The number of customers per store is one of the best-kept secrets in modern retail as are the sales per store.
“We have about 50,000 customers in each store on average every month,” says Alexandru Vlad, executive director of the Selgros chain, which arrived in Romania in 2011 when it opened a store in Brasov.
At that time it was part of Germany’s Rewe but in 2009 went to Switzerland’s transGourmet.
The company has been applying one of the most cautious expansion strategies since entering Romania, opening no more than three stores a year during its first years in this country and during the boom years. The retailer, which posted RON3.4 billion sales in 2012, slowed down the expansion rate opening only two stores in 2009-2013 (one in 2009 and one in 2011), with no new opening planned for this year.
“According our current plan, we want to reach 21 stores in Romania. If the market changes significantly in the next ten years, we, too, might change our plans. We are now looking at cities with more than 150,000 people where don’t have a presence,” Vlad said without providing any details.
The company has been going to large cities since its entry on this market, and has four stores in Bucharest, two in Constanta and one in each of the rest of the cities it operates in. Looking at the ranking of the largest cities in Romania, ZF found that Selgros does not have any store in Pitesti and Sibiu, two cities with a population of about 150,000.
“We cannot reveal any details until we get the construction permit,” Vlad says in reply to a question about targeted cities. He would also not say whether the company has bought land or not so far.
“[Land] price has not gone down enough. Decline varies with each city.”
Investment in a Selgros store built from scratch stands at some EUR15 million, but may vary with the price of the land, Vlad said. Selgros stores usually have about 10,000 square meter to 11,000 square meter floor area.
Unlike other modern retail stores, such as hypermarkets, which work with end customers, cash & carry chains target resellers, be they small traditional shop owners or restaurants and bars. Under the circumstances, a store needs to be close to major cities.
Although it has not opened any new store this year, the company spent EUR4 million remodeling the store in Iasi, which now includes a small vegetable “market” in the center, cheese, fish and delicatessen areas.
It will not do any more remodeling this year, but the store in Iasi is only the first to undergo such process. The decision to remodel was made to keep up with competition, which has invested a great deal in recent years, Vlad said.
Selgros’ direct competitor is Metro Cash & Carry.
Vlad did not say how much the remodeled store was expected to sell but said he estimates full-year sales of the entire network will be flat in lei at RON3.4 billion as in 2011 and 2012. His statement comes after the National Statistics Institute announced consumer spending decline for the third month in a row in July.
(English version by Loredana Fratila-Cristescu)