it is not surprising that the European brand is among the pioneers in the Russian market. In the territories of newly built LCD studios with an area of not more than 150 square meters. m. will offer OBI goods to residents of the complexes.
Finally about the sad - Castorama leaves us
Over the previous 2 years - 2017 and 2018 - trade in Kastorama hypermarkets has become unprofitable. Unfortunately, the company did not take the best position in the DIY market in Russia. In addition to the leaders already mentioned in the article, the network from the British corporation was inferior in sales to the domestic Petrovich. That is why the closure of all 20 Castorama stores is coming this year. The retailer is curtailing activities not only in our country, he also failed to gain leadership in Spain and Portugal. In this connection, the leadership decided to leave these 3 countries. This will make it possible to focus as much as possible on increasing the share in promising markets where it is realistic to reach the first position.
Time will tell if this change in strategy has helped Castorama.What can be confidently predicted right now is major changes for both competitors remaining in the segment and buyers. Competitors can, at a minimum, pay attention to objects abandoned by Kingfisher Corporation, which owns Castorama. Among them there are hypermarkets located in good places, in addition, the area is sufficient. The maximum program for any competitor may be the purchase of part or all of the business. So far, only Leroy Merlin has officially commented on this possibility, reporting the absence of such intentions.
As for the end customers, Castorama's departure from Russia will affect them through changes in the pricing policy of the remaining players in the segment. Such large-scale changes and a new redistribution of the segment cannot go unnoticed. But given that healthy competition between DIY retailers in Russia nevertheless persists, prices are unlikely to skyrocket. None of the networks owns such a large market share so that this negatively affects the pricing process.