Development of the Business
The first M.VIDEO store was opened in Moscow and the M.VIDEO
trademark was registered
Restructuring and preparation for Expansion
During these six year period, M.VIDEO developed its
promotion and customer loyalty programs and launched a professional development
program for its employees. The first on-line store www.mvideo.ru was launched.
Having partnered with Russian Standard Bank M.VIDEO became one of the first
retailers which offers in-store consumer credit to its customers. M.VIDEO also
opened its first store in region and successfully weathered the Russian
Growth and Expansion
M.VIDEO opened its first retail store providing an average
shopping space of 2,000 square metres. A uniform format of M.VIDEO hypermarket
of consumer electronics was developed together with international consultants
and launched. The first around clock store was opened. The Company started to
change its management incentives and launched an aspirant training program to
identify and develop new store managers among existing employees. In addition,
experienced foreign managers were engaged.
The restructuring of M.VIDEO Group started to increase
transparency and improve the efficiency of operations. For example, it was
implemented a new retail management system based on a functional management
structure that allowed to move administrative functions from individual stores
to regional offices thereby eliminating duplicative functions and overlapping
The Company opened a total of 28 new stores and entered 11
new cities. Specifically, it opened 3 new stores in Moscow, 4 in Saint
Petersburg, 2 in each of Ryazan and Ekaterinburg, and 1 in each of Voronezh,
Vladimir, Chelyabinsk, Samara, Rostov-on-Don, Nizhny Novgorod, Volgograd,
Tambov, Stavropol, Tyumen, Togliatti, Magnitogorsk, Bryansk, Novosibirsk, Kazan
and Naberezhnye Chelny. 16 of these new stores in 10 cities are open around the
M.VIDEO continued to develop its corporate information
system and transferred its finance, management and personnel systems to a SAP
M.VIDEO became a winner of the "Best Retail" award for the
best design of the Household Appliances & Consumer Electronics format.
In November 2006, M.VIDEO Finance - part of M.VIDEO Group
issued a debut RUR 2 billion bond most of which was paid off in November
The restructuring of M.VIDEO Group was completed. A new
holding company was formed and the Group operations were consolidated in six
The first additional service agreement complementing the
manufacturer's warranty was introduced. M.VIDEO modified its store concept
based on new market trends, customer preferences and the application of new
visual solutions based on the theory of neuromarketing.
The Interactive Research Group (IRG) conducted a study in
April - May 2007 based on service standards defined by M.VIDEO. The research
revealed that 87% of customers who made a purchase at M.VIDEO were willing to
become repeat customers. The same study placed M.VIDEO, with the 72% rating,
first among top 5 competitive consumer electronics retail chains in Russia for
In 2007 M.VIDEO has signed direct retail contract with HP.
The Company's Customer Care Centre changed over to 24x7 operation.
In November 2007 M.VIDEO, the first and the only company
among domestic consumer electronics chains made an IPO on the major Russian
stock exchanges RTS and MICEX, The Company offered almost 30% of its stock to a
wide range of Russian and international institutional and private
In 2007 M.VIDEO opened 37 new brand name stores. By the end
of the year the Company operated 122 stores in 48 regions of Russian
Federation; 24 of these stores operate around the clock.
2008 was a successful year for M.video, anchored by sales
growth in the existing store network and supported by the execution of the
effective expansion strategy.
The company opened a total of 37 new stores in 2008: 6 in
Moscow and its nearby suburbs, 3 in St Petersburg and 28 in the regions,
including entering 16 new cities. At the end of 2008 the company ran 157 brand
name stores in 64 Russian cities as well as 2 online internet stores.
In 2008 M.video’s retail sales increased by 41% (in Russian
rubles terms) while the company’s like-for-like sales grew up by 11%.
The company’s revenues, gross margin, EBITDA and net profit
all grew significantly from 2007. M.video was able to achieve this as a result
of double-digit like-for-like sales growth and by opening new stores.
M.video clearly demonstrated that it had a powerful business
model and high brand awareness and loyalty amongst customers. That allowed the
company to become the fastest growing consumer electronic retail network in
In 2008 M.video was awarded with a prestigious national
“Sales Business Award” in a “Consumer Electronics” category.
In 2009 M.video became the only nationwide consumer electronics
retailer, who achieved positive dynamics and sales growth. While the market
lost more than 30% of its value as compared to the previous year, M.video
sales growth was more than 3%.
The Company was strongly committed to expansion in the Russian
market in 2009. While many of the consumer electronics networks closed stores
and experienced financing difficulties during the year, M.video opened 22 new
stores and continued to roll out its successful store format to the regions of
The breakthrough performance in 2009 allowed M.video to double its
market share in both the national competition and in the specialized networks
Probably the most impressive highlight of the year was that due to the
effective management of the Company’s balance sheet and working capital M.video
achieved a net cash position of more than 6 billion Russian Rubles at the end
of 2009 as compared to the net debt position the year before.
in 2010 M.video became the number one CE retailer in Russia by its business
volumes and revenue. The Company demonstrated the highest top line
results in the industry as compared to any of the Russian Consumer Electronics
and Home Appliances federal chains. The remarkable accomplishment became a
benchmark of a 100 billion Russian Rubles (with VAT) of annual
sales achieved due to the most successful opening campaign
in the corporate history and launch of 44 new stores in 2010, a
record for 1 year.
Those efforts in achieving superior sales results and increasing the number
of M.video stores were undoubtedly awarded by the growth in the market share of
the major product categories. M.video significantly outperformed the overall
Consumer Electronics market in 2010: the Company's retail
revenue increased by 23% for the year while the CE market
grew only 13%.