Although a focus of the retailer on the rural areas of the country and this type of store has been visible since early in the year, December best illustrates the bet on this format, as almost all the new stores bear the Loco brand.
Profi’s decision to go to rural areas in Romania is justified by two important factors. On the one hand, no modern retail chain has really gone to the villages, with most of the investment concentrated in urban areas where purchasing power is also commensurate. So here Profi only competes with small retailers who do not have the buying power of the modern retailer with over 1,550 stores nationwide. This bargaining power allows Profi to have lower shelf prices and gain market share over time.
Secondly, Romania has the highest proportion of its population living in rural areas, even more than Bulgaria. More than 50% of the total live in villages, the latest ZF data shows, so that is a large potential consumer base.
In total, in 2021, Profi opened 173 new stores, 92 of which under the Loco brand. In terms of full-year expansion, this is the slowest pace since 2016. Even so, Profi was and still is the fastest growing modern retailer in Romania.
Although it accelerated expansion in the last four months of 2021, peaking with 20 new stores in November, it was unable to match the expansion rate of its best years. By comparison, at the end of 2019, the best year for expansion and also the last before the pandemic, the company had 264 more stores than the year before.
Profi’s original target for 2021 was 250 new stores, but the company also banked on remodels. Thus, company officials had previously announced that they actually wanted a total of 250 stores to be inaugurated and modernized by the end of the year.
“Modernization involves a greater volume of work than an inauguration,” the chain’s representatives said.
Profi officials do not announce the openings and remodels at once.
Profi has four formats in Romania – Super (regular stores, up to 550 square meters), City (smaller, 150-250 square meters but intended for the urban areas), Loco (for rural areas) and Go, the latter being the latest arrival. Go is a modern convenience store for today’s consumer in a hurry. Although such stores have been growing in number in recent months, Loco dominates in 2021.
The supermarket and convenience store network, which has more than 1,550 stores, is the fourth largest player in the local grocery retail by sales in 2020, with the top three places occupied by Lidl, Kaufland and Carrefour (as a group).
Profi ended last year with sales of RON8.8 billion, up 22%. The growth rate is the second fastest in the market, after Lidl.
(English version by Loredana Fratila-Cristescu)