X5 Retail Group, one of Russia's leading multi-format retailers, has signed a partnership agreement with major pharmaceutical distributor SIA International.
The agreement grants the right of first refusal to open pharmacies inside X5 stores based on market rates. It is planned for over 3,300 pharmacy outlets to be opened inside the Pyaterochka, Perekrestok, and Karusel retail chain stores by end 2020.
The cooperation arrangement will create a synergy between the X5 retail chains and the lessee to boost traffic and convert that traffic into earnings, while customers will gain additional services. SIA International will locate its pharmacies in the X5 stores under two brand names – A-Mega discount pharmacies and Da Zdorov for middle class customers. Pharmacy floorspace will range from 20 to 200 sq.m. The pharmacy outlets will mostly be located at the cashier zones in the X5 chain stores (Perekrestok, Pyaterochka, and Karusel), but also on the shop floor of the Pyaterochka supermarkets as a shop-in-shop. Each pharmacy will carry 8,000 products.
SIA International plans to open more than 170 pharmacies in spaces leased from X5 in Moscow and Moscow Oblast by end 2016. Later, they will be located in all regions where the Pyaterochka, Perekrestok, and Karusel retail chains have a presence. Under a pilot project, 57 pharmacies have already been opened since July 2016 through the present. Investment in the project by the SIA International shareholders will be up to RUB 6 billion.
In SIA International the project will be managed by Andrey Gusev, who formerly headed and ran the development of the Rigla and A5 pharmacy chains.
"Cooperation with one of the largest national pharmaceutical distributors is in accord with our strategy of developing partner relationships in priority categories of "additional services" and providing a comprehensive range of products and services in the X5 retail chain stores," X5 CEO Igor Shekhterman said.
"The effect of synergy will be achieved by our experience and specialized logistical network," SIA International President Sergey Piven said, "plus the potential for rapid growth in the number of outlets, stable and predictable traffic in the X5 stores, and precise segmentation of the target audience into which the formats of our pharmacy project fall 100%.