Russian retailer X5 Retail Group – the merged entity of discounter Pyaterochka and supermarket retailer Perekriostok – will add a third main format to its portfolio: hypermarkets. X5 intends to set up a chain of some 70 hypermarkets trading under the banner name Frank. The Russian retailer announced this in its five-year strategy plan.

Currently X5 Retail Group – whose 2006 net sales excluding VAT was US$3.5bn – operates 619 stores with total floor space of 466,000m2. 415 of these are Pyaterochka discount stores, 189 are Perekriostok supermarkets and the remaining 15 stores are Perekriostok hypermarkets. But now the retailer will build a separate hypermarket format with a new brand name to become the third pillar of its multi format strategy.

X5’s management is convinced that supermarkets and hypermarkets will be the main growth formats in the booming Russian retail sector. In the forthcoming five to seven years, X5 plans to take over about 25 hypermarkets (if the intended acquisition of the Russian ‘Karusel’ chain is completed succesfully) and to open more than 70 new hypermarkets. X5 reports that more than 20 land plots have already been obtained for construction of new stores and 60 land plots are currently at the stage of acquisition.

Frank hypermarkets will have trading floors of 5,000, 7000 and 10,000 square meters and an assortment of 40,000 to 60,000 items. Lev Khasis, X5’s chief executive, said to the Russian Business Monitor that the Frank brand was invented by the founder of Pyaterochka, Andrei Rogachev, before the merger with Perekriostok. “Project Frank will operate in the segment of low prices, this is a hypermarket of the French style”, Khasis said and added that the first Frank hypermarket would be opened this year. By 2009, the new hypermarkets will start appearing in large numbers.