In the spring of this year the German retailer announced its franchise program dedicated to traditional commerce stores, taking on a market of around 70,000 companies with an estimated annual turnover of EUR7-8 billion.
“Half of the 300 stores opened under the La Doi Pasi name are in rural areas,” says Adina Timplaru, head of corporate communications within Metro.
The German chain has reached big Romanian cities as well as villages all across Romania with the La Doi Pasi chain. 14 such convenience stores are opened in Bacau county alone, with a single one in Bacau town and the rest in smaller towns and villages within the county.
In this move, Metro Cash & Carry taps a market that modern retail chains have yet to conquer. The only modern retailers to have entered the rural market are Mega Image and Profi, though only tentatively.
Who can get the franchise?
The project has been launched at a time when Metro’s turnover has been affected by the difficult economic situation and the decline of consumption, with Metro losing around EUR500 million in the last four years, and posting a turnover of EUR1.17 billion last year. Moreover, 6,000 traditional stores were closed down during the same period.
Metro’s project can be seen as an attempt by the German group to ensure loyalty of its existing client base and even to extend it, with the company’s main clients being in fact small traditional retailers.
Small merchants and kiosks that seal a franchising contract with the German cash & carry chain will have to remodel their stores based on a concept agreed with Metro and change their name to “La Doi Pasi.”
“Metro Cash & Carry doesn’t impose restrictions on the number of stores to be opened in rural or urban areas, as long as the “La Doi Pasi” stores are located at a certain distance within one another,” Adina Timplaru says.
How much does the La Doi Pasi franchise cost?
Although this is a franchise project, Marc Carena, director in charge of client management within Metro Cash & Carry Romania said a few months ago that franchisees did not have to pay an initial franchising tax. They contribute 500-600 lei (EUR100-EUR130) monthly for marketing. Each store gets at least 300 catalogues with offers every two weeks. Metro Cash & Carry and its franchisees launch promotional flyers with 17 discounted products every two weeks in all La Doi Pasi stores. The German company handles promotion and marketing, while the owner of the store is in charge of the management.
The stores opened under franchise by Metro Cash & Carry in partnership with the franchisees cover between 40 and 200 sq m and according to previous information, the remodeling of a store based on the concept set by Metro Cash & Carry costs RON14,000 (around EUR3,000) on average and takes around 30 days from the signing of the contract. (EUR1=RON4.574)
(English version by Daniela Stoican)