Install

Get the latest updates as we post them — right on your browser

. Last Updated: 07/27/2016

Kopeika Discount Chain Grows Rapidly




Discount supermarket chain Kopeika opened its 14th Moscow store Monday and plans to open its 20th outlet by year-end.


The first Kopeika, or Kopek, discount store was opened in May 1998 and, despite the crisis, it hasn't looked back.


Kopeika, whose goods are mostly locally made, declined to say who its owners are or reveal its financial statistics.


Prime-Tass has reported that Dialog-Optim bank had given a $3 million credit to develop the supermarket chain.


The general manager of the chain, Alexander Samsonov, was not available for an interview Monday.


Customers on Monday morning packed the square in front of the supermarket where they used to celebrate the New Year in the southeast suburb of Solntsevo for the official grand opening of the new supermarket.


The opening had already been postponed from Friday and on Monday was delayed about two hours, but the store was still crowded in the afternoon and cashiers struggled to cope.


Vasily Barbashev, manager of the Solntsevo store, was at first reluctant to give an interview because of the hiccups over the opening.


He said Kopeika had no competitors close to his store, though Perekrestok and Prodmak stores were operating in the same market niche.


"But I do not think they are competitors to us, we have our own loyal customers," said Barbashev.


Inside the store two old women were comparing prices.


"The sausage is very expensive f 98.29 rubles ($3.53) [per kilo]. In the outdoor market I can buy it for 87 rubles," one said.


"And the pepper costs twice as much here, let's get out of here," said the other.


After making her purchases, Svetlana, a middle-aged woman said: "I like it here and prices are not high.


"Of course, products like fish and meat are cheaper to buy in the market, but water, cigarettes, milk products, preserves are very inexpensive in this store. And most of all, for spending more than 500 rubles I got the book 'Secrets of Home Cooking,' as a bonus. I am very glad."


Others in the store praised the cheap price of beer at just 8 rubles a bottle.


Analysts said more and more discount stores could be expected in Moscow as the city government closes down outdoor markets.


"These kinds of stores are alternatives to markets," said Natalya Oreshina, an analyst at real estate agency Stiles & Riabokobylko


"They are mostly situated in the suburbs of Moscow, because the percentage of potential customers is very high and the rent price is low."


"All chains are competitors to each other. Kopeika has a limited assortment, but low prices," said Natalya Osipova, of Colliers HIB.


"And that part of the population who feel the difference in prices even down to the kopek will go there.


"But anyway, I think they will have to fight with Perekrestok."


Vadim Zuikov, president of the national trade association, also pointed to the closing of outdoor markets as influencing Kopeika's fate.


"Generally, these shops have very good prospects. In three to four years the outdoor markets will be closed in Moscow and customers will be looking for substitutes," he said.


However, the problem for discount stores is that they can have longtime life only if they keep prices low.


If the prices are average, in five years when Western companies come to the Russian market they will be bought out or they will become bankrupt.


"But if they really can keep prices really low they have a future. But these stores will only be able to make profits by having 50 or more supermarket s: Firstly, they will have high turnover; secondly, because of the big discounts from producers and distributors," Zuikov said.


"And when Western discount store chains come to Moscow, Russian chains will be able to make good competition for them."


Competition may be on its way much sooner than Zuikov expected.


Spar, the largest supermarket chain in the world, announced last month that it and a local partner have intentions of opening 30 local stores within the next three years.