X5 Group (Пятерочка). Годовой отчет за 2021 год - часть 14

X5 Technologies

The operations of X5’s retail formats are the Company’s 
backbone, and X5 Technologies is the main technology partner 
for all of the Group’s business units. 

Our retail formats continue to develop services aimed at 
improving the quality of service and the freshness of produce 
as well as optimising internal processes. This enables us to use 
innovative technologies such as artificial intelligence, analytical 
platforms based on big data, algorithms for managing business 
processes and cloud infrastructure. In order to increase the 
speed at which we incorporate new solutions, proprietary 
innovations are becoming our main priority.  

In 2021, X5 Technologies took part in 417 business initiatives 
on behalf of X5’s retail formats and business units, and we plan 
to increase this number in 2022.

368

Information systems
in operation 

>

1.4

THS

Physical servers

10.0

Petabytes of storage 
in a big data cluster

X5 Technologies infrastructure

The flexible application of state-of-the-art 
development practices, a product-based
approach and product teams are at the core
of X5 Technologies’ work. 

>

3.5

THS

Employees

STRATEGIC REPORT | RETAIL INFRASTRUCTURE | X5 TECHNOLOGIES

106

X5 Technologies took part in 

417

BUSINESS

INITIATIVES

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X5 TECHNOLOGIES

107

Domain approach

To improve the efficiency of working with X5’s retail 
formats, the Company continued to take a domain 
approach in 2021, where digital specialists are 
embedded within business units.  

During the year, one of the main objectives was 
the comprehensive development of investment 
initiatives in the early stages.

As a result, more than 300 different ideas were 
analysed, 60% of which showed excellent potential 
and were submitted for further development. 

In terms of the impact on the Group’s customers, 
employees and partners, the following are worth 
noting:

A technological concept was developed for stores 
in 2023. The time needed to authorise cashiers 
at checkouts was reduced by 80% — this operation 
now takes no more than eight seconds

Decrease the time needed to update checkout 
and back-office systems, reduce the cost of 
maintaining store operations, increase staff 
productivity, and improve the customer experience 
and the quality of our labour-enhancing IT services

We moved employees’ personal accounts 
to a single digital platform, which made it possible 
to prepare the rollout of the portal at Perekrestok 
over several weeks

Develop a platform approach for other solutions, 
including corporate training and employee 
development systems

We launched our first corporate portals using the 
low-code content management platform 
WordPress. These solutions are now being further 
developed without the involvement of IT specialists

Apply the low-code / no-code approach to other 
solutions, including mobile applications, in order 
to reduce overall costs and decrease the time 
to market for new products

More than 5,000 business trips have already been 
processed using the new portal

Increase this figure to 65,000 and fully digitalise 
this routine process

More than 3.5 million financial documents are 
signed by stores electronically on the new platform

Considerably improve the quality of the user 
experience in respect of the Group’s other 
electronic document management solutions

2021

PLANS FOR 2022

The unit enabled the entire X5 team to work 
remotely throughout the year, quickly anticipating 
and resolving issues raised by staff. The unit also 
introduced a system for managing IT service status 
and assessments of the impact of IT on business 
processes. Access management processes were 
automated, meaning that staff did not have to be 
present in order to be granted access, and the unit 
began sending hardware to new hires though 5Post 
parcel lockers located at nearby Pyaterochka stores.   

In 2021, X5 Technologies launched the first A/B testing 
platform for retail. The system is able to automatically 
collect the results of experiments at all Group stores, 
as well as analyse the effectiveness of operational 
processes in all of the Group’s business units.
The A/B testing system helps with decision-making 
based on raw data: on a daily basis, information about 
purchases is systematised, analysed and used 
to formulate conclusions regarding each of hundreds 
of hypotheses put forward. The main goal of the 
project is to accelerate the growth of X5’s business 
by increasing the number of ongoing experiments. 
The system processes all of X5’s stored data – tens 
of millions of records every day. The platform is 
currently testing and finalising a number of modules, 
and we are planning to evaluate over a 1,000 
experiments a year.   

The Company attaches great importance to the 
development of a data-driven culture and the 
engagement of young employees. In-house schools 
have been launched covering every major area 
of development, and a school for analysts has been 
restarted. In the summer of 2021, we launched 
a business analysis school and a systems analysis 
school, where more than 100 X5 Technologies 
employees completed training over a period six 
months.

One of the division’s priorities is to ensure 
a high degree of availability and a high level of 
performance on the part of its IT systems, which are 
essential to X5’s core business processes. A separate 
team created to develop and support root systems 
has launched projects aimed at taking the 
development of ERP, checkout software, document 
management and other root systems to a new level.

99.87

%

IT service availability in 2021

IT and development

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X5 is actively developing a data-driven approach 
to decision-making. The penetration of analytical 
solutions increased by 18%, and 2,390 employees were 
added to the Company’s BI platform, an increase 
of 78% year-on-year.  

The Company is working hard to incorporate this 
analytical platform into its work. Last year, dozens 
of projects involving BI analytics were implemented, 
with special attention paid to the development 
of self-service analytics in Russia’s regions.   

We introduced a data catalogue — a single entry point 
into the world of X5 data, where one can find the data 
and reports they need, gain access to said data and 
reports, request assistance from co-workers and much 
more. Today, more than 3,000 employees of the 
Company’s business units use the system every 
month. The data community is being actively 
developed, and its membership has doubled. The 
growth of the data community is also one of the 
priority areas for the development of a data-driven 
culture.  

This year, we managed to complete the rollout of our 
single customer sign-on platform, X5.ID, across 15 
communication channels. Over 14 million customers 
are currently active users of the platform. The service 
makes it possible to quickly integrate existing X5 
services, thus considerably improving the customer 
experience. The platform is an example of X5’s new, 
state-of-the-art, high-load, cloud-based architecture, 
which ensures excellent availability and enables rapid 
modifications. The Company’s solution received a CIO 
Global award as the best e-commerce/retail project.

In October 2021, X5 announced the launch of a pilot 
subscription service. The project’s MVP, completed 
in September, showed an increase in retail turnover 
and traffic at our retail formats, and it also contributed 
to the creation of new customer streams. People 
in every age group have shown interest in the 
subscription service. 

Based on the results of assumption testing, three 
subscription formats were identified, which the 
Company piloted from November to December 2021. 
The format of each subscription differs in terms 
of its anchor offer and the available option packages. 
A combined subscription with the working title 
“Bundle” combines discounts on goods in a single 
check, loyalty programme upgrades, free services and 
gifts. The monthly cost is RUB 199, RUB 249 or RUB 
299 depending on the service package. By December 
2021, more than 100,000 customers had signed up for 
a Bundle subscription.   

Bundle subscriptions are based on X5’s single 
customer sign-on, X5.ID, which creates a so-called 
golden record that stores all data on customers’ 
shopping habits at all X5 Group business units and 
retail formats. Thanks to CDP technology, X5.ID 
is able to incorporate the use of cookies with user, 
profileswhich makes it possible not only to build an 
end-to-end marketing funnel for subsequent analytics 
but also to enable personalised automated media and 
CRM communications. The Dialog.X5 platform has 
a significant role to play in the project, as it provided 
the data and analytics that made it possible to increase 
subscriber conversion through communications with 
niche audience segments.

Data management and data products for customers

In 2021, X5 worked hard to develop its X5 Cloud 
dynamic infrastructure project. The main objective of 
the project is to provide high-quality, state-of-the-art 
service to internal customers (project and product 
teams) and for results-based work.   

A new X5 Cloud development strategy was drafted 
and approved, which foresees the transformation of X5 
Cloud into a full-fledged cloud platform that includes 
infrastructure (IaaS) and platform (PaaS) services, as 
well as a new model for processes related to project 
onboarding, financial accounting, information security 
and standardisation of business activities within 
X5 Technologies.   

From using off-the-shelf integrated solutions from one 
vendor, we are moving to a best-of-breed approach, 
where the main focus is on open-source solutions and 
products. For commodity components such as the 
platform’s infrastructure core, we use off-the-shelf 
solutions in the form of a service with a high SLA, while 
products unique to X5, such as a platform orchestrator, 
billing, portals, and so on, are developed in-house.  

As part of our new X5 Cloud strategy, we plan to 
implement hybrid scenarios with external public 
cloud providers for disaster recovery, cloud burst for 
cloud-native applications and the use of specialised 
environments – for example, with super-fast storage 
systems or GPUs.  

In the autumn of 2021, we introduced a new role: 
customer success manager, whose purpose is to help 
projects and products resolve organisational, 
commercial and technical issues at all stages of their 
life cycle. The customer success manager acts as a 
one-stop shop, promptly connecting the needed 
resources from X5 Cloud to resolve specific project- 
and product-related issues and tasks on an individual 
basis.  

In 2022, the Company plans to start the process 
of cloud-native transformation, which will involve the 
migration of a large number of information systems 
from various sources. For this purpose, we plan to 
launch a centralised migration service in 2022: the 
main focus will be on migrating from OpenShift and the 
old version of X5 Cloud, but preparatory processes 
and planning for migration from other sources will also 
get under way.  

X5 Cloud

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With the increase in the number of business initiatives, 
the staff of X5 Technologies has also been growing. 
Recruiting personnel in Russia’s highly competitive 
IT market is becoming more difficult every year; 
to ensure success, X5’s HR team uses a set of tools 
from classic recruitment and career sites to their 
own events, games, and training and retraining 
programmes. This combination and systematic work 
on the Company’s IT HR brand have driven our 
success in hiring highly qualified employees and 
meeting our extensive staffing needs. 

In 2021, we built IT talent management processes 
(IT resource planning, evaluation, recruitment, 
development, etc.) around a single competency 
model. Employees completed more than 
300 training programmes. In terms of ESG initiatives, 
X5 Technologies launched a project on intellectual 
volunteering in 2021.   

We will focus on the following in 2022: career 
development based on equal opportunities for all 
employees, automating HR solutions to improve 
the employee experience, high-quality IT talent 
management and organisational efficiency, working 
with employee engagement and developing 
our employer brand. 

For X5 to achieve tech leadership and high-quality 
automation of the Company’s business processes, 
one of X5 Technologies’ key focuses remains working 
with employees. 

1,400 

New employees joined the 
X5 Technologies team  

in 2021

Human capital management

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INNOVATIONS

110

Innovations

X5 Group systematically develops innovations 
to improve the efficiency of in-house processes and 
the quality of customer service. Having achieved 
numerous breakthroughs in recent years, the 
Company has become a leading innovator.   

Since X5’s Innovations department was established 
three years ago, its staff have studied more than 
15 thousand different retail solutions, covering nearly 
the entire range of existing technological practices. 
Our main objective now is to monitor the emergence 
of tech innovations in real time while also keeping 
abreast of any solutions that are of interest but that 
require further development or a cost reduction. In this 
context, the Company’s main source of breakthrough 
ideas is its employees, who have free rein within X5’s 
in-house accelerator to propose innovative projects 
of all sorts. The Company also considers it important 
to work with students in developing innovations. 

In 2021, 28 new pilot projects were launched, and 16 
pilots were completed with statistically significant 
results. Ten of the 16 were declared successful and 
cost-effective. Five of them have already been rolled 
out or are at the rollout stage. The other five are 
undergoing tech refinements in preparation for rollout. 

In 2021, X5’s Innovations department began working 
more closely with the customer experience unit 
in order to include the development and analysis 
of a customer journey map in our projects. This led 
to a better understanding of customer needs and 
a better formulation of value propositions.  

The introduction and scaling of innovations added 
RUB 865 million to the Company’s EBITDA in 2021.  

In addition, X5’s innovations received numerous 
awards last year, including Popai Russia Awards, 
IT Stars, Retail Week Awards, Loyalty Awards, etc. 

External sources of innovation are an important 
element of X5’s work. Ideas for scouting are 
developed in collaboration with X5’s retail formats, 
business units and functional divisions. Problem 
interviews are conducted with managers at all 
levels of every function. This enables us to look at 
pain points from all sides and to properly prioritise 
and organise an effective search for tech solutions 
that we can incorporate. To begin with, we search 
for solutions in response to those needs where 
we see the greatest potential economic impact.  

In 2021, our scouting team evaluated just over 
1,500 innovative solutions — both Russian and 
international. Plug & Play provided an overview 
of European, US and Brazilian solutions, and the 
Axis accelerator and Israel’s trade mission to Russia 
provided an in-depth study of Israeli solutions. 
Invest India conducted scouting in India, while tech 
from Singapore was studied in conjunction with 
Enterprise Singapore. Although extensive scouting 
was carried out in China, it proved ineffective.

Innovations

External innovations 

For the third year in a row, X5 was an anchor partner (on the retail track) for the world’s largest 
accelerator, Plug & Play.   

Plug & Play holds closed pitch sessions for X5, including in response to needs that are raised 
during workshops. 

In 2022, X5 also became a Plug & Play partner on the sustainability track. The partnership in this 
area involves searching for innovative solutions to achieve the goals of lowering CO₂ emissions, 
reducing food waste and developing sustainable packaging. 

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INNOVATIONS

111

Joint innovation 

activities

The launch of Russia’s first partnership 
involving collaborative innovations in retail for the 
exchange of best business practices and experiences 
piloting and implementing tech solutions and joint 
scouting in Russia and abroad bore fruit in 2021.  

In the context of the Retail Innovation Tech Alliance 
(RITA), 14 joint events were held in 2021:

4

PARTNERS MEETINGS

Meetings where the partners discussed companies’ 
pilot projects, outlining who worked with which 
startups and what the results were

4

CASE STUDY CLUBS

Introductory meetings where companies’ business 
functions discussed the exchange of experience 
in implementing projects and improving the efficiency 
of their processes

6

 PITCH SESSIONS

On 15 startups selected from a long list

2020

GEOGRAPHY 
OF SCOUTING

2,700

SCOPED

2021

4,200

SCOPED

ADDED IN 2021

+1,500

In 2021, the Alliance companies (X5, Hoff, 
M.Video-Eldorado Group, Beeline) jointly 
scoped 900 startups, evaluated 80 use 
cases and launched 21 pilots

The Alliance’s Russian scouting programme 
is run by GoTech

In 2021, RITA added another ecosystem 
partner, the Kazakhstani food retailer Magnum. 
RITA also added three technology partners: 
SAP, Microsoft and Nvidia

Plug & Play and Axis have traditionally 
helped with the European funnel. The Israeli 
programme is led by Axis

RITA’s general funnel includes 1,276 
companies from more than 40 countries. 
Twenty-one projects have completed 
piloting or are currently at the pilot stage 
(for all partners, not only X5) 

RITA is operated by GoTech, which 
coordinates all partners

01

134

PILOTS

193

PILOTS

+59

03

PILOTS

1,300

BUSINESS  
CASES

1,600

BUSINESS  
CASES

+300

02

BUSINESS
CASE

SCOPING

19

ROLLOUTS

45

ROLLOUTS

+26

04

ROLLOUT

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INNOVATIONS

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Twenty-four students completed the programme, 
some of whom received job offers from X5 or were 
given an opportunity to implement their own ideas.  

The programme was taught not only by staff from the 
Graduate School of Business but also by practitioners 
and innovation specialists from X5 Group, including 
Pyaterochka and Perekrestok, as well as leading 
Russian and global companies (the Internet Initiatives 
Development Fund, Plug & Play and others).  

The programme lasted three months. As a result of the 
training, each project team created a concept for an 
innovative product or service that can be incorporated 
into X5 infrastructure.  

In April 2021, X5 Group established a multifunctional 
auditorium at the Graduate School of Business. 
The auditorium hosts lectures and seminars for the 
Innovations in Retail programme, applied workshops 
and scouting sessions for solutions developed by 
students, as well as industry meetings with leading 
Russian and global companies. The Higher School of 
Economics and X5 plan to conduct joint research and 
to publish scientific and educational materials related 
to the retail industry and new technological solutions.  

In 2021, X5 launched a comprehensive corporate 
entrepreneurship programme. During the two phases 
of the programme, 588 different ideas were collected 
that were aimed at improving business efficiency, 
creating new tools to increase sales and improving the 
customer experience. Ninety-six teams were selected 
for the main programme of the intensive startup 
workshop, where they received training on everything 
from presentations to financial modelling.  

A dedicated unit was created within the Innovations 
department for the implementation of corporate 
entrepreneurship programmes.

In February 2021, X5 and the Graduate School of 
Business of the Higher School of Economics National 
Research University entered into a strategic agreement 
on long-term cooperation in the area of education. 
The partners began their collaboration with the launch 
of an applied programme called “Innovations in Retail” 
for students from the Higher School of Economics 
and other universities. 

Development of intrapreneurship

and work with students

Thirty-nine teams advanced to the budget defence portion

The second wave of the corporate entrepreneurship programme

68

%

Share of the ideas coming from regions 
beyond Moscow and St Petersburg. 
The regional component expanded

~

33

%

Share of the participants in the second wave 
are already participating a second time  

40

%

More teams entered
the programme

60

%

More ideas were collected

11

Pilots launched
in the first wave 

>

1

BLN

RUB

Expected to be added per year
to the Company’s EBITDA

11

In logistics

4

In operations

5

In HR

4

In marketing

1

In maintenance

1

In commerce

3

In online

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INNOVATIONS

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The introduction of remote technology to monitor 
the on-shelf availability of fresh baked goods, the 
assortment of baked goods and culinary business 
processes enabled us to increase turnover and reduce 
losses in the category, as well as to increase customer 
satisfaction (NPS). 

The pilot was carried out at 30 supermarkets, resulting 
in a 6.5% increase in turnover in the category. 
A decision was made to roll out the solution in 
130 stores. The tech uses a neural network that 
enables a single operator to process three times 
as many stores as operators not using the tech. 

Remote monitoring of baked goods

A neural network–based technology that monitors 
a driver’s condition and prevents accidents due 
to asleep onset, fatigue, the use of devices and 
distracted driving. The pilot, which was carried out 
on 50 vehicles from the Vidnoe transport company, 
confirmed the efficacy of the solution, as the accident 
rate at the pilot transport site was reduced 
considerably. 

Adding a rear-view camera to the tech resulted in 
a 99% reduction in damages from accidents. It was 
decided to install the tech in 2,778 vehicles and 
to include it as a standard part of new vehicles.

Anti-sleep tech 

Examples of innovative solutions