Magnit: winning by embedding its new business structure

Date : 01 April 2021

Amin Alkhatib

Senior Retail Analyst

Magnit is in the middle of a business transformation programme. It is implementing six strategies to turn around its business and as it looks to support its dynamic growth strategy, and compete with other leading retailers in Russia.

Since 2018 the retailer has reported an improving sales performance with a sales CAGR of 11.4% between 2018 and 2020, when compared to a 6.7% rate for the period 2016-2018. It also reversed its three-year decline in like-for-like sales, enjoying growth in 2019 and 2020, of 0.4% and 7.4%, respectively.

Source: IGD Research, Magnit

Magnit’s growth plan built around a focused strategy

The retailer is expected to grow sales at a rate of more than 10% annually to 2023, above the market growth rate of 4%. Much of this growth is attributable to the vast number of new store openings it is planning, with it looking to open a few thousand each year in the timeframe to 2023.

To support its growth, Magnit is focusing on six strategic priorities that will either help existing stores to boost their sales per sq. m., or new stores to maximise their opportunity to attract shoppers and grow average basket sizes.

Magnit’s six strategic priorities

The retailer’s strategy is focused on improving and tailoring its store portfolio, services, and products to help it target a wider range of shoppers. These will help it boost its sales per sq. m. and margins.

Source: IGD Research, Magnit

COVID-19 had little impact on plans

Magnit remains focused on growing its store network and expanding its retail ecosystem and omnichannel offer into new areas. It is also increasing its commitment to becoming a more sustainable and responsible retailer. Finally, it is quickening the pace at which it implements initiatives aimed at helping it meet more shopper missions through tailored store and customer value propositions.

Multiformat development: beyond convenience and online

Magnit has been diversifying its format portfolio, expanding its presence beyond its core convenience channel. So far in 2021 it has launched a kiosk format, under the banner Magnit Go (or M Go), online delivery services, a discount banner Moya Tsena (Our Price), and reentered the hypermarket channel with Magnit Extra.

Source: Magnit

These steps illustrate how Magnit has been considering the nuances of Russian shopper demographics and is looking beyond price competitiveness to build a value proposition around needs and missions.

Want more insight on Magnit?

To read more about Magnit’s plans for 2021 and onward, subscribers can read Strategic outlook for Magnit.