The retailer focused on Bucharest, where it opened 80% of its more than 400 stores under several formats. In some parts of the city, it opened as many as 5 to 6 stores over 1 or 2 kilometers.
“The company’s strategy changed in the past decade, after having only focused on supermarkets, which are larger and carry a wider range or products. It diversified by adding the Shop&Go convenience stores,” says a top executive in the real estate consulting business.
A Shop&Go usually takes up about 130 square meters, approximately five times less than a supermarket. The sales match the floor space.
“With this new format, the Belgian-held retailer covered a market segment served mostly by traditional retailers (a EUR8 billion to EUR9 billion market i.e.). This format was needed because anyone may forget to buy something, be it a bottle of milk or coffee and people are not willing to walk more than two or three minutes for this kind of shopping. They managed to add a new shopping trip for the same customers,” the same source added.
Mega Image officials have recently said the focus will be on the smaller format for future expansion, because there are not enough large spaces left in Bucharest. It will continue to expand at the same rate as in the previous years in 2015, that is by more than 100 new stores.
“There aren’t many large spaces left, indeed, but even if there were, such a fast-paced expansion like Mega Image’s would not have been able to accommodate that many supermarkets.”
Mega Image opened 114 stores last year alone, increasing the size of the network by 27%. Revenue rose by 20%.
While the network grew 25-fold in size from 16 to 410 stores in the past ten years, revenue progressed at half the rate.
Sales per store therefore halved in 2005-2014, according to ZF calculations, which do not take into account the store opening date. An explanation for this may be that the Belgian-held retailer has expanded its portfolio over the last few years, so it now has Mega Image supermarkets, specialist stores – AB Cool Food and Gusturi Romanesti and convenience stores – Shop&Go. There are more Shop&Go than Mega Image stores, 211 to 202, with one Gusturi Romanesti (which mainly sells private label products and products made in Romania) and AB Cool Food (frozen products) each. Mega Image also sells its products online, after having partnered with eMag, Romania’s largest online retailer, last year.
(English version by Loredana Fratila-Cristescu)