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. Last Updated: 07/27/2016

Store to Offer Discounts at Your Convenience

For MTShopping online or using Utkonos' automated telephone system will entitle the customer to an extra 2 percent off his total bill.
Utkonos, a new convenience store chain for busy shoppers and thrift hounds, is coming to Moscow.

"Our prices will be 15 percent to 20 percent lower than the average retail prices in the area because we save money on staff and real estate costs," said Ivan Tukmachyov, spokesman for Utkonos, which is managed by the Novy Impuls holding company.

Novy Impuls plans to cover all of Moscow with what it touts as "cybermarkets," or "stores of the future."

Like traditional convenience stores, Utkonos has an assortment of basic goods that can be purchased on the spot. However, customers in a hurry can instead choose to use special computer terminals to choose the items they need.

The online option means that Utkonos needs fewer employees than a traditional supermarket and shopping time can be kept to a minimum.

"The customers will spend no more than five minutes at our stores," Tukmachyov said. "It's for those who value their time."

In order to be able to log on to the system, first-timers need to get a complimentary frequent customer card from the store's management. The card allows customers to get access to the system at a computer terminal in the store, or at any computer with Internet access, to fill their virtual shopping basket.

"The card automatically memorizes the items each shopper normally gets, creating a 'favorites' list," Tukmachyov said. "This allows for even faster shopping because by choosing the 'favorites' option, a customer can instantaneously fill the basket with everything on the shopping list."

Orders can also be placed via the telephone, either with an operator or through an automated system.

By shopping online or using the automated system, the customer will be entitled to an extra 2 percent off his total bill. But since goods purchased at the store do not conserve space and thereby help cut real estate costs, their price will be no more than 5 percent lower than regular retail prices in the area.

Goods ordered online or using the automated system are delivered to the store from the warehouse and can be picked up and paid for the day after the order is placed. For now, there is no home delivery service, but Tukmachyov said it is likely to be developed in the future.

"Some come in for the discounts, while others shop [at Utkonos] to save time," Tukmachyov said of the stores that already operate in the Moscow region towns of Zelenograd and Mendeleyevo. There are plans to open 20 more stores in Moscow within the next six months, and more than 300 will spring up in two to three years, covering all of the city's districts.

Retail analysts were cautious about the potential success of the Utkonos chain. According to Aton, Moscow boasts an Internet penetration of between 15 percent and 20 percent, which means more than 1 million people with web access. But while Russian shoppers are continuously becoming more Internet-savvy, the Moscow e-commerce market is still in its infancy.

Alexei Yazykov, Aton's consumer market analyst, said that one factor against Internet shopping is that people tend to make purchases on impulse.

"When you come to a store, you don't know yet what you feel like buying," he said.

For this reason, Utkonos might come up against competition from the likes of Shagmag, another new convenience store chain, which is planning to expand across southern Moscow in 2005. While Shagmag stores do not offer Utkonos' low overheads and virtual shopping basket, under one roof they provide a "one-stop shop" of services ranging from groceries to shoe repairs and a dentist.

However, the Sedmoi Kontinent supermarket chain, which launched its Internet shopping option in 2002, demonstrates that Internet trading in Russia can turn a profit, even if it is not associated with discounted groceries.

"Internet sales return grew from 25 percent in 2003 to 33 percent in 2004," said Sedmoi Kontinent's public relations manager, Anna Zaitseva, adding that the gross receipts increased from $3.9 million in 2003 to $6 million in 2004. The company receives around 300 orders a day via the Internet and telephone.

In contrast to Utkonos, Sedmoi Kontinent offers a free home delivery service. Aton's Yazykov was skeptical that people would be willing to pick up their goods from an Utkonos store.

"Internet shopping was designed to free people of the need to fetch their purchases," he said.

Chris Skirrow, a retail expert and partner with PricewaterhouseCoopers, said the Utkonos project is "generally an interesting idea," but factors such as the assortment of goods offered, the store's reputation and geographic coverage would eventually determine its success.

Staff Writer Maria Levitov contributed to this article.