Neighbourhood grocery retailer Pyaterochka admitted at an analyst meeting that profit margins are a concern for the group and that there is little room for more cost efficiencies, so it hopes to renegotiate supply contracts in a bid to increase profits.
The company said that the reorganisation of its purchasing plans will focus on the centralisation of its buying in three core areas: the Urals, Southern Russia and Povolzhiye, along with an increase in the number of goods channelled through logistics centres.
The move will involve the introduction of in-house logistics, with a target of 2 per cent to 3 per cent increase on margins for the retailer.
The company also told analysts it hopes to boost efficiency through buying out more of its franchises during this year.
Pyaterochka is keen to generate significant cost savings to invest in the continued expansion of its hypermarkets, supermarkets and discount-store formats.
Founded in 1999, Pyaterochka has 347 fully owned stores and 404 franchise operations, predominantly based in Moscow and St Petersburg. It launched an IPO on the London Stock Exchange last year and the company chairman is David Noble, a former main board director of UK supermarket group Somerfield.
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