Business perspective of Alina Yuhnevich, Pyaterochka, primarily centers around sustainable development.
Progression of X5 Group's "Pyaterochka with Care," Evolving Sustainable Development Priorities
Since 2019, X5 Group has actively developed the sustainable development program "Pyaterochka with Care," interwoven into the overall ESG strategy of the company. Over the past few years, the company's vision of the benefits of such projects has transformed and adapted to the changing world, with these shifting priorities now at the forefront:
Focus on Humanity: X5 Group has shifted from customer-centricity to human-centricity, understanding that people, not simply buyers, are the most crucial element. Consequently, the company's efforts are geared towards enriching individuals' lives. Communication with customers helps the company understand their needs, preferences, and how they wish to contribute and make a positive impact together.
Flexibility: In response to changing societal and business needs, X5 Group reviews its ESG goals every six months. While there are key vectos for systemic impact, these can be adapted as required.
Community Engagement: To further involve customers in sustainable initiatives, the "Care Manager" project allows anyone to submit proposals through the company's website, evaluating and implementing the best ideas.
Shift from Global Standards to National Priorities: While X5 Group still aligns with international directives, a greater emphasis has been placed on national goals, aiming to cater to the distinct needs of the communities they serve.
Example of Adaptation to External Changes: Phygital Expansion
As digitalization blurs the boundaries between online and offline, X5 Group has adapted its community centers to the phygital (physical + digital) direction by developing online versions. This way, stores that cannot host social-cultural events can offer digital tools, such as an electronic bulletin board or live-streaming events from a TV studio.
Key Trends in ESG Area
- Digitization: Integrating digital tools to optimize processes, ensure accessibility, and streamline operations.
- Inclusivity: Enhancing retail environments and digital platforms to cater to people with various abilities and needs.
- Artificial Intelligence (AI) Integration: Leveraging AI to improve waste management, optimize delivery routes, and develop "smart stores."
- Local Focus: Catering to the specific needs and concerns of each region to create sustainable solutions tailored to the local community.
Measuring the Impact of Key ESG Projects
X5 Group follows a "double materiality" approach, considering the impact of sustainable development projects in conjunction with the economic effectiveness of the business. Key performance indicators include NPS, engagement, reach, and foot traffic, with CMS stores showing increased loyalty and foot traffic. Positive effects on personnel are also noticeable, with employees expressing higher levels of happiness, satisfaction, and engagement due to a greater sense of co-creation and being listened to by management.
The Future of ESG at X5 Group
X5 Group's ESG department is now recognized as a critical business partner, assisting other departments in adapting to regulatory changes and identifying projects with additional business benefits. ESG principles have evolved from being an afterthought to an integral part of the company's overall strategy, affecting each functional unit in a unique way. For instance, engineers optimize energy consumption, logistics specialists simplify routing, stores manage waste, HR adapts the corporate environment for employees with disabilities, and so forth. The company is increasingly reevaluating its business decisions through a sustainable development lens.
Influencing the Mindset of Employees
As with any new initiative, employees must embrace the changes. By observing top and middle management living sustainable development principles, the rest of the staff is influenced, and the new vision becomes part of their mindset and lifestyle. Finding value for each functional unit is essential, as employees understand the benefits to the company and its customers when implementing ESG principles.
Regional Differences in ESG Practices
Since focusing on the local person, X5 Group tailors its programs to the specific needs and concerns of each region, from environmental preservation to community engagement. In large cities like Moscow and St. Petersburg, the environmental agenda is more advanced, while social responsibility is emphasized in the North Caucasus. Community centers are popular in both large and small cities, catering to various age groups.
Future ESG Projects by "Pyaterochka"
In 2022, the retail network launched a virtual "at home" store for children with autism spectrum disorder, allowing them to learn shopping skills in a safe and stress-free environment. The company is also developing the "All for the Better" guide to good deeds, an interactive knowledge base to help people make positive contributions to their communities, and electric vehicle charging stations for stores starting from 2024.
The results generated by X5 Group's ESG projects allow millions of customers to make more conscious choices when shopping, fostering a sense of belonging to something greater. Both customers and employees find satisfaction in making a positive impact on their surroundings and contributing to a more sustainable future.
- X5 Group is exploring possibilities to incorporate sports and physical activities into their community centers, aligning with their focus on human-centricity and promoting a holistic approach to individual well-being.
- To adapt to the changing weather patterns and emphasize local focus, X5 Group is considering projects that boost energy efficiency in their stores, reducing carbon emissions and ensuring that each community they serve is better equipped to handle extreme weather conditions.
