Fozzy Group Fozzy Group Develops Soft-Discount Format Thrash

Sebastian Rennack (Senior Retail Analyst)
05 April 2017

Ukrainian retailer Fozzy Group has attracted external financing to push through rapid expansion of its discount-oriented Thrash banner. As reported by delo.ua multi-format Ukrainian grocery retailer Fozzy Group will open a credit line of USD75mn (EUR70mn) with Alpha Bank to finance the expansion of its newly developed price-focused banner under the Thrash logo. As announced earlier, most of the 37 existing Thrash discount-supermarkets have been converted from former Silpo stores, in cities with a population of more than 100,000. 

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Sebastian Rennack (Senior Retail Analyst)
Sebastian Rennack (Senior Retail Analyst)

Opinion Fozzy Goes Back to Basics

05 April 2017
The times when tapping half-heartedly into several market segments at once and being successful are over in Ukraine. As LZ Retailytics data shows, single-format soft-discounter ATB wrestled market leadership from Fozzy in 2016, winning the consumer’s favour with its low-price and private-label focused sales strategy. With a retail business comprising seven banners, restaurants, a travel agency and several food manufacturing plants, Fozzy owner Vladimir Kostelman is now going back to basics. The new Thrash chain will strengthen the bottom line, focusing on the sale of fast-moving assortment ranges in reduced sales areas.

We see top line growth becoming compromised as market pressure increases on all Fozzy’s retail banners. In direct competition with Auchan, Fozzy C&C hypermarkets are working to develop e-commerce delivery solutions. Fora minimarkets meet head-on with ATB, so are transforming stores to increase sales areas and repositioning themselves as proximity supermarkets. Ringoo and Bila Romashka so far are surviving as wallflowers in their respective segments. Silpo supermarkets, the group’s primary retail backbone, are losing favour with shoppers in these times of decreased spending – a challenge for all competitors in this channel.

With time pressure high and profit margins unable to sustain high-level investments, we believe that reformatting Silpo to Thrash soft-discounters is a quick and cost-efficient way to stand up to the current economic downturn. Paired with Vladimir Kostelman’s well-known innovative spirit and a knack for tapping into synergies, we are convinced we will see Fozzy overcome the current dip and gain back crucial momentum.
 
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