The strong Real stores now integrated into the Auchan network are in the process of ensuring loyalty of their old customers and attracting new ones. “Those that did not perform so well gave us some lovely surprises,” the French executive said, without specifying which hypermarkets he was talking about.
Prior to the deal with Auchan, Real’s best hypermarkets were those in Craiova, Vitan Bucharest and AFI Palace Cotroceni Bucharest.
Early in December 2012, Auchan announced it had paid EUR1.1 billion for the Real stores in Romania, Poland, Ukraine and Russia. Out of the about 90 hypermarkets it bought at the time, almost a quarter were in Romania.
Auchan took over 20 of the 24 Real hypermarkets in Romania, and Real kept the rest. Auchan had only 11 hypermarkets in the country at the time of the deal, and the acquisition propelled it to second place. Kaufland is the leader of the segment with its 100 stores.
Unlike other modern retailers, where the average number of employees per store went down, it went up in the Real stores that Auchan took over. “We had to bolster staff by 20% to 30%,” Bellon said. Real slashed jobs during the crisis to streamline operations and cut losses so once Auchan bought the stores the headcount went up, so the entire Auchan network is currently employing almost 11,000 people in Romania, he added.
Although the French retailer bought the Real stores at the end of 2012 it only received competition watchdog’s approval in July 2013 so it started remodeling the stores last fall, completing the process in the spring of 2014. The last store to be remodeled was the hypermarket in the AFI Palace Cotroceni mall.
Remodeling and rebranding cost EUR2 million per Real store on average, the Auchan boss says, 90% paid by the Auchan shareholders and 10% from Auchan Romania’s profit in the last two years.
After the takeover, a product basket costs 15% to 20% less in Auchan than it did in Real so a customer can buy more for the same amount of money or spend less on the same basket, Bellon says. Auchan has been applying a low price policy in line with the group’s worldwide policy since entering Romania.
Auchan announced it ended last year with more than EUR1 billion revenue generated by both its hypermarkets and the Real Hypermarket Romania stores. Revenue will increase at a single-digit rate in 2014, Frederic Bellon added.
Auchan wants to open a new store in Bucharest, in Drumul Taberei (west of the city) by yearend. The new store will also include a shopping gallery and office space for the company’s offices. The project will cost EUR60 million in all.
A store in Brasov is scheduled for opening in the first quarter of next year. These are the only two projects announced by the French group in Romania. Bellon says that Auchan wants to develop but cannot open 20 stores like the hypermarket in Titan district of Bucharest (its top performer) but if it were to open five like that and 15 smaller stores, why not? The number of openings will depend on the trend of the economy, on demographics and many other macroeconomic factors.
(English version by Loredana Fratila-Cristescu)