Even today, there are huge Russian companies about which there is almost no public information. This week, The Bell published a long article telling the story of one of them: a Russian Walmart copy-cat known as Svetofor. With 2020 revenue of about $2.5 billion, this Siberian company recently became Russia’s fastest-growing supermarket chain.
- “When I first ran into [the owners of Svetofor] it drove me fucking nuts that they were so secretive,” said one veteran of the retail market. “I liked the concept and tried to set up a meeting through some mutual acquaintances. Nobody even called me back! That’s not how we do things in retail. Everyone talks to each other.”
- The mysterious owners of Svetofor, who never give interviews, are Sergei and Andrei Schneider — two brothers from a family of German origin. They founded the company in 2009 when it seemed the leaders in Russian retail were unassailable. But Svetofor was very successful at copying the Western discount store format and managed to create a retail chain where prices were at least 20 percent lower than its main rivals.
- Like everyone in Russian retail, the Schneiders’ model was Walmart in the U.S. and Germany’s Aldi and Lidl. But Svetofor went further. A typical Svetofor store is a 1,500 square meter concrete box in a grimy city suburb, stacked from floor to ceiling with pallets of ultra-cheap goods.
- The chain will go to any lengths for low prices (for example, buying up goods close to their expiration date) and opens stores in places that other supermarkets won’t go. The Schneiders assumed shoppers would come to them if the price was right – and it was.
- Steadily falling salaries in Russia have been one of the key reasons behind Svetofor’s success, pushing shoppers into low cost stores. It has also forced Russia’s undisputed retail market leaders – X5 Retail Group and Magnit – to enter the budget sector. Both announced the launch of their own discount chains — Chizhik and My Price respectively — last year.
Why the world should care
Svetofor’s story is a perfect illustration of the state of the Russian economy. Now, Svetofor is going global (it can already be found in Germany, Latvia, Lithuania, Estonia, Poland, and Serbia). Future expansion is planned for Spain, France, Greece and even the U.S. and the United Kingdom.