Russia’s X5 Retail Group Highlights Worker Shortage As Key Challenge

By: Trademagazin editor Date: 2024. 10. 08. 09:03

Labour shortages will be a major challenge for Russia’s largest food retailer X5 in the next decade, CEO Igor Shekhterman said, as he forecast sharp business growth over the next few years.

Unemployment in Russia is at record low levels, aggravated by a military mobilisation in 2022 and the emigration of hundreds of thousands of people since Moscow sent troops into Ukraine, and many state officials have flagged labour shortages as a key concern for the Russian economy.

X5 is turning to automation and robots to combat staff shortages, which Shekhterman said would be one of the company’s main challenges over the next 5-10 years.

Russia’s trade, logistics and catering sectors could be short of 230,000-500,000 people by 2028, he said.

Growth Forecast

He forecast X5’s business would grow by 24%-25% this year and by at least 17-18% each year up until 2028, while the wider market expands at 9%-10% annually.

He did not specify whether he was talking about sales, revenue or another measure of business growth.

The company forecasts its market share will grow to at least 20% by 2028 from close to 15% now as consolidation in the sector continues, Shekhterman said, while presenting the group’s strategy at a forum in Moscow.

X5 expects that Chizhik, a budget food store chain it launched in 2020, will almost double its market share of the discount segment in Russia to 30% in the coming years.

In 2028, X5 aims for Chizhik to generate 1 trillion roubles (€910 million) in revenue, Chizhik’s head Ilya Yakubson said.

X5 is also seeing very fast growth in its online delivery business.

“There are challenges here,” Shekhterman said. “They are primarily related to cost and sometimes to the lack of couriers.”

ESM