All 15 companies operating in modern retail in Romania last year opened almost 150 stores in 2011, fewer than the three retailers planned for 2012.
The local modern retail sector now comprises only 13 companies after Turkish-held G’Market left and Minimax Discount, the only Romanian network in this business, held by businessman Dinu Patriciu, closed and filed of insolvency.
Lidl, Mega Image and Profi’s plans are a continuation or acceleration of the expansion of the three networks. The three operate small format stores of less than 2,000 square meters, supermarkets or discount stores. This makes it easy for them to reach smaller cities of less than 30,000 people, and find central space close to the most densely populated areas
Why are they opening stores?
Retailers, and especially the small format ones, continued during the crisis years and will continue to open stores in 2012, even though consumer spending fell from 2009 through 2011.
“There are a number of reasons why retailers continue to invest in opening stores in spite of the consumer spending decline,” explains Szabolcs Nemes, principal with Roland Berger Strategy Consultants Romania. “For supermarkets, it means securing locations in various cities throughout the country. For discounters (…), it is about continuing plans started in recent years. They looked for land first, then bought it and started on to building on it.”
He added discount chains expected their sales to go up in times like these because consumers go for the lowest price.
Lidl going for 200 stores
The most conclusive example is German-held Lidl chain. The retailer has recently announced it would open 66 new stores by the end of the year, for a total of 200 new stores on the local market. The investment of the German discount chain amounts to about EUR70 million, excluding land, as calculated by ZF.
Lidl officially entered the Romanian market less than a year ago and has since become the largest chain in the country, leaving rival Penny Market behind.
Mega Image plans 80 openings
Lidl is not the only one to bet on expansion in full gear in 2012. Belgian-held Mega Image plans to open about 80 stores, market sources say.
The officials of the retail chain will not verify the information but if the company proceeds at the same pace as in January, it should have 60 new stores. Mega Image, which operates the stores by the same name and the Shop&Go convenience chain in Romania, opened only five stores in January
“We have six more openings planned of February, said Raluca Alexandrescu, Mega Image’s marketing manager.
At an average rate of six stores per month, the chain should inaugurate over 70 this year, more than double last year’s level. The retailer has recently announced it will start franchising its Shop&Go stores, which may lead to expansion of the chain. It opened 33 stores last year, five more this January, so that it now ranks third in terms of network size, with 110 stores.
Profi repositions
Mega Image became number three among retailers by network size, thus pushing Profi to fourth. Profi, held by investment fund Enterprise Investors, has at least 25 openings announced. The retailer is a convenience supermarket chain, previously considered a discount store chain. As some customers are still seeing it as a discount chain, Profi will close its 108-strong network for one day, on February 13, and reopen it on February 14, a marketing action, which sources say is meant to reposition Profi as a supermarket chain without changing its name.
(English version by Loredana Frățilă-Cristescu)