French DIY Retailer Leroy Merlin To Increase Store Openings in Russia As Revenue Increased 30% in 2014

Posted: April 24, 2015 in Econ 101, Free Trade, Sanctions on Russia Meaningless

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Leroy Merlin will accelerate the opening of stores in Russia

Apr 22, 2015

French retailer Leroy Merlin, working in the DIY sector (construction materials, goods for home repair), plans to accelerate the expansion of the network in Russia and expects slower growth in revenue this year. As reported “Interfax”, said the General Director of the company in Russia Vincent jeanty at the forum “Russian retail”.

According to him, in 2015, Leroy Merlin plans to open in Russia for 10 new stores versus 6 in 2014.

The benchmark for Leroy Merlin is the opening 20 hypermarkets in Russia in the year and expand the network to 120 stores in 2019. The Russian market has great potential for the development of DIY retail, and the company plans to invest even more in the opening of new stores in the next five years, said jeanty.

In the future growth drivers of the DIY market in Russia will improve living standards and the spread of the practice to do repairs on their hands, said jeanty. According to him, the potential of the Russian market for the next 10 years to open about 500 DIY hypermarket with an area of 10 thousand square meters and the same area of 5-6 thousand square meters.

By the end of 2014 revenue growth Leroy Merlin in Russia exceeded 30 percent. In 2015, the year the retailer expects slower sales growth. “This year – it’s hard to say, I think that will be more than 20 percent. Depends on the speed of development”, – said the head of the company in Russia.

Retailer opens stores in cities with a population of 400 thousand people, priority is megacities. In the medium term, the company plans to enter in the city with a population of about 200 thousand people with more compact format stores. Now trading the standard size of a hypermarket is 10 thousand square meters.

In December last year, the market saw high demand because of the desire of consumers to purchase goods at the old prices. The retailer had problems with vendors who demanded to renegotiate contracts and to increase procurement prices due to the devaluation of the ruble. In the first quarter of 2015 sharp decline in demand has occurred. The situation with suppliers stabilized and the growth of prices on the market amounted to about 10 percent.



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