Russian retailers, including Magnit, O’Key and Auchan Russia, said they were voluntarily limiting markups on “socially important” products, such as bakery, dairy, sugar and some vegetables, to 5%.
National News Agency RIA Novosti said the measure is being implemented to ensure essentials are still affordable for everyday consumers amid soaring inflation and a falling ruble – factors likely to be exacerbated by the conflict in Ukraine .
“Current inflation rates affect the purchasing power of the population, especially for socially vulnerable categories of citizens,” Magnit’s managing director said. Jan Dunning commented. “We want to support these customers, so we are further limiting our margin on a number of socially important goods, making them even more affordable.”
Magnit limits margins on 304 commodities in 27 categories, including beets, carrots, cabbage, potatoes, onions, milk, cottage cheese, kefir, butter, sugar and bread .
Last January, retailers Magnit and Bristol agreed with Russia’s Federal Antimonopoly Service (FAS) to limit markups on “socially important” products to 10%.
Elsewhere, X5 Retail Group announced last month that it was limiting margins on 20 core product categories, as well as compiling a list of specific SKUs on which margins would be adjusted on a monthly basis.
Socially significant products
Commenting on this decision, Leonid Sinyutin, analyst at Sova Capital said: “The retailers’ decision should, in our view, maintain the accessibility of socially important products for Russian citizens.
“We believe the 5% limit should have a minor effect on the profitability of Magnit and X5, as their diverse sales mixes (socially important products represent less than 5% of sales, according to our estimates) and the growing share of private label items should maintain their margins.”
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