“An equal number of stores can still be opened in modern retail, but this will take at least four years if networks expand at the same pace as they have until now. Then, after the peak is reached, refitting will follow,” says Daniel Mocanu, chief executive officer and majority stakeholder in DAAS, a major supplier of equipment for hotels, restaurants and food stores.
The domestic retail market is dominated by 12 foreign networks with overall revenue of some EUR8 billion per annum and with over 1,200 stores. Retailers have sped up expansion in recent years marked by the crisis and falling consumption, opening over 100 new units per annum.
The best year in terms of expansion was 2013, when 283 new units opened, most of them supermarkets and proximity stores. These have areas of tens or hundreds square meters and take sweeping investments. At the opposite end, no cash&carry was opened last year. According to ZF data, over 250 new units are scheduled for opening this year.
“Chains will expand further, but on small formats, supermarkets and proximity stores. Online expansion will also start,” adds Mocanu.
Belgian-held Mega Image last year opened 103 stores under three formats, more than a third of all openings in modern retail. This year, the retailer is set to expand at the same pace, according to market sources.
Modern retail in 2013 for the first time outweighed traditional retail in the total, according to GfK data. Thus, in the first six months of the year, the weight of international chains reached 53% from 49% a year before.
Aggressive expansion on classic formats on the one hand and the development of proximity formats on the other one led to the disappearance of small players. Traditional retail still includes 60-70,000 stores.
In Romania, the modern retail/traditional retail ratio has been quite balanced in recent years, but international players have been gaining ground. In Western countries, modern retail weighs close to 90%. Hans Dewaele, head of P&G operations in Romania, recently said Romania is heading the same way and this is only a question of time.
“In Romania, there is still room for growth, until the average modern retail area doubles, to around 160-170 square meters. It took us about a decade to reach the current level and I believe it will take us another ten years to double the area amid the current market conditions. Should the market and consumption pick up, the area will doubl in a shorter period of time. I do not believe we will get to catch up with Germany or Poland, where purchasing power is higher and salaries are double the Romanian ones,” says Marcelo Mihai, senior consultant with Geva & Company consultancy.
(English version by Catalina Apostoiu)