Germany’s Metro group is beginning an assessment of the operations in Romania, following the developments at the headquarters where an extensive restructuring process is ongoing. The group will separate its food retail and computer and electronics products divisions.
Market sources say Metro wants the first step in Romania to be the assessment of the real estate portfolio, which it would include in a Central and Eastern European division and find a future for it.
The next step is analyzing the space of each store in Bucharest to see whether the cash & carry operations could use less of it and the rest to be sublet.
Metro has 30 cash & carry stores in Romania, taking up 200,000 square meters, according to ZF’s estimates. Metro Cash & Carry sales amount to about EUR1 billion in Romania a year.
Sales are down 70% compared with the boom years, despite the rise in the number of stores.
Traditionally, Metro Cash & Carry is divided into two companies on the markets where it is present, one that handles operations and one that manages the real estate of the group. A potential sale can be done independently or as a bundle. Metro owns most of the plots in Romania where its stores are.
One of the short-term solutions of the group is to rearrange the stores, so as to use less space for the sales floor. The remaining space should be rented, like hypermarkets do, which have shopping galleries around them. Metro Cash & Carry Romania officials did not provide details about local plans. They only said Metro AG was in the process of creating two independent companies, one specializing in food trade and the other in computer and electronics and was positive there was growth potential for the food division in Romania.
Metro took a series of steps to stop the decline of the business, such as introducing online sales for a number of products, opening Metro Punct stores or introducing the LaDoiPasi franchise in the spring of 2012, which now numbers 400 stores compared with 700 at its peak. However, this particular move has yet to produce the desired effect. Metro even hired Violeta Luca, an experienced executive who had worked for eMAg, Flanco and Microsoft, to invigorate the business.
(English version by Loredana Fratila-Cristescu)