April 18 Reuters Discount store formats are driving sales and profit growth at two of Russia39;s major retailers, the companies said on Tuesday, following a trend in which consumers battling inflation and economic decline have switched to cheaper goods.

Shoppers have faced surging prices and falling incomes since the Kremlin ordered tens of thousands of troops into Ukraine in February 2022, hitting spending power and boosting demand for cutprice goods.

Russia39;s leading retailer X5 Group reported a 15.7 jump in net retail sales, excluding some ecommerce segments, to 689.2 billion roubles 8.46 billion in the first quarter, driven by doubledigit growth at its cheaper store formats, Pyaterochka and Chizhik.

Hard discounter format Chizhik saw a fivefold increase in net sales, while X539;s proximity Pyaterochka stores posted a 12.2 increase. Premium supermarkets Perekrestok had a 5.1 rise.

X5 expects to accelerate Chizhik store openings in the coming quarters. It completely shut down its Karusel hypermarket format in early April.

Rival retailer O39;Key Group posted a 16.2 rise in net profit for 2022 to 242 million roubles 2.97 million. Revenue at its hypermarkets, which account for almost 80 of core earnings, fell 2.1 yearonyear, but jumped 53.1 at the company39;s Da! discounters.

Overall, in 2022, the company successfully adjusted the hypermarkets39; operations to accommodate the ongoing price inflation of raw materials, decreased foot traffic, and more cautious and…