OREANDA-NEWS. October 29, 2009. The first hypermarket of "Lenta" retail network outside Saint-Petersburg was opened at Gusinobrodskoye Shosse in Novosibirsk on October 21, 2006. That was the beginning of Lenta's regional expansion. Nowadays, 22 Lenta stores are serving its customers in 16 cities of Russia. They have generated 50% of the network's turnover in the 3-rd quarter of this year

Three years ago the management made the decision regarding the company's regional development.

Siberia was chosen as the starting-point of this process. Siberian Federal district occupies 30.1 % of the territory of Russia, with 13.8 % share in the country's total population. No major commercial trade networks existed in central cities of this huge region before, while the presence of modern retail trade format was insignificant. However, the level of effective demand in Siberia is high enough: according to Rosstat, in 2007 the Siberian federal district held the fifth place by the level of monthly average incomes, and the fourth place - by turnover of retail trade per capita.

Four "Lenta" hypermarkets work in Novosibirsk today. It is the second region in Russia by the number of Lenta trade stores. Its contribution to the total company's turnover is over 10 %.

It is not a secret that competition in Novosibirsk is rather tense: the density of hypermarkets per 100 thousand inhabitants exceeds one, which is close to limit. Other segments of food retail are less saturated, however serious competition is observed both among supermarkets, and discount stores.

"Hypermarkets of Lenta network in Siberia are rather perspective, so we lay our big hopes there. The trade store in Gusinobrodskoye Shosse is located favorably from the point of view of its potential attendance ratio – close to large residential area, with a busy traffic stream passing nearby. The shop in Bolshevistskaya Street is built in the prospective district with infrastructure less developed right now. The store of Kirzavodskaya Street is located at the boundary of the town: citizens can do all necessary shopping on the way to their summer residences. The hypermarket in Energetikov Street is close to Dimitrovsky Bridge connecting the city's two coasts", - says Anna Bogush, Director for Siberia-Urals region.

Before "Lenta" came to Siberia, the market was dominated by local players, and in 2007 Metro and Achan appeared and made their contribution into the local competition. According to telephone inquiries (conducted by an independent research company WorkLine), in the first half of 2009 the share of federal players of retail networks reached 50 %.

The share of "Lenta" in Novosibirsk market of retail trade is steadily growing, and today amounts to 23 %. About 60 % of Novosibirsk inhabitants have visited "Lenta" at least once ***. More than 250 thousand of Novosibirsk residents hold Lenta cards as regular customers of the network.

Winning a considerable share of the market in the region was possible due to Lenta's basic competitive advantages: low price level and high quality of goods and services.

According to price monitoring for July - September, 2009, conducted by companies Mix Research and "The World of foodstuffs" and ordered by "Lenta", the price level in "Lenta" is 14 %* lower than that of its closest competitor. Buyers' satisfaction with price level in "Lenta" in Novosibirsk averages to 70 %, service level - 74 %**. More than 80 % of those interviewed are ready to recommend "Lenta" to their relatives and friends.

Despite the general decrease of retail trade turnover in this country, the average paycheque in "Lenta", in the period from January to September 2009, has increased, including Novosibirsk, – by 7 %.***

During its work in the regions "Lenta" has promoted the development of local suppliers. Today their share in the network supplies in Novosibirsk amounts to about 30 %. About 70 local companies are among Lenta's suppliers in Novosibirsk: LLC "Siberian Food Company", LLC "The First Cereals Company", LLC "Каrachinsky Istochnik", Joint Stock Company "Novosibirsk Integrated Poultry Farm" and others. Due to cooperation with "Lenta" local suppliers expand their seller's markets: LLC "Siberian Food Company" (meat products), JSC "Novosibirsk Canned Meat Factory", LLC "Integrated Poultry Farm Inskaya", LLC "Pure Water Company" carry out supplies to all Lenta stores in the Siberia-Urals region. Among suppliers are also manufacturers of goods bearing private trademarks of "Lenta" retail network: LLC FSP Incorporated Bakeries (bread "365"), LLC "Sibinvestprom-3" (toilet paper, napkins "365") Berdsk, LLC "The First Cereals Company" (cereals "365"). The network will keep promoting further cooperation with local and regional manufacturers.

Delivering the necessary quantity of the goods to trade stores in due time became possible after we have rented a warehouse in Novosibirsk (total area 25000 sq.m.). It works similarly to the distribution centre in Saint-Petersburg and carries out deliveries to 8 hypermarkets of the retail network in Siberia: Novosibirsk (4), Omsk (2), Barnaul and Tyumen.

"During our work in Siberia we have become one big family, strong and friendly as Siberian families are: four of our Lenta stores employ about 1300 people", - says Tatyana Antonova, deputy director of human recourses of "Lenta" company.

* average data through cities of the Siberia-Urals region

** data of telephone inquires conducted by independent research company Work Line in September 2009

*** Lenta's internal data