Head of Dixy food chain: Russia’s economic woes mean opportunities for business

By Andrei Skvarsky.

Portuguese businessman Pedro Manuel Pereira da Silva, chief executive of Russian food retailer Dixy, argues that the current economic situation in Russia, though described by many as a crisis, means opportunities for business.

The performance of Dixy, where Da Silva has been at the helm since March 2016, appears to corroborate his point, which echoes Winston Churchill’s aphorism that “the optimist sees the opportunity in every difficulty”.

The food chain, the fourth-largest in Russia, opened 50 stores in the first half of 2016. Its total number of stores has more than quadrupled to nearly 2,800 since 2010, and its total revenues for 2015 amounted to 272.34bn roubles ($3.7bn), being 23.6 per cent up on 2014.

“There are several factors that have led to economic turbulence [in Russia]: sanctions, rouble devaluation and overall consumer confidence,” Da Silva said in an emailed interview with EmergingMarkets.me.

“But these times also give us new opportunities for improvements and new cycles of development. We have been focusing on looking for additional efficiencies and sustainable long-term relationships both with our partners and with our customers that can allow us to provide our customers with better value for money on a daily basis,” he said.

Russia’s drastically curtailed opportunities for borrowing abroad as a result of the Western sanctions are no snag for Dixy, according to Da Silva.

“We have quite a comfortable debt position,” Da Silva said. “Firstly the bulk of our debt is long-term, secondly all our debt is denominated in roubles and is borrowed from Russian banks. To make it even more comfortable, we successfully realise a programme aimed at decreasing the average interest rate for our debt portfolio.”

By the end of September, Dixy’s total reported net debt amounted to 29.6bn roubles ($471m).

Before taking over the reins at Dixy, Da Silva had spent a decade and a half working in the retail market in Poland.

First he headed Biedronka, a Polish no-frills supermarket chain owned by Portuguese food distribution and consumer goods manufacturing company Jeronimo Martins, and then was chief operating officer for Jeronimo Martins’s Polish business.

“These markets have a lot in common but each of them has its own characteristics,” Da Silva said when asked to compare doing food retail business in Poland and Russia.

“Russia is providing more opportunities taking into consideration the market size and consolidation phases in many different industries. Agribusiness is also a promising industry with a lot to happen in it,” he said.

“On the other hand, there is still a lot to be done in what concerns integration and efficiency in the supply chains. I do believe that importance of local and regional assortment will also play a bigger role in the near future.”

A key strategic principle of Dixy is proximity to people’s homes – the company seeks to mainly set up its supermarkets in residential areas to save people the trouble of travelling long distances to do their shopping.

“We are determined to be customers’ preferred store in the neighbourhood. A careful selection in the range of high-quality products, offered at everyday low prices, comfortable and pleasant shopping experiences complete with unique promos and temporary offers will have great importance for achieving the desired goals.

Dixy, which is controlled by Russian conglomerate Mercury Group, operates under the Dixy, Victoria and Megamart brands in about 800 cities and towns in European Russia and the Ural area.

A few weeks ago, Dixy organised a press tour of its business network in and around Moscow which included visits by journalists to two supermarkets, a distribution centre, and a confectionery factory that has a supply deal with the retailer.

The confectionery factory is owned by a small firm, Moscow Nut Company (MNC), which appears to be another success story: founded by two men in 1994, it has been able to weather all the financial storms that have swept through Russia and the rest of the world since then.

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