26 january 2010
X5 Retail Group N.V., SAP and GMCS Summarize the Results of the Project of implementation of SAP for Retail – the largest in Russia
X5 Retail Group N.V., Russia's largest retailer in terms of sales; SAP, a leading global supplier of software solutions for business management; and GMCS, an advanced IT-consulting company, summarize the results of the project of deployment of information management system based on SAP for Retail.

At the moment, this successfully working solution, verified in the pilot branch is being implemented in the entire retail chain. The total number of the system users is 450 and it will continue to grow.

The change to the new information system for the management of sales activities was necessitated by the growing volumes of the retail company's business that operates in several formats (discount store, supermarket, and hypermarket), and by an increasingly competitive climate. The existing IT-systems intended to provide the automation of such business chains as Pyaterochka, Perekrestok and Karusel that constitute a part of the X5 Retail Group were unable to cope with the scale and tasks of the united company. Therefore, X5 Retail Group made a decision to take the chain management to a totally new level of automation and ensure appropriate IT-support for high growth rates of the company.

The peculiar feature of the on-coming project consisted in the automation of management of the functions that had been previously performed manually and required considerable time and labor resources on the part of the and X5 Retail Group personnel. The following processes were to be automated in the integrated system: pricing, control of product range, merchandise flow, finances, product orders.

Having analyzed the existing solutions for retail business management, X5 Retail Group preferred to choose SAP for Retail. The characteristics of the system such as flexible architecture and scaling, as well as its wide functional capabilities were decisive in the choice process started in 2007. X5 Retail Group together with GMCS – engaged as a result of the competitive tender – began to implement the system in March 2008.

In order to minimize the risks, the GMCS and X5 Retail Group team of experts developed a strategy to launch the system. Pursuant to this strategy, the work over the project was divided into stages. Specifically, this strategy provided that X5 Retail Group will gradually stop to use the previous systems. The clear control over each stage, deep involvement and cohesive work of the project team which included the representatives of the key operating divisions of X5 Retail Group (operations, procurement, logistics, finance and marketing), support on the part of the retail chain top management – all that provided a successful launch of SAP for Retail with a possibility of the system sustainable operation at each stage.

From June 2009, right from the time when the pilot development of the system started in the Volgo-Vyatsky Branch (Nizhni Novgorod), X5 Retail Group received the opportunity to increase their competitive advantages due to the centralized management of the core business processes of their 64 stores in this region. The first features that began to work were a centralized automatic ordering system; capability to provide the required managerial reporting to the company’s management about the branch performance. Today the system is able to reflect the merchandise flow in all the stores of Nizhni Novgorod – receipts, write-offs, production, inventory, and sales.

"Based on the results of the system operation in Nizhni Novgorod we receive excellent figures – the company’s transparency increased, the productivity of the operations of the basic retail processes increased tenfold. For us today, the SAP for Retail solution is a powerful platform for the growth and an indispensable component of business management," says Teimur Shternlib, Deputy Chief Executive Officer, Chief Business Support Officer of X5 Retail Group.

The implemented system enables X5 Retail Group to efficiently manage the pricing process: the computation of prices is automatically performed by the SAP for Retail system based on price quotations of other market players. The new system supports the uniform principles of product range control in the stores thanks to which the retail chain can be able to pursue a clearer product portfolio policy, optimize procurement, adjust wholesale and retail prices, and in the event of opening new stores – to create their product range and prices within the shortest time possible. The management of promotion actions is subject to the same logic.

In order to make the work of the retail chain financial directorate specialists more convenient, GMCS automated the system process of settlements with counterparties, accounting of merchandise flow and other bookkeeping operations. Using the business analysis module the company's management is able to receive consolidated corporate routine reporting, including specialized reports containing required analytical sections for the divisions.

The duration of the main project works was 18 months. Today, X5 Retail Group and GMCS continue their cooperation on the next project stage that provides the system launch in the remaining branches of the retail chain by the end of 2010. The project implemented by GMCS in X5 Retail Group is awarded by SAP for the Highest Quality SAP for Retail Implementation in the CIS.

"X5 Retail Group is a strategic partner of SAP in the Russian market, and we highly appreciate the confidence vested by the company that have chosen our solutions to develop the chain and to grow the business. The SAP for Retail industrial solution which considers the entire specificity of the retail industry business processes has already strongly proved itself all across the world. Therefore, we believe that the success of this project will strengthen the leadership positions of our solution in the Russian market," said Vladislav Martynov, General Director, SAP CIS.

"We are happy that our work and the project results have been greatly appreciated by X5 Retail Group. Certainly, the project has been successful due to the team work of the X5 Retail Group and GMCS managers and consultants that showed the highest level of professionalism and responsibility at all the project stages. Having received an invaluable experience, we are going to continue the Retail direction, we’ve got new ideas and we will put them into practice," added Andrei Sapozhkov, SAP Solutions Department Director at the GMCS Company.

About X5 Retail Group

X5 Retail Group N.V., Russia’s largest food retailer by sales, operates Pyaterochka and Perekrestok brands. The chain included 674 Pyaterochka soft discounter shops located in Moscow (309), St. Petersburg (244) and other Russian regions (121), as well as 179 Perekrestok supermarkets in Central Russia and Ukraine, including 105 outlets in Moscow and 15 hypermarkets on December 31, 2007. The company owns the real estate of these outlets. The number of franchising outlets in Russia and Kazakhstan totaled 688.
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