Express doesn't work
“Perekrestok Express” is the weakest format in the X5 Retail Group structure: at the end of nine months of 2017, its revenue decreased by 11.1%, to RUB 7.3 billion. For comparison: during the same period, sales of Pyaterochka increased by 30.3%, to 724.4 billion rubles, Perekrestok - by 19.4%, to 132.3 billion rubles, Karusel - by 7 .2%, up to 63.3 billion rubles.
Perekrestok Express also turned out to be the only retailer format that showed a decrease in the average check for the nine months of 2017 - to 275.6 rubles. versus 281.1 rub. for the same period last year.
The EBITDA margin of Perekrestok Express is several times lower than that of other retail formats: 2.1 versus 5.8% for Karusel, 7% for Perekrestok and 9.1% for Pyaterochka in the first half of the year. (for nine months this data is not disclosed).
The network was launched in 2007 as a joint project with a group of private investors, whose names were not disclosed. Initially, X5's share in the project was only 40%, but the group had an option to increase it. In 2010, X5 Retail Group received operational control over the chain, paying $6 million for the next 20%. A year later, the company became the sole owner of the chain.
“Perekrestok Express” was the first format of X5 Retail Group, for the distribution of which the group began to attract franchisees. Since 2012, the group has changed the principle of working with partners to “reverse franchising” - under the terms of the contract, the network participates in all stages of opening and operating stores, and the partner only manages them. Under this arrangement, the franchisee does not pay an initial fee or royalties, but his income is limited to a certain percentage of the store's gross margin.
To increase the efficiency of the X5 format, Retail Group tried to experiment with Perekrestok Express stores: at the beginning of this year, several stores in the chain were transferred under the Food brand.
Reset excess
“Perekrestok Express” cannot be called a problematic format of X5 Retail Group; it simply does not meet the group’s requirements for growth prospects, says Uralsib analyst Konstantin Belov. In his opinion, this segment is more suitable for smaller and niche retailers, such as Magnolia or Azbuka Vkusa. “The entire network will not necessarily be bought by one prominent player. It is possible that the stores will be sold in parts to small retailers,” he suggests.
Azbuka Vkusa, as reported by its representative Andrey Golubkov, may be interested in some Perekrestok Express stores, but no more than 20 objects in Moscow - these points fit the AB Daily format. A representative of VkusVill stated that the company is not interested in purchasing Perekrestok Express stores.
In the West, the “convenience store” format in which Perekrestok Express operated is more widespread than in Russia; every major player has a network in this segment, notes Deloitte partner Egor Metelkin. In his opinion, Perekrestok Express has no direct competitors in Russia; even AV Daily, Magnolia or VkusVill are focused on a different product range and a different buyer. The Express format has potential due to the global trend towards purchasing ready-made food in stores, says Anna Zhdanova, junior director of the Fitch Rating corporate department.
Earlier in early October, it was known about the sale of Karusel hypermarkets to X5 Retail Group under the sale and leaseback scheme (sale of real estate with the subsequent conclusion of a long-term lease agreement with the new owner). The cost of space in X5 Retail Group hypermarkets, according to INFOLine-Analytics, is about 20 billion rubles.
The work currently being carried out by X5 Retail Group is a normal optimization of processes for a company that has always fought for rapid growth and maximum efficiency, Metelkin believes. Both the sale of the network and the reverse leasing of the Karusel space is an optimization of the group’s work, and not an attempt to attract additional funds; X5’s debt load is at an acceptable level, agrees Belov from Uralsib. The company's net debt/EBITDA ratio at the end of the first half of 2017 was 1.8 (a year earlier it was 2.34), 72.8% of liabilities are long-term.
Perekrestok is one of the first chain supermarkets in the history of Russian retail. The management company X5 Retail Group N.V. actively uses the franchise to develop its network business. This is an opportunity to start a solid business with high turnover in a very short time. The minimum investment is 7 million rubles, and the payback is about 8 months.
Perekrestok supermarkets pay special attention to product quality
Franchisor information
The first retail outlet called “Perekrestok” was opened back in 1995 in Moscow. The supermarket chain developed rapidly and by 2010 reached 2.7 billion dollars and 301 points in more than 20 cities of Russia and Ukraine. This number also includes 8 special “Green Crossroads” supermarkets, where, in addition to regular goods, they offer a variety of delicacies from all over the world.
The format of Perekrestok Express is convenient stores within walking distance with fresh bread, dairy products, vegetables, fruits, etc. Half of the entire retail space of the establishment is occupied by goods from the fresh and food & go categories. The range also includes related products, such as household chemicals, hygiene and office supplies.
Particular attention is paid to comfortable movement around the hall and selection of goods. The buyer of Perekrestok is a person with average income, so a democratic pricing approach has been chosen.
The Pyaterochka and Karusel stores belong to the same organization.
The secret of success of the Perekrestok network
The main idea of the Perekrestok chain is to offer the highest quality products. The stores constantly have a promotion “I am responsible for quality!” The buyer who finds the goods overdue receives a reward in the amount of the cost of the goods.
Due to a partial outflow of customers and high competition, Perekrestok underwent rebranding in 2014. The logo has been updated - now an element resembling a clover has been added, as well as a green background. This should suggest to the customer that the supermarket's main goal is fresh food. The organization of the sales floor and other areas have also undergone transformation.
The Perekrestok franchise supplies store shelves with a wide range of all product groups
Perekrestok franchise – price, features, advantages
Compared to other offers, the cost of a Perekrestok franchise is moderate.
Basic project prices:
- lump sum payment - 295 thousand rubles;
- royalty – 3% of gross revenue;
- marketing payments – no;
- insurance premium – 0.7% of the credit limit amount;
- agency fee – 25% of turnover (products from the franchisor come for sale);
- the cost of building a store is 10 thousand rubles/m2;
- purchase of cash register and retail equipment - 3 million rubles;
- advertising media and branded clothing – 180 thousand rubles;
- acquisition of an alcohol license - 450 thousand rubles.
Read also: Conditions and cost of the Sportmaster franchise
The total cost of launching a store of 200-300 m2 will cost 7 million rubles.
Peculiarities
The opening of the Perekrestok point takes place through reverse franchising. This means that the franchisor supplies 80% of the range of goods under an agency agreement. And based on the sales results, the franchisee receives his agency interest (25%).
Business indicators
Main indicators of the project’s attractiveness:
- payback 6-24 months;
- average monthly net income - 800 thousand rubles.
Note: practice shows that most supermarkets opened under the Perekrestok Express franchise pay for themselves in a period of one to one and a half years.
Advantages of the Perekrestok franchise
- Working under a well-known brand with a ready-made successful ideology.
- A single supply center also implies a single settlement center and deposit.
- Ready-made designs for the design of the sales area, shop windows and exterior.
- Developed assortment and pricing policy.
- To open a retail outlet, a launch command is provided.
- Software provision.
- Training.
- Organization of logistics.
- Support and supervision during the first two weeks.
- Consulting at all stages – each store is assigned a manager-consultant.
One of the main advantages of operating such supermarkets is the fact that goods are delivered by one transport from a single distribution center. About 80% of goods are supplied this way, which greatly simplifies the purchasing process.
Requirements for obtaining a franchise
The franchisor puts forward certain requirements for the premises and location where the new Crossroads is planned to be implemented.
Place to open a store
Key guidelines for choosing a location:
- A densely populated or actively developed area, as well as intersections of pedestrian or transport lines with active traffic.
- Good visibility of the sign from any angle at any time of the day.
- Availability of equipped entrances, parking and a comfortable pedestrian line.
- Availability of entrances on the rear side for trucks of Scania type dimensions.
- The purchasing power of the population is average or higher - the average bill is from 500 rubles.
- It is important that there are no similar stores within 150 meters.
Room
Key requirements for the premises:
- Total area from 120 m2.
- Availability of utility networks: water supply, sewerage, heating, ventilation, electricity with a power of 35 kW.
- Availability of fire safety systems with automatic fire extinguishing.
- Lighting: sales area – from 800 lux, offices and warehouses – from 400 lux, transport passages – from 200 lux.
- Availability of high-speed Internet and internal PBX with 5-7 lines.
- Availability of an unloading unit for pallets for 2-3 places.
Requirements for franchisees
Perekrestok franchisees must:
- register as a legal entity;
- have sufficient funds for investment;
- have the required premises in long-term lease or ownership;
- conclude service agreements: utilities, repair and construction, collection, etc.;
- obtain a liquor license;
- carry out repairs, decoration and equipment of the store.
Note: Most of the goods come from the X5 RetailGroup distribution center. However, alcoholic products are purchased directly from suppliers. This issue is supervised by the franchisee in accordance with contractual terms with alcohol suppliers.
They don't give you a receipt, the finished cutlets are raw inside, the staff is terrible.
Good afternoon. It so happened that I work at the Novospassky Dvor business center and for groceries I have to go to Perekrestok-Express on Derbenevskaya embankment.I already left a complaint about how, after paying for the purchase, I was told that no money had been debited from the card (although in fact the money had been debited), they say you should pay more. I refused to pay for the purchase again. The goods were not given to me. They didn't want to call the manager. As a result, a woman came up to me, without a badge, but clearly an employee of the store and just listened to my complaint (I was extremely calm and kind). As a result, they were rude to me and I realized that nothing could be done about it. The employees turn on the deaf and tight mask and say that no one is there, and they don’t solve anything.
They didn’t give me the purchase, they took the money from the card. (and have not returned it yet).
On the same day, I called the hotline service line of the Perekrestok store and left a complaint number 14451049 and told the whole story. The manager said that she had recorded everything and would solve everything. They will contact me and give me my money back. This story happened in early December 2015. Today is February 19th. And actually silence. I had already mentally given them my purchase, but there was still a residue. The amount is small, but the very fact of treating people is simply boorish. And as I understand, this case is not the only one, because my colleagues also encountered such an “interesting” way of stealing money. This way the world is probably doing well.
So here it is. I had already let go of this situation, when life again forced me to go to the nearest store, that is, there. Because there was an urgent need to buy food. And that's what happens again. They punched my purchase (and you will be surprised, but it was the same cashier as last time), I already paid in cash (remembering past experience). And I say, can I have a check? I asked him because I didn’t really know how much it would cost for the mug I chose. That is, I just became interested for myself. And then the cashier turns on the temporary “deafness”. I ask 4 more times. Each time increasing the volume of the request. And silence.....
I go up to the information stand, I think maybe there is a manager’s phone number or, for example, his name, but there is nothing on the stand......
After spending about 10 minutes searching, I realized that this was a lost place and that I would never set foot there again.
After another 20 minutes, I finally started eating. The food, of course, is ready-made and from the Perekrestok Express store. In short, the finished chicken cutlets turned out to be completely raw inside. I even photographed it all. And in the end, for the 500 rubles spent, I didn’t eat anything.
I decided to write this review because this place is terrible. People, don't go there.