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Business Model and Strategy

Business Model and Strategy

Fix Price maintains strong
value across a diverse product offering. Our relentless focus on EDLP strategy (everyday low price) and a constantly
changing assortment provide a “trеasure hunt” experience for our customers.

Key pillars of our business success

Unique CVP

Agile sourcing

Efficient store
management model

Strict cost control

Smart & streamlined
logistics

Well-developed IT
tech platform

Unique CVP

Fix Price sells a broad range of products, offering approximately 2,000 SKUs across 20 different categories, including household chemicals, household products, cosmetics and hygiene, shelf-stable food and drinks, stationery and books, clothing, toys, and more. By keeping our attractive assortment constantly renewed and introducing a treasure hunt element to our CVP, we aim to surprise customers and encourage them to make repeat visits.

Thanks to our scale, expertise and involvement into the production process we find ways to offer much more attractive prices on comparable products that provokes “WOW!” effect and prompts traffic and excitement. Our goods are sold at a number of key price points - from RUB 55 to RUB 399. In our international markets, pricing follows a similar pattern.

~2,000 SKUs
across 20 categories

22%

private label

22%

major brands

56%

no-name brands

As of 2023

Consumables and regular products make up around 29% of retail sales at Fix Price, while the remaining 71% of retail sales come from general merchandise and new products.

The consumables / regular category covers products available year-round on our shelves. First and foremost, it consists of food, groceries, confectionary, drinks and snacks, household goods, household chemicals, and cosmetics and hygiene products. The general merchandise / changing products category includes non-food products, such as toys, stationery and books, clothing, party and celebration supplies, as well as accessories.

~77%

of our product range is priced under RUB 100*

*As of 2023

Our product assortment management approach looks to drive both store traffic and margin growth. Products in the consumables / regular category have historically been key traffic drivers, given that they are products that people need on a regular basis. Products in the general merchandise / changing products category have been key margin drivers, typically comprising non-food categories with higher unit prices and higher gross margins across the assortment.

Private labels are integral to the Company’s business strategy as they allow us to provide a broad product offering in each consumer category and stand out from the competition. In terms of quality and appearance, our private labels are on par with third-party branded products widely available in the market.

Our most popular private-label brands include Assortel, Lovely, Hupper Dupper, Flarx, Frutobar, Snezhnoye Kruzhevo and other.

Agile sourcing

Fix Price has a well-balanced supply chain, which is central to the Company’s business model and gives us a crucial competitive edge. Our sourcing capabilities and distribution platform facilitate efficient and rapid geographical expansion and support our low pricing proposition and constantly changing product range.

Fix Price’s sourcing is designed to optimise costs and enable agile responses, a frequent rotation of goods and a high sell‑through rate. We strive to follow a transparent procurement model that sees us engage in proactive discussions of pricing architecture with suppliers to secure the best supply offers.

560 suppliers

79%

оf Fix Price purchases have been sourced from domestic suppliers

As of 2023

Fix Price negotiates bespoke product features with suppliers, including packaging, taste, design, weight, and much more, leveraging our market position and scale to maximise profitability.

We also benefit from exclusive arrangements for custom products from several suppliers.

Efficient store management model

The Company operates a completely standardised store portfolio that is well positioned to drive outstanding unit economics.

Our typical store has an average selling space of c. 216 square metres and is mainly located in convenient and high-traffic sites in high-density areas, as well as in shopping malls and shopping centres, across a variety of urban areas. In addition, we have been successful in operating stores in smaller localities and plan to continue to expand in those settings.

The site selection process is supported by cutting-edge IT solutions. White space analysis is based on the performance of the existing stores and a number of major considerations, including: economic and strategic, commercial, technical and physical. Average lead time for a new store opening is 30 days.

Strict cost control

Fix Price is one of the leading public retailers in variety value segment globally in terms of profitability.

The efficient business model is based on decision-making optimization, agile management, store standatization combined with high level of operational processes automation, streamlined logistics and effective sourcing. Modern IT systems help Fix Price control all the processes at every stage of the supply chain which enables fast scaling of the business and leads to measurable cost savings.

Smart & streamlined logistics

We operate thirteen modern distribution centres (DCs) with a total space of over 480,000 sq.m.

Our DCs are strategically located across our retail network’s footprint in Russia and neighbouring countries. Almost 100% of the Company’s stock is delivered directly from suppliers to our DCs for onward transportation to stores

All of our transportation needs for product delivery services are outsourced to a number of third-party logistics companies. When Fix Price imports products, it engages a variety of land and sea transportation operators or agents for transportation from overseas to Russian ports and to our DCs.

Fix Price intends to increase the total space of its distribution centres gradually in line with its fast-pace store expansion.

Fix Price DCs as at 31 December 2023

Location

Total storage area (sq.m)

Pushkino, Moscow region

Total storage area (sq.m)

27,774

Vnukovo, Moscow region

Total storage area (sq.m)

27,840

Yekaterinburg

Total storage area (sq.m)

22,061

Novosibirsk

Total storage area (sq.m)

44,117

Saint-Petersburg

Total storage area (sq.m)

35,582

Kazan

Total storage area (sq.m)

32,865

Krasnodar

Total storage area (sq.m)

67,272

Voronezh

Total storage area (sq.m)

27,971

Samara

Total storage area (sq.m)

37,162

Novosibirsk

Total storage area (sq.m)

23,387

Domodedovo

Total storage area (sq.m)

66,925

Yekaterinburg

Total storage area (sq.m)

68,019

Astana

Total storage area (sq.m)

3,252

Total

484 227

Well-developed IT tech platform

Our proprietary IT solutions are geared towards reducing operating costs and boosting efficiency. Cutting-edge digital technologies have enabled us to continue scaling rapidly while saving employee time and streamlining costs in challenging market conditions.

Our key solutions include Enterprise Resource Planning (ERP) system, Warehouse Management System (WMS), Proprietary Demand Forecasting Tool (Demand Forecasting System), BI platform, Information Management Tool, Mobile Solutions for Store Operations and Employees’ Remote Access and others.

We constantly work on improving customer experience with technological solutions. All new stores are now being equipped with self-service checkouts, payment methods include QR-code payments, and customers can opt in to receive electronic receipts. We invest in the development of our mobile app which is currently available for Android, iOS and Huawei users.