Public Joint Stock Magnit : Magnit Opens Its First Supermarket under the New Concept

Press-Release | Krasnodar | November 20, 2019

Magnit Opens Its First Supermarket under the New Concept

Krasnodar, November 20, 2019: The retail chain has reimagined the concept of its compact urban hypermarkets and presented its first superstore-an updated store under the new format.

The outlet with a sales floor of 2,350 sq. m is a revamp of an existing Magnit Familty hypermarket located inside the city boundaries within customers' walking distance.

One of the main changes-the Company significantly broadened the product range, which is now differentiated from the assortment in convenience stores and selected in accordance with customer preferences. The main focus is on the Fresh and Ultra-Fresh category, products from local suppliers, unique private labels manufactured at Company facilities-such as Magnit Freshness-as well as direct import products. At the same time, the Company refined the non-food categories and developed a comprehensive offering of household, children's, and family products.

Magnit completely redesigned the zoning in the superstore, which became more convenient and easy to understand: there is a "promo avenue" displaying the best offers, including seasonal ones. The alcoholic drinks section was moved, and its assortment was bolstered with Russian wines, with a special place reserved for wines produced in Kuban-Magnit's homeland. The Company will continue to develop its expertise in this category and work on shaping the drinking culture for Russian wines. The customers can find out more about the product using a novel feature-ane-sommelier. After scanning the product barcode, it displays information about the manufacturer and tasting notes on its screen. In the future, it will also offer advice on how to pick a wine to pair it with a certain dish, as well as recommendations from Magnit's wine experts.

The store has a separate area with children's food, clothing, toys, hygiene and care products, and interactive services for the enjoyment of its youngest customers.

Magnit answers its customers' wishes to lead a healthy lifestyle. In order to do that, the Company established a separate "Health and Beauty" discipline that will form a part of its strategy. The superstore will introduce the first "Health Island"-a special dedicated department offering healthy nutrition. The assortment here will be constantly expanded and updated.

The culinary products area was transformed into a gastronomic space, with new navigation, broader choice of food prepared right there in the hypermarket, as well as new services-for example, customers may pre-order meals for a celebration, or ask store employees to mince any meat, scale a fish, and many other things.

Magnit cares about its customers and introduces new services in order to make shopping more convenient. The store boasts a number of cutting-edgetechnologies-for instance, Scan & Go allows shoppers to scan products on the go and pay for them at self-service checkouts in just 12 seconds. In total, the store has 27 checkouts, of which 15 are self-service terminals. Video analytics technology helps

to avoid queues. The Company equipped the store with SELFIETOPAY technology: at the checkout, a special terminal is used to scan the customer's face, which then makes it possible to pay for the purchase without using cash, a bank card, or a mobile phone. Along with that, Magnit also implemented other solutions to improve convenience for customers and employees.

The whole point of the evolution of the store-located at 18/3 Solnechnaya st., Krasnodar- is to make it more digital, interactive, and welcoming for the customers while also helping it maintain its rewarding market offering. The design of the sales floor incorporates digital elements in the form of LED screens with inspirational videos, and every category is assigned a specific color that is used in decorations and promo signage. In addition to that, supplementary accent lighting and modern store fixtures were installed, offering better convenience and cost savings.

"Historically, Magnit's large formats took a back seat to the main convenience format. We want to change that, to make our compact urban hypermarkets-oursuperstores-attractive for the customer, to transform them into the stores people will come back to. We want to differentiate this format within the Magnit Family of Stores, to make it unique. In our first superstore, we've combined advanced technology with the Company's DNA-attractive prices, convenient location, and diverse assortment. This represents the format's first step on the great road to success,"-commented Ruslan Ismailov, Magnit's Director of Retail Chain.

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Company description:

Public Joint Stock Company "Magnit" (MOEX and LSE: MGNT, S&P - "BB") is a holding company of the group of companies (the Company) carrying out retail trade through the "Magnit" retail chain. The Company's headquarters are in Krasnodar. "Magnit" retail chain is one of Russia's leading grocery retailers. As of September 30, 2019, "Magnit" operated 20,497 stores (14,507 convenience stores, 467 Magnit Family supermarkets, and 5,523 drogerie stores) in 3,694 cities and towns across the Russian Federation.

Approximately two thirds of the Company's stores are opened in cities with a population of less than 500,000 people. The majority of the Group's stores are located in the Southern, North Caucasian, Central, and Volga Federal Districts. Magnit's stores also operate in the North- Western, Ural and Siberian Federal Districts.

The Company has its own logistics network which, as of September 30, 2019, includes 38 distribution centers, automated management system for inventory and for its motor fleet, which consists of 5,776 vehicles.

In accordance with the Company's non-audited IFRS management statements, Magnit's revenues for 9M 2019 amounted to RUB 1,000 billion, with EBITDA of RUB 63 billion.