Grocery business

The Company operates on the Belarusian retail market, one of the fastest-growing retail markets in Europe, with strong fundamentals for further robust growth. The main engine for growth is modern retail formats, which are increasing market share and displacing traditional retail formats. Sales in modern retail format stores are expected to grow at a CAGR of 15% between 2017 and 2022 – the highest rate in Europe.

The growth potential of modern format retail is underpinned by a low level of penetration compared to other markets. According to BCG, the share of modern format retail sales in Belarus in 2017 (46%) is comparable to Poland more than 10 years earlier.

Eurotorg is the undisputed leader in the Belarus grocery retail market, with market share in 2018 of approximately 19% of the overall food retail market. In the modern format grocery retail market, the Group’s 2018 market share was approximately 39%, more than 5 times larger than the second player (unprecedent level in the global context) and higher than the combined market share of the next seven competitors. Eurotorg has also built up an enormous gap by geographic coverage, covering approximately 150 localities without any modern retail competitors.

Eurotorg operates four different store formats, from convenience stores to hypermarkets. Since 2017 the Company has been focusing on developing smaller formats. In 2018 the Company entered rural localities with a favorable competitive landscape (very limited number of modern format players). The Group has strong expertise operating smaller convenience stores that fit well in rural areas. Moreover, the Company enjoys strong supply-chain competitive advantage – due to high density of its stores, Eurotorg is best-positioned to arrange cost-efficient logistics to rural stores.

Format Banner Avg selling space, sqm Location % of net retail sales
Rural convenience
| Minimarket
63 Rural settlements with population of <2 ths. people 1%
Urban convenience
| Market
232 Urban settlements/cities, within walking distance for target customers 44%
| Super
887 Densely populated city districts 23%
| Hyper
3,036 Close to transport routes in urban settlements with population of >50 ths. people 32%
As of 31.12.2018 or in 2018

This diversified multi-format chain model enables the Group to meet the different consumption needs of its customers, from daily neighbourhood to basket family shopping, and to penetrate any particular location in Belarus based on the size of the local population and potential customer base. The Group has a strong position across all formats and all types of localities in Belarus, with more sizeable gap vs the second player in smaller formats and in smaller cities.

The Company’s strategy, based on offering a focused assortment of high turnover products at market-leading prices, delivers a value proposition that is well-tuned to the needs of Belarusian consumers. Eurotorg’s focus on value enhancement for customers enables the Company to achieve an outstanding level of loyalty (74% of purchases made with loyalty card) and become the store of choice for 43% of Belarusians, according to BCG.

The in-store shopping experience is enhanced by unmatched marketing campaigns, such as the nationwide lottery “Udacha v pridachu” and the Bonsticks collectible toys marketing campaign. These marketing campaigns complement Eurotorg’s product offering with emotional elements. Since the launch of “Udacha v pridachu”, over 2 million unique customers (or more than 20% of the population of Belarus) have participated in the lottery draws.