“We aim to become a national player. After covering Bucharest, we target the entire country. In the cities we currently operate, we are testing concepts of stores we expand with, more precisely, we test in Brasov, Ploiesti, Constanta as well as in the rural area, offers of products, promotions, prices,“ Belgian Xavier Piesvaux said less than a month ago at the end of his mandate with Mega Image. Piesvaux was in charge with turning Mega Image in the largest Romanian retail network, with over 420 units countrywide.
Part of Mega Image strategy was to focus on Bucharest, which is like an island in Romania, in terms of revenue and population as well as lifestyle, according to Piesvaux. Moreover, the central authorities and the largest corporations have their headquarters in Bucharest. Romania is split up into three parts, namely Bucharest, the country’s largest ten cities and the rural environment, he said.
According to Piesvaux, the network could not cover these three areas with the same store format, and it would have lost control over the business. That is why it focused on Bucharest.
“We are looking to make an acquisition countrywide, but a future transaction must meet three condition. First of all, a merger should create synergy, therefore we must learn from the one we take over, which must help us in our business. Secondly, there must be a compatibility between the organizational cultures of the two companies, otherwise people won’t adjust. Third but not least, a fair price must be paid, otherwise the business could be affected,“ said Piesvaux.
Mega Image negotiated the takeover of Billa’s 85 supermarket-network but it did not reach an agreement regarding the price. Piesvaux did not give any details about other envisaged networks for takeover.
Mega Image currently owns over 420 stores in several formats, such as Mega Image supermarkets, Shop&Go, online stores and units branded as Gusturi Romanesti and AB Cool Food. Around 80% all its stores are in Bucharest, generating most of the company’s total sales of 2.8 billion lei (EUR630 million) in 2014.
Hence, Mega Image does not have a dominant position in Bucharest with its 23%-24% market share. According to the Competition Council, a company has a dominant position with an over 40% market share,“ said Piesvaux.
(English version by Manuela Panescu)