Russia's largest retailer introduces "reversed" franchising | RetailDetail

Russia's largest retailer introduces "reversed" franchising

X5 Retail Group, Russia's largest retail holding, chooses the system of “reversed franchise” to make expansion of their retail network easier. This new simplified system of franchising has a lower threshold for franchisees (lower costs, no monthly licence fee, no own purchase investments), but lets the franchisee keep a commission of 13 to 18% of his business's turnover. This reversed franchise system had been announced in April last year and has been tested since November. 

Like a store manager

From a Western point of view, such a “reversed” franchisee is more like a store manager than like a real franchisee, but in the Russian market this could be a huge step to fully introducing the franchise system. It is very possible that entrepreneurs want more after experiencing this system's success and turn their business into a “hard franchise”. 

Merger in 2006

The rapidly growing X5 group was formed in 2006 by a merger of soft discounter Pyaterochka and supermarket chain Perekrestok and was expanded in 2008 with hypermarkets Karusel and again in 2010 with Kopeyka.  20% of the chain's 3400 stores are managed by (hard) franchisers, The group wants to use the new system mainly to expand in the region around Moscow and in the city of Nizhny Novgorod, 400km to the east of the capital. 

Paul Martins joins

These expansion ambitions also reflect in changes in X5's management team, as the group announced that Paul Martins, ex-Casino and now Tesco, will join the board of management next Saturday as commercial director. 

X5 Retail Group, Russia's largest retail holding, chooses the system of “reversed franchise” to make expansion of their retail network easier. This new simplified system of franchising has a lower threshold for franchisees (lower costs, no monthly licence fee, no own purchase investments), but lets the franchisee keep a commission of 13 to 18% of his business's turnover. This reversed franchise system had been announced in April last year and has been tested since November. 

Like a store manager

From a Western point of view, such a “reversed” franchisee is more like a store manager than like a real franchisee, but in the Russian market this could be a huge step to fully introducing the franchise system. It is very possible that entrepreneurs want more after experiencing this system's success and turn their business into a “hard franchise”. 

Merger in 2006

The rapidly growing X5 group was formed in 2006 by a merger of soft discounter Pyaterochka and supermarket chain Perekrestok and was expanded in 2008 with hypermarkets Karusel and again in 2010 with Kopeyka.  20% of the chain's 3400 stores are managed by (hard) franchisers, The group wants to use the new system mainly to expand in the region around Moscow and in the city of Nizhny Novgorod, 400km to the east of the capital. 

Paul Martins joins

These expansion ambitions also reflect in changes in X5's management team, as the group announced that Paul Martins, ex-Casino and now Tesco, will join the board of management next Saturday as commercial director. 

Questions or comments? Please feel free to contact the editors


Adidas wants to strengthen bond with small retailers

15/07/2018

German sportswear giant Adidas says it wants to strengthen its bond with small-scale retailers after they claimed Adidas is too aggressive in pushing its web shop, especially as they feel the brand is favouring large international chains as well.

Several candidates to take over Men at Work

12/07/2018

There are several takeover candidates for both the Dutch and the Belgian stores of the bankrupt clothing chain Men at work. The curator is confident an agreement should be reached today in Belgium.

Burberry sales increases thanks to new strategy

11/07/2018

The new strategy of the British fashion brand Burberry starts to render: the company had a 3% increase of revenue in their own stores last quarter. In total, Burberry has now a revenue of 479 million pounds (520 million euros).

FNG moves to Brussels stock exchange

06/07/2018

Belgian fashion group FNG has collected 60 million euros by issuing new shares. The new shares will be traded on the Amsterdam Stock Exchange and - for the first time - on the Brussels Stock Exchange as well.

Athleteshop ends its run

02/07/2018

Dutch sports web shop Athleteshop has filed for bankruptcy, after an abysmal year in which strings of complaints led to all sorts of problems. Social media and review sites were flooded with customers complaining about late deliveries.

Alibaba goes Turkish with stake in Trendyol

29/06/2018

Alibaba is the new strategic partner of Trendyol, one of the best-known e-commerce companies in Turkey. With this partnership, the Chinese retailgroup strengthens its presence in Europe.