In China, Walmart has faced regulatory and infrastructureproblems, as well as
slowing growth. Meanwhile, in India, it has scrapped its joint venture with Bharti
Enterpriseslate last year.
Under its former chief executive, Sir Terry Leahy, Tesco – the world’s third largest
grocer by sales – was bent on world domination. Since Sir Terry’s departure,
however, Tesco’s ambitions have become smaller. Last year, the grocer signed a joint
venture with China Resources Enterprise after failing in its attempt to go it alone.
However, as market leader, Mr Galitskiy is undeterred. “We have always said that
X5, Auchan and Lenta are strong, but we are stronger,” he insists. “We will always try
to maximise our profits, then try not to reduce our market position,” he says. “We
face that choice anew every day. We revise our plan any minute.”
Few challenge his record in doing that. Analysts say that Magnit’s network of 22
distribution centres, its fleet of more than 5,500 lorries and its automated ordering
system to monitor inventory all help to keep costs low, price flexibility high – and
bargaining power with suppliers strong.
“If Magnit sees that a store needs a lot of sunflower seeds, they try to figure out
where that demand comes from and what it means for the other stores,” explains Mr
Vilidnitsky of Barclays. “They have the best programmers on the ground.”
“The biggest advantage a food retailer can have is its logistics and supply-chain
management, but X5 doesn’t have that because they combined several companies
with different IT systems and logistics.”
He believes that Magnit has the potential to increase its market share from 6 per cent
to 15 per cent.
Mr Galitskiy observes: “When you stop listening, that’s the path to decline. I am
scared every day.”