1. Deal of the year in retail: Auchan buys Real
French-held hypermarket chain controlled by the Mulliez family, bought the Real stores in Romania, Poland, Russian and Ukraine a few weeks ago after several months of talks between the French buyer and the German owner, Metro Group.
Most of the newly acquired Real stores are located in Poland and Romania and the buyer was most interested in the Romanian network, market sources say. Auchan paid EUR1.1 billion for Real’s Eastern European hypermarkets.
Auchan decided to buy 20 of Real’s 24 stores in Romania, because the remaining four in Arad, Constanta, Oradea and Suceava ‘did not meet’ its requirements. The retailer’s network will therefore grow to more than 30 hypermarkets, the second largest in this country after Kaufland’s. Revenue could exceed EUR1 billion.
2. Change of leader: Kaufland takes top spot
German-held retailer Kaufland, which posted 5.58 billion lei (EUR1.26 billion) sales last year became the largest modern retailer in Romania. Kaufland’s climb to the first place is not the only change among to largest five retailers, whose cumulated revenue stands at more than EUR5 billion.
Selgros returned to fourth place last year, leaving Real behind. The most important change, however, is Kaufland’s climb to the top spot, beating Metro Cash&Carry, the leader since 1996, when it entered the market in partnership with the local businessman Ion Tiriac.
The revenue of Kaufland, which arrived in Romania about six years ago, increased by 18% in 2011 compared with 2010 and by 50% on 2009.
Metro Cash&Carry is a cash&carry type chain targeting companies and Kaufland is a discount hypermarket network.
3. Change of management at Penny Market
German-owned retailer Penny Market appointed three managers, Simon Hamersky, Daniel Gross and Gunter Becker, to run its local operations. The three will supervise the development of discount store chains Penny Market and Penny Market XXL on the local market. The two chains posted revenue of RON1.75 billion in 2011.
The three executives were put in charge of the Romanian operations after Frank Wagner (39), gave up his position as chief executive officer of the retailer part of the Germany’s Rewe, two years after being appointed to it. He left to group to pursue personal projects.
4. No new cash&carry store
The two cash&carry chains, Selgros and Metro Cash&Carry decided to put expansion on hold in 2012. Selgros stayed at 19 stores in Romania, while Metro Cash&Carry at 32 (26 traditional cash&carry stores and 6 Metro Punct).
Still, Selgros Cash&Carry’s chief executive Alexandru Vlad, who is also one of the few Romanians in change of a multinational retailer, says the company is in talks to buy some land and if successful, the chain could open at least one store this year.
Selgros posted EUR802 million revenue and had more than 4,000 employees in 2011.
Metro officials did not provide any details about their expansion plans.
5. New exit: Interex
French-held supermarket chain Interex, one of the lowest-profile retailers on the local market with less than EUR40 million revenue in 2011 left Romania in 2012. Before doing that it closed all the ten stores it still had, market sources said.
The financial crisis hurt Interex’s business, halving it, while losses increased fourfold in 2008-2011. It tried to sell the local operations but negotiations failed, so it decided to close the stores and leave the market.
News about the sale of the chain first surfaced a few years ago but the officials of the company denied it every time saying they had expansion plans to take the network to 40 stores. Information about Interex’s exit surfaced again this spring, the network did not expand as planned and even started to close some of its stores.
6. Mega Image, the boldest retail expansion plan
Mega Image was expected to end the year with 193 stores, almost double the number it had at the end of 2011. The Belgian-owned retailer, which operates the Mega Image supermarkets and the Shop&Go convenience stores budgeted 88 new store openings for 2012, almost three times as many as in 2011.
Ever since the retailer entered the market, it focused on Bucharest and Ilfov County (around Bucharest). It also expanded its network southward to Giurgiu County, northward to Brasov (central Romania) and westward to Arges County (southern Romania). The only city east of Bucharest where it opened stores is Constanta.
Mega Image has relied on opening its own stores and on buying out rival networks for growth.
Mega Image has the largest network in Romania by far, followed by Lidl and Profi with about 150 stores.
7. Two hypermarkets less
The five hypermarket chains in Romania opened 14 stores and closed two in 2012. The investment in the new hypermarkets exceeded EUR150 million, according to ZF estimates.
The most active by far was Kaufland, the leader of local retail, which has ten hypermarkets more than it had at the end of 2011. On the other hand, Real and Carrefour closed one store each.
Carrefour, the retailer that introduced the format in Romania, closed its store in Arad (west of the country) after the mall that housed it closed and will probably be turned into a logistics center.
The French retailer had previously closed a hypermarket in Braila (SE Romania) in 2009, when the Armonia center in that city closed.
Real, the third largest hypermarket network by sales (after Kaufland and Carrefour) closed the store it had in the rural town of Ghiroda, near Timisoara (western Romania). This is the first hypermarket ever closed by Real in this country.
8. Year of openings
Retailers remained some of the most “loyal” investors in the local economy. They kept investing hundreds of millions of euros in store openings in the last four years, despite consumer spending decline and weakened economy.
The retailers inaugurated more than 220 new stores in the past year alone in which they invested EUR250 million to EUR330 million, according to ZF estimates.
Kaufland invested the most money, EUR70 million to EUR100 million in ten new hypermarkets. Next was Cora, which spent EUR50 million on two stores. Third biggest spender was Mega Image, which invested EUR40 million to EUR50 million in 88 new stores.
9. Bankruptcy of the year: Minimax Discount
Minimax Discount store chain, the first retail bet of businessman Dinu Patriciu went bankrupt this summer about six months after being ruled insolvent.
The company went insolvent early in 2012 and all its 58 stores were closed only eighteen months after Dinu Patriciu bought into it.
Dinu Patriciu acquired the smallest discount food retailer on the market, MiniMax, via his company, Mercadia, from Austrian real estate group Real4You and two foreign investors in August 2010. MiniMax had 31 stores and revenue stood at EUR45 million.
The deal was estimated at several million euros at the time. Dinu Patriciu was actually one of the founders of this business, but exited it only two years after opening the first stores, in 2006, market sources say. Construction of MiniMax stores was one of the first real estate investments he made in Romania, together with his brother.
The closing of the Minimax Discount means the only Romanian modern retailer is now out of the game.
The chain controlled by Dinu Patriciu ended 2011 with RON433.7 million in revenue, 56% higher than in 2010, according to the data the company made available to the Finance Ministry and the Trade Registry.
10. Private labels headed towards EUR1.5 billion
With price becoming a more and more important factor in the local retail sector in the last three years, the main winners are the private labels of the major players, which make up a market that is close to EUR1.5 billion.
Aro, Marca 1 or Clever products, increasingly more often finding their way into Romanian consumers’ shopping carts, accounted for 9% of the total fast moving consumer goods market in 2011 compared with 7% in 2010, according to market researcher GfK.
Despite the constant growth over the last few years, private labels still have potential for growth, because their share in the total spending on consumer goods is lower than in Eastern Europe, where it is almost 20%, according to GfK.
(English version by Loredana Fratila-Cristescu)