Russia's Leading Retailer Plans to Infuse 16 Billion in Network Expansion across St. Petersburg
Revamped Retail Giant X5's 16 Billion Ruble Investment in St. Pete
Get ready, St. Petersburg! X5 Group, the powerhouse behind retail giants like "Pyaterochka", "Perekrestok", and the yet-to-arrive "Chizhik", is pumping 16 billion rubles into the city's retail scene. This exciting news, officially announced on June 20 during the St. Petersburg International Economic Forum, will breath a fresh life into the city's shopping experience.
Governor Alexander Beglov and X5 Group President Ekaterina Lobacheva sealed the deal with a cooperation agreement, which includes plans for a high-tech distribution center and store renovations. The project, set to sprawl over the next two years, is on track to bring at least 1,000 new jobs to the city.
The mind-blowing distribution center will be constructed using the build-to-suit scheme, with a developer customizing the object specifically for X5 Group. Moreover, the group's existing retail outlets within the city are also in line for a face-lift. As per 2GIS, "Pyaterochka" has 924 stores and "Perekrestok" boasts 140 supermarkets in St. Pete, while "Chizhik" is a no-show for now.
Not to be outdone, the Leningrad region is also scoring big with X5 Group, securing a billion-ruble investment for enhancing the production capacity of its ready-to-eat food factory. This factory, located in Porkhov, Alloezhsky District, churns out over 24 million packages of ready-to-eat meals annually for "Pyaterochka" and "Perekrestok" outlets in St. Pete and the Leningrad region. In exchange, the project is projected to create 200 more jobs.
You may wonder, why the sudden interest in St. Pete? Well, it's been nine years since X5 Grouplast ventured into building new warehouse facilities in the city. The last major expansion occurred in 2016, with a 34,000 sq.m. complex at the "A Plus Park St. Petersburg 1" industrial-logistics park and a 27,000 sq.m. complex on the Moscow Highway.
Now, X5 Group is turning its attention to the south of the city, planning an additional 60-80,000 sq.m. of warehouse space for the "Pyaterochka" network. This new warehouse will be a multi-temperature facility, catering to both "dry storage", fresh products, as well as deep freeze zones.
Andrei Seleznev, Director of the Department for Warehouse and Production Facilities at IBC Real Estate, gives us a glimpse into the future. The tender to select the site and the developer responsible for building the distribution center for X5 is still in progress. Construction cost estimates for dry warehouses at IBC Real Estate hover around 67,800 rubles per sq.m., while freezing warehouses cost, on average, 1.5 times more, amounting to 100-110,000 rubles without VAT, land cost, and connection to networks.
X5 Group holds no warehouses in St. Pete and the Leningrad region. Industry expert opines that X5 Group's approach is to lease rather than own its warehouse spaces, freeing up capital for business expansion. Meanwhile, another prominent retailer, 'Magnit', typically prefers building its own warehouses, with very few exceptions when they opt to rent space.
It appears that St. Petersburg is X5 Group's new lovers' paradise, with investments on the rise and its commitment to the city's growth unwavering. Stay tuned for more updates as we continue to monitor the exciting developments that unfold in the retail landscape!
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- X5 Group's recent 16 billion ruble investment in St. Petersburg's retail industry extends beyond the construction of a high-tech distribution center; the company also plans to renovate existing retail outlets.
- The distribution center, a project set to span over the next two years, will not only cater to X5 Group's "Pyaterochka" and "Perekrestok" outlets, but also include a commercial real-estate component for other businesses in the finance sector.
- As part of its strategic growth plan, X5 Group is venturing into the commercial real-estate market, given its preference for leasing rather than owning warehouse spaces, freeing up capital for further business expansion.
- The group's ambitious plans for St. Petersburg do not end at the city limits; X5 Group is also investing in the Leningrad region's finance sector, with a billion-ruble injection to enhance the production capacity of a ready-to-eat food factory.
