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Lenta is one of the largest Russian food retail chains, historically built around hypermarkets — large stores with a wide range on the outskirts of cities. In recent years the company has been actively adding smaller formats alongside them. The shares trade on the Moscow Exchange under the ticker LENT.
A hypermarket is a model built on the big shopping trip: the customer drives in once a week, fills a trolley to the top, and the average ticket is high. The format wins on range and on price thanks to volume, but loses on convenience: nobody drives to one for a loaf of bread.
That is exactly why the company is expanding into convenience stores and delivery: shopping habits have shifted towards frequent small purchases, and a chain made up of hypermarkets alone loses share not because of quality but because of format. Buying convenience store chains was the response to that shift.
The economics are the same as across all of food retail: a thin markup, enormous turnover, and profit decided by the cost of logistics and staff.
Large stores with a wide range and a high average ticket.
A walking-distance format, acquired and developed as a response to changing shopping habits.
Delivery from stores and partnerships with aggregators.
Strengths and weaknesses describe the business itself. Opportunities and threats describe what may happen around it.
It is a food retail chain: hypermarkets, supermarkets and convenience stores, as well as grocery delivery. The company sells food and everyday consumer goods.
In size, range and the pattern of the visit. People drive to a hypermarket once a week for a big shop, and walk into a convenience store almost every day for a few items. The former has the higher average ticket, the latter the higher visit frequency.
Because shopping habits have shifted towards frequent small purchases. A chain consisting only of large stores loses share not because of quality but because of format, and adding small formats is a way to win that customer back.