OREANDA-NEWS. March 16, 2010. X5 Retail Group, the largest Russia’s retailer in terms of sales (LSE ticker: “FIVE”), is planning to launch its own electronic trading floor in Q2 2010 for more efficient interaction with suppliers. With its own electronic trading floor, the Company will not need services of other operators who provide their platforms for electronic bidding.

All bidding will take place on a single platform with all the hardware placed in X5 Retail Group Processing Centers. This new development will enable the Company not only to obtain optimal purchasing prices through fair trading, but also to control information flows and prevent information leakage. Conditions of participation in the tenders are publicly available information; they are posted on the Company’s official website http://www.x5.ru/ru/partners/tendery.

Pilot electronic bidding on the new trading floor is scheduled to take place in May 2010, and in May-June 2010 the floor may become fully operative. The Company has acquired large experience in holding tenders, and more and more of its suppliers are being selected on the basis of electronic bidding. In 2009 X5 held approximately 500 tenders, 95% of which took place in form of electronic bidding. Electronic bidding is used mainly to select suppliers of private label goods and non-commercial goods and services (i.e. goods and services for the Company’s own needs). However, the Company is also planning to widely use tender technologies for selection of the core assortment suppliers.

Private label goods

Only in last 4 months, in accordance with the Company’s private label development and launch strategy, 41 tenders were held in form of electronic bidding with 2265 lots traded. Invitations were sent to 2088 suppliers, of which about 400 participated in the bidding.

The Company’s Quality Control Department tested approximately 2300 sample goods, of which a significant number did not meet the stated quality requirements. Thus, 22% of confectionery products, 10% of dairy products and about 40% of sausage products did not meet the quality requirements. As a result, approximately 15% of the bidders were disqualified at the stage of quality check.

Non-commercial goods

Suppliers of non-commercial goods have been selected through electronic bidding for more than 4 years already. Tenders have been held in various categories – from expendables to store construction contracts, consulting and auditing services, retail equipment and trucks.

Commercial assortment

At the end of last year the Company started to hold tenders for commercial assortment supplies as part of preparation for the retail trade law coming into force. In last three months about 100 suppliers of commercial goods participated in tenders in such categories as juices, meat products, canned products, poultry, eggs, fruits and vegetables.

Lev Khasis, CEO of X5 Retail Group, commented:

"We use tender technologies more and more actively. This year all our suppliers of private label goods and non-commercial goods and services, as well as a significant number of core retail assortment suppliers will be selected through competitive tendering. Our tender-based supplier selection process will be continuously improved on the basis of experience gained".