“Alimentara” stores and kiosks, reminders of communist times in Romania, continue to dominate Romanian retail in terms of number. With a total of around 74,000 stores at the end of last year, traditional retail started to see companies leave the market even back in the boom period, shows a survey of market research company Nielsen. So, during a period when both the economy and consumption were growing, the latter by two-digit figures, a number of kiosks and “alimentaras” started to close down.
The reasons are mainly the lower consumption and the expansion of modern retail.
“Since two Mega Image stores have opened in the area, sales have started to go down. The crisis also played a part,” says the vendor of a kiosk on Stefan cel Mare boulevard in Bucharest, after serving a customer. Several other vendors refuse to comment, though.
Between 2006 and 2007, modern retail started to grow, with increasingly more hypermarkets, supermarkets and discount stores being opened in Romania.
Modern retail – which includes cash & carry stores, hypermarkets, supermarkets, and discount stores – has a short history of just 15 years on the Romanian market.
The pioneer was Metro Cash&Carry, which in 1996 opened its first store in Romania. It was followed by Billa (1999) and Carrefour (2001). While traditional retail started on a downward trend, modern retail has started to gain increasingly more ground.
In fact, the number of hyper, supermarkets and discount stores has doubled in the last few years.
After investing hundreds of millions of euros, players such as Carrefour, Penny Market and Mega Image managed to gain half the market, reaching around EUR8 billion in overall turnover.
According to the latest available, data, the turnovers of the over 70,000 stores in traditional retail also amount to EUR8 billion.
In the last three years, the market has lost around EUR5 billion, with consumption falling by an overall almost 20%.
The financial crisis was reflected in consumption, which started to decline as early as in 2009, after a period of two-digit rises.
Despite this negative trend of consumption, modern retail players continued to invest thanks to financial support from their parent companies. Many of them bet on a rebound of consumption in the years to come. Moreover, new openings helped retailers keep their turnovers from declining, while sales per store fell.
At the end of last year there were nearly 900 supermarkets, hypermarkets and discount stores in Romania, which compares with 429 in 2006. The hypermarket segment, worth around EUR3.5 billion, which includes five players (Carrefour, Kaufland, Cora, Real, and Auchan), tripled its number of stores between 2006 and 2010.
But modern retail was not left unaffected by the financial crisis. Hurt by the consumption decline and by the financial freeze, Romanian retailers went insolvent one after another.
The largest insolvency cases include Spar (Ioan and Floare Cuc siblings), Trident (Constantin and Alina Mateescu) and Pic (Ilie and Cornel Penescu brothers).
Some of the foreign-held players (Mega Image and Billa) took advantage and bought a few stores of chains developed by Romanian entrepreneurs (Prodas, Primavara and Spar), who could no longer finance the chains’ expansion.
(English version by Daniela Stoican)