Ukraine’s leading retailer, ATB, announced an achievable expansion for 2018. The announcement comes after the release of ATB’s nine months results for 2017.
ATB’s expansion plan for 2018
ATB’s CEO, Boris Markov, announced that the chain will expand store numbers to reach 1,000 stores by the end of 2018. Focus for this expansion will be in western Ukraine, around the city of Lviv, and in the Kiev region. ATB also acquired two distribution complexes in Kiev and Lviv, earlier in 2017, to support this expansion. The chain will also refurbish 50 of its stores in 2018 and will make no changes to its EDLP pricing strategy.
ATB’s inflation-led growth in 2017 aids expansion plan
ATB reported a 28% year-on-year growth to UAH57.3 bn (€1.8bn) in its sales for the first nine months of 2017. This builds on an exceptional growth of 25.5% growth in 2016, and almost surpassing 2016’s full-year result of UAH58.5 bn (€1.9 bn). But much of the growth is attributed to inflationary pressures in consumer prices.
Expansion to break 1,000 stores mark by end of 2018
ATB’s plan is to reach 1,000 stores by the end of 2018 which is not an unachievable goal since it would require adding around 100 stores to its current approximate number of 900 stores. In 2016 the chain opened 112 new stores expanding the network by 15.5%. ATB is likely to use a combination of organic store openings and acquisitions in their expansion n strategy, as illustrated in their purchase of 17 stores in the Lviv region.
Focus on western Ukraine and Kiev
In the first nine months of 2017, ATB has opened 62 new discounters, 29 of which in Western Ukraine. The retailer also acquired two facilities in Kiev and Lviv to create their own distribution centres with plans to operational in 2018-2019. The focus on western Ukraine is so to prop up presence in the region. Focus on Kiev is to protect ATB’s market share in the capital city and region as some of its key competitors focus their expansion strategy in this area. One example that stands out is Fozzy Group’s 2016-launch of discount banner Thrash!.
ATB completes exit from Crimea
ATB ceased to operate its 60 stores in Crimea since March 2014, and only managed to find buyers for its stores in November 2017. The chain sold the stores to Russian agricultural company Agrocomplex for around RUB500 mn (€7.2 mn). Since the stores ceased operation in 2014 they are not counted as part of the 2017 network.
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Amin Alkhatib, Retail Analyst CEE, IGD International: based in London, UK, Amin is responsible for shaping IGD's research in Central and Eastern Europe; as well as contributing to IGD's broader European research programme. Follow me on Twitter @Amin_IGD for further insight on the region’s retail landscape.