destination, offering customers a broad range of essential and unique products at multiple fixed price points, all
under RUB 250 (ca. USUSD3.40).
? Fix Price's pricing policy capitalises on a structural shift towards value among consumers worldwide, which Fix
Price believes allows it to benefit in almost any economic environment, most recently during the COVID-19 pandemic.
In 2020, Fix Price reported double-digit quarterly like-for-like sales growth every quarter and FY like-for-like
sales growth of 15.8%.
? The variety value retail market is one of the fastest-growing segments in Russian retail and is expected to triple
in size by 2027 with a CAGR of 16.9% for 2019-2027, according to an independent industry consultant report. The
market has more than doubled its size over the past five years, albeit still at a low base compared to other
countries, suggesting further significant potential for growth.
? In the Russian variety value retail market, Fix Price is the leader both by number of stores and revenue. According
to an independent industry consultant report, Fix Price was estimated to account for 93% of the Russian variety
value retail market by revenue in 2019, and had by far the largest number of stores among Russian variety value
retailers.
? Today there are more than 4,200 Fix Price stores primarily in Russia, as well as in neighbouring countries
(Belarus, Kazakhstan, Uzbekistan, Kyrgyzstan, Latvia and Georgia), all of them stocking approximately 1,800 SKUs
across around 20 product categories. In addition to its own private brands, Fix Price sells products from leading
global names and smaller local suppliers. Fix Price's wholesale operations service a number of franchisees
operating in Russia, Belarus, Georgia, Kazakhstan, Kyrgyzstan and Latvia.
? Fix Price has an efficient and easily scalable business model, which is underpinned by the following key pillars:
data-driven procurement, supplemented by streamlined centralised logistics, an efficient store management model,
and a highly experienced management team. State-of-the art IT solutions enable Fix Price to achieve a high degree
of automation across its operations.
Investment highlights
Fix Price benefits from a combination of competitive advantages that it believes have contributed to its success and
will continue to support its competitive position and business strategy going forward. These competitive advantages
include:
Leading market position in a highly attractive, large and growing market
? Fix Price was estimated to account for 93% of variety value retail sales in Russia in 2019, according to an
independent industry consultant report, making it 13 times larger than other players on the Russian variety value
retail market combined, and had by far the largest number of stores among Russian variety value retailers.
? Fix Price believes that it pioneered and scaled the variety value retail concept in Russia, and therefore has a
first-mover advantage, as a result of which it currently operates in a market that is characterised by significant
barriers to entry to new competitors.
? Fix Price's leading market position enables it to drive the development of the variety value retail market in
Russia and neighbouring countries, drawing upon a globally proven concept which has demonstrated significant growth
over the past decade.
? The Fix Price business proposition addresses a material and fast-growing market, which is underpinned by a sizeable
population of over 249 million (in Russia, other CIS countries, Georgia and Latvia - the geographies comprising Fix
Price's expansion focus).
? On the back of structural shift in consumer behaviour towards value, in 2017-2020, the Russian variety value retail
market, measured by sales, grew at a CAGR of 23%. Fix Price sees substantial further upside supported by the
significant level of under-penetration today.
A unique customer value proposition
? Fix Price offers its customers deep value across a diverse, unique and constantly renewed product assortment,
satisfying their needs for everyday essentials while providing an engaging "treasure hunt" experience. Fix Price's
loyalty card programme brings additional value to customers through a number of attractive benefits.
? The elements of this unique customer value proposition include:
? Deep value across a diverse product offering. Fix Price strives to offer outstanding value via an
uncompromising "every day low price" strategy across several highly competitive anchor price points, all under
RUB 250 (c. USUSD 3.40). As of 31 December 2020, c.80% of the Company's product assortment was priced under RUB
100 (c. USUSD 1.3). Fix Price sells a broad range of products across approximately 1,800 SKUs in approximately 20
different categories, including household goods, cosmetics and hygiene, stationery and books, clothes, toys,
household chemicals, as well as shelf-stable food and drinks. Fix Price maintains a diversified mix of own
private brands, branded and non-branded (no-name) products.
? Constant newness and rapid time to market. A continuously refreshed product offering is at the core of Fix
Price's assortment strategy. Fix Price launches 40 to 60 products every week, many of which are driven by
seasonal occasions and latest retail trends, with approximately 60% of assortment in SKU terms being rotated up
to six times per year. Fix Price's own private brands are developed in-house by dedicated procurement and
design teams that continuously monitor the market for best-selling goods, collaborating closely with Fix
Price's suppliers to deliver quality products at the right time, at strategic price points and with target
profitability.
? Convenient shopping experience and an exciting "treasure hunt". Fix Price seeks to open its stores in locations
it believes benefit from convenience of access and high traffic. Fix Price constantly renews its assortment to
create an element of discovery and "treasure hunt" experience for its customers. This encourages repeat visits
fuelled by the search for exciting novelties. According to a study by Marketing Agency Vector, a marketing
consultancy, Fix Price enjoys a high Net Promoter Score of 60%.
? Fast-growing loyalty programme with highly attractive benefits. Fix Price's "Bonus Card" loyalty programme has
approximately 12 million registered card holders. Approximately 36% of Fix Price's retail sales in 2020 were
generated from sales of products to Fix Price's loyalty programme card holders, creating a "win-win" for the
customers and Fix Price.
Operational excellence: standardisation, tech-enabled automation and agile sourcing
? Fix Price believes that its efficient operational model driven by lean decision making and nimble management
approach greatly benefits from standardisation of its store network, highly automated operations, centralised
logistics and efficient procurement as follows:
? Fully standardised leased store portfolio driving outstanding unit economics. Fix Price has standardised its
entire network of stores in terms of pricing, product assortment, product layout, equipment and marketing. Fix
Price believes that the standardisation of its stores drives value, convenience and a great experience for Fix
Price customers. At the same time, standardisation reduces the complexities of running Fix Price's vast store
portfolio, allows it to make efficient purchasing decisions and contributes to the efficiency of its
operations.
? Agile sourcing model and long-standing relationships with suppliers. Fix Price's efficient, agile and
streamlined sourcing model translates into the ability to offer a constantly changing and carefully crafted
product assortment, delivering deep value to its customers and strong margins to the business. Fix Price has
developed long-standing, direct and collaborative relationships with over 600 local and international
suppliers. Fix Price's procurement team works closely with these suppliers to continuously create new and
on-trend products to meet the evolving tastes and needs of its customers. Fix Price believes that the sheer
scale of its business and purchasing volumes make it a highly relevant partner to its suppliers.
? State-of-the-art IT infrastructure, translating into better decision-making and decreased costs. Since the
inception of Fix Price, its IT infrastructure has been designed for scale, and today supports all key facets of
decision-making within its business. The high degree of tech-enabled automation of store-level processes allows
Fix Price to effectively run the entire network as a single store and to further scale it without significant
expansion of HQ personnel or significant additional investments in IT infrastructure.
? Logistics infrastructure scaled for growth. The design of Fix Price's logistics infrastructure is highly
strategic in supporting a portfolio of more than 4,200 stores. Operating across 78 out of 85 regions in the
world's largest country by land size, Fix Price's logistical infrastructure is critical to the success of its
business model. As of 31 December 2020, Fix Price had eight distribution centres. Fix Price's logistics
infrastructure is nearly 100% centralised.
Leading financial KPIs among best-in-class peers
? Fix Price believes it enjoys leading revenue growth, profitability and ROIC levels among publicly traded variety
value retailers globally (namely, Dollar General, Dollar Tree, Five Below, Ollie's, Grocery Outlet, Dollarama, B&M
and Dino), based on their publicly reported financial information. (MORE TO FOLLOW) Dow Jones Newswires
February 22, 2021 02:00 ET (07:00 GMT)
