(Reuters) – Russia’s Magnit supermarket chain launched its first “hard discount” stores under a new brand on Tuesday, the company said, as falling living standards and rising inflation push Russian consumers to search for lower-ticket items.
Magnit said the new “V1” – which stands for “First Choice” in English – brand will focus on basic products, including fruit, vegetables and bakery goods, carrying a narrower range of items than the chain’s existing stores.
Russian shoppers have faced surging prices and falling incomes in the year since the Kremlin ordered tens of thousands of troops into Ukraine a year ago, hitting spending power and boosting demand for cut-price goods.
Discounters have posted strong results, attracting traditional retailers to the accelerating market.
Fix Price on Monday reported a 20.5% jump in revenue and a 27% increase in operating profit last year as Russians reined in their spending.
“Discounter stores remain one of the fastest-growing market segments and maintain high potential for future development,” Anzhela Ryabova, Magnit’s director of hard discounter format, said in a statement.
Magnit said it plans to open 15 pilot V1 stores in the Moscow Region “in the nearest future”. The stores will carry dedicated private label items and display items in pallets or boxes, as well as being more dependent on technology, such as self checkouts, to keep costs down.
Magnit already operates another line of discount stores under its “My Price” brand.
(Reporting by Jake Cordell; Editing by Kirsten Donovan)