Modern retail, a market of around EUR9 billion, has reached over 1,200 units in 18 years and the target envisages a doubling of the number of stores in 5-7 years, with the focus falling on small-area units.
“Mega Image wants to open around 100 stores this year alone, keeping up the 2013 pace,” says a retail market source. Belgium-held Mega Image is Romania’s largest modern retail chain, with over 300 units under three formats, namely Mega Image supermarkets, Shop&Go proximity stores and AB Cool Food frozen products store.
The retailer embarked upon aggressive expansion in 2012, when it opened 88 units. In 2013, it launched over 100 units, namely over one third of total modern retail openings.
The Romanian modern retail market is dominated by 12 foreign networks with total revenue of around EUR9 billion annually and over 1,200 stores. Retailers have stepped up expansion in recent years marked by the crisis and falling consumption, opening over 100 new units per year.
The best year in terms of expansion was 2013, when over 284 units were opened, mostly supermarkets and proximity stores. At the opposite end, no cash&carry unit was opened last year. According to ZF data, more than 250 new units, particularly small ones, are scheduled for opening this year.
Modern retail players are still pumping hundreds of million euros and opening hundreds of stores every year in Romania, stating there’s still potential considering the average modern retail area per 1,000 inhabitants stands at just 84 square meters, five times lower than in Germany.
French group Carrefour, present in Romania with over 160 hypermarkets, supermarkets and proximity stores, will open Supeco stores in Ramnicu-Valcea, Targoviste and Giurgiu. Carrefour thus brings the fourth store format, Supeco, in Romania.
Supeco stores sell in a cash&carry system, but address individuals, and not legal persons, with the concept focusing on low prices. The company has already started recruiting for the three units scheduled for opening in Romania.
In its turn, Rewe Romania, the company operating discount chains Penny Market and XXL Mega Discount domestically, wants to double its store network by 2020 and is poised to open 20 units per annum under the two brands. The company will thus reach almost 300 stores from 156 at the end of 2013.
Owing to aggressive expansion, modern retail in 2013 outstripped traditional retail by weight for the first time, according to GfK data.
Thus, in the first 6 months of 2013, the weight of international chains in overall retail reached 53%, from 49% a year before. Classic format expansion on the one hand and the development of proximity stores on the other one led to the disappearance of many small players owned by domestic entrepreneurs. Traditional retail still includes 60,000-70,000 units.
Gilles Roudy, head of Metro Cash & Carry Romania, bets on modern retail growth, stating the weight is likely to climb from a little above 50% to 60-65% in 3-4 years.
However, in the case of Metro, just like in the case of Selgros, the focus will not be on expansion. Instead, discount chains, supermarkets and some hypermarket chains will step up growth.
“In Romania, there’s still room for growth, until the average modern retail area doubles, to around 160-170 square meters. It took us around one decade to get to this level, so that I believe that in the current market conditions it will take us another 10 years to double the area. Should the market and consumption pick up, the doubling of the area will take less. I do not believe we will catch up with Germany or Poland, where purchasing power is higher and salaries are double the Romanian ones,” says Marcelo Mihai, a senior consultant with management consultancy Geva & Company.
(English version by Catalina Apostoiu)