The retailer’s convenience stores have as direct rivals around 70,000 mini shops and kiosk. After the exit from the market of the around 800-unit chain mic.ro, what is Mega Image’s plan for this segment, estimated by ZF at EUR7-8 million?
“For us the entrance on the market of smaller-sized, convenience stores, with a new concept – Shop&Go – is a new step towards the development of the Mega Image chain. Shop&Go is the store close to home, which allows customers to do some quick shopping,” says Raluca Alexandrescu, marketing manager of Mega Image. Shop&Go stores have a sales area of 90-150 square meters, up to five times lower than that of Mega Image supermarkets.
The Belgian retailer entered the Romanian market more than decade ago and has two store formats – Mega Image supermarkets and Shop&Go convenience stores. The company relied since its market entrance on the supermarket format, with the first Shop&Go store opening in 2010.
“At present there are 34 Shop&Go stores open, 9 of which were opened in 2011, one in 2010 and the rest in 2012,” the Mega Image representative also said.
Partnerships for more stores
This year Mega Image has sped up expansion of its convenience store chain. Initially Mega Image had developed the Shop&Go chain on its own, but more recently the company has devised a partnership in order to develop the network.
Mega Image explains that this is not a franchise, but a partnership. According to Mega Image’s announcement, it will contribute the following: the fully fitted commercial space, the stock of merchandise, payment of rent and utilities, and Mega Image will also handle logistics and marketing. The partner is required to operate the store under the Mega Image brand. Depending on the results of the store, it will receive a monthly income, but the amount is not specified.
“Our partners for the development of the Shop&Go network are small entrepreneurs.” Mega Image officials say this collaboration is beneficial both for the partner and for Mega Image: small entrepreneurs have the advantage of developing a family business without the risks of starting from scratch, benefitting from the know how of the Belgian company, while Mega Image has the advantage of a much faster expansion rate and of serving customers through its partner, which keeps in much tighter contact with them. The decision for the location of such a store belongs to Mega Image. An existing store can also be turned into a Shop&Go.
Shop&Go in the provinces too
The Shop&Go concept has so far only been developed in Bucharest, but Mega Image representatives say “the start is a promising one,” and don’t rule out “future expansion to other cities.”
“Partners have access to Mega Image’s supply system and manage their merchandise orders on their own, but can only get supplies through Mega Image channels and get the products chosen in advance by Mega Image,” Raluca Alexandrescu explains.
Several hundred thousand euros per store
Mega Image doesn’t want to provide information on the amount necessary to open a Shop&Go store, but according to ZF estimates this is several hundred thousand euros.
The retailer says although it is currently operating the stores in a partnership, in the future it is planning on launching a franchise system. “We have a franchise solution prepared and are working on the franchise contract that we will offer applicants in the future.”
As for future plans, representatives of the retailer don’t offer figures but say “the expansion of the Shop&Go chain is part of our expansion strategy and is coordinated by Mega Image.”
Another 10-20 stores by the end of the year
According to ZF information, the company is set to open another 10-20 Shop&Go stores by the end of the year and continue to develop the Mega Image supermarket chain. The chain has reached a total of 151 stores with both formats, 47 more than at the beginning of this year. By the end of this year, another 30-35 units are set to open in total for the two formats, according to ZF sources.
A few months ago Xavier Piesvaux, general manager of Mega Image Romania, said the retailer could end next year with a total of 300 stores, double the current number.
The retailer’s decision to pursue convenience stores comes at a time when retailer mic.ro, controlled by businessman Dinu Patriciu, went bankrupt and closed down all 800 stores. This has been the most ambitious plan to transform modern retail, an extremely fragmented market. This market segment has been strongly affected by the financial crisis of the last few years and by the fast expansion of modern retailers which have the financial support of parent companies.
(English version by Daniela Stoican)