X5 is Russia’s largest grocery retailer by revenue. It holds and operates various major grocery retail brands, including Perekrestok and Pyaterochka, which are staples of Russian neighborhoods and daily life in Russia’s more populous Western half. Pyaterochka, a discount convenience brand, comprises the vast majority of X5 stores. Perekrestok has about 600 mid-range supermarkets. The company also runs the Karusel brand of approximately 90 hypermarkets (a very large store that sells both groceries and other consumer goods) which are usually located just outside of major cities. In 2017, X5 operated 12,000 stores and handled $22 billion in gross revenue across Russia and Ukraine.
X5 began operations in 2006, with the merger of Perekrestok (founded 1995, Moscow) and Pyaterochka (founded 1999, St. Petersburg). It has since expanded via natural growth and additional mergers – particularly by buying larger brands in Russia’s regions and rebranding them. X5 is part of Alfa Group holdings, a massive conglomerate associated heavily with Russian billionaire Mikhail Fridman.
Interestingly, X5’s official documents list the company as being founded in 1975, and it is headquartered in The Hague, Netherlands. However, the company’s operations are almost entirely based in Russia and it appears to have no recorded activity prior to 2005, meaning that an older Dutch structure was probably bought and renamed to facilitate the original merger and provide legal and tax benefits.
The company is in good financial health with revenues of $22 billion in 2017. X5 and Magnit are far and away the market leaders in Russia’s robust grocery store industry. One estimate puts X5’s market share in 2016 at 12.7% in 2016, with a projected share of 21.5% in 2021. The firm is also still expanding its operations. It added around 2000 stores in both 2016 and 2017, pushing farther east into Russia, where it did not yet have a strong presence. The Leningrad region around St. Petersburg is now so saturated with company stores that some have been closed to consolidate and streamline positions after heavy market acquisitions.
The financial and political crises of 2014 negatively affected X5’s business. However, in quickly rebounding from the effects of crises, the company has gained positive trajectories, such as a growing emphasis on sourcing products domestically or at least from cheaper non-European sources. These trends were triggered by counter-sanctions that banned food imports from Western countries into Russia.
Overall, X5 is a growing industry leader in Russian grocery stores. With a range of low-end convenience stores, mid-range stores, and hypermarkets, it looks to jump ahead of its closest competitor, Magnit. For now, the company is in a good position, particularly in western Russia.
A history of X5 from 2012