X5 to cut prices in Perekrestok chain

X5 retail group will cut prices by an average of 20% on many goods in its Perekrestok supermarket chain in order to stem a drop in shoppers.

The company presented a new policy on Monday which will include an average 20% drop 3,500 goods, which is about a quarter of their product total and will include meat, dairy, fresh vegetables, fish and seafood, frozen food, babyfood and alcohol, among others.

X5 Group head, Lev Khasis, said that the company will not raise prices on other items and that the price cuts were not a short-term plan, adding that they were made possible by “improving efficiency, which is reducing operating costs and enabling us to reinvest profit in prices.”

Deutsche Bank analyst Natalya Smirnova said that the cuts are due to fewer customers.

“The company is clearly amending its pricing policy to stem a further drop in traffic.”

However, Uralsib Capital senior analyst, Tigran Oganesian, said that price drops will affect profit margins since the cuts “probably apply to seasonal goods above all, which usually fall in price during the summer.”

X5 has 276 Perekrestok stores and also owns the discount supermarket chain, Pyaterochka, as well as the Karusel hypermarkets, totaling 1,399 stores as of the end of March.