While waiting for consumer spending to clearly rebound, the retail chains comprised of smaller stores on the ground floor of apartment buildings or as close to populated areas as possible are opening store after store to take advantage of the lower rents and to prevent competitors from moving into the space.
Supermarkets have been the stars of local retail in the last few years, and retailers stepped up expansion by opening more than 100 new stores every year. The small format stores, and especially supermarkets and discount stores gained ground during the crisis years while large stores requiring tens of millions of euros in investments did not progress much.
The investment in a supermarket ranges from several hundred thousand euros to two million euros for a 2,000 square meter store.
The last few years of crisis and sharp decline in consumer spending changed not only retailers’ plans but also consumers’ attitude. Romanians now prefer to do their daily shopping at small stores close to home or workplace. The large stores are only a weekend destination.
The retailer that made the most of this opportunity is Belgian-held Mega Image, which operates via the supermarkets by the same name and the Shop&Go convenience stores in Romania. The chain now has 193 stores after having expanded fast in recent years. It opened 88 stores in 2012 alone, almost as many as in all the other years in business on this market.
Ever since the retailer entered the market, it focused on Bucharest and Ilfov county (near Bucharest). It also expanded its network to Giurgiu county (S), Brasov (central Romania) and to Arges County (S). The only city east of Bucharest where it opened stores is Constanta, avoiding Ialomita and Calarasi counties, where the purchasing power is lower.
Mega Image has relied on opening its own stores and on buying out rival networks for growth.
Mega Image has the largest network in Romania by far, followed by Lidl and Profi with about 150 stores. It plans to open another 80 stores in 2013, for a total of almost 2013, according to market data. The company did not specify exactly how many stores it would open this year, though.
Another retailer to have aggressively expanded is supermarket chain Profi, controlled by Polish private equity fund Enterprise Investors. Pawel Musial, the general manager of the retailer said a few weeks ago he planned to open at least 45 new stores, keeping the pace of 2012.
The company is getting ready to develop its network to almost 200 stores throughout Romania, as its officials believe there is still room for expansion. The retailer says it will also introduce two new store formats to take on the convenience store segment in cities and the village store segment.
Profi, as well as Billa and Carrefour Market, chose countrywide expansion right from their start in Romania. Mega Image, on the other hand, focused on Bucharest and the surrounding areas. It will continue to focus on Bucharest and the surrounding areas on a 250-kilometer radius.
Although the retailer is now present in most of Bucharest, rivals Carrefour Market, Billa and Profi says there is still room on this market.
Billa budgeted for the opening of at least ten new stores in 2013, while Carrefour will proceed at the same pace as in 2012.
It opened 21 supermarkets, 21 convenience stores and no hypermarket, last year and now its network numbers 110 stores.
Although companies say they are going to expand, they would not say exactly how much room for new stores there is.
Daniel Mocanu, general manager and majority shareholder of DAAS, one of the most important suppliers of equipment for hotels, restaurants and food stores says the market can grow until 2015 at the same rate as in the last few years.
The reason for the statement of the entrepreneur, who knows what is going on in local retail one year ahead, is that the number of stores per one thousand inhabitants is still low in Romania, compared with Western countries. However, the purchasing power is not the same as retailers have to be careful with expansion if they want to avoid having to close stores.
(English version by Loredana Fratila-Cristescu)