“I prefer to shop in a small store, where all products are within reach and where I don’t have to stand in a long queue,” says Mihai, 24, a customer.
The financial crisis has changed consumer behavior, with Romanians preferring to shop more often in convenience stores, where they only buy the basic necessities for one day, believes Vassante Monany, commercial manager of the Interex supermarket chain.
He says that, while in the beginning Interex stores covered up to 3,000 square meters, which compares with the usual 1,000 square meters of supermarkets, now Interex supermarket areas are down to 1,000-1,200 square meters.
The market entry of Germany’s Lidl, one of the most aggressive European discount chains, will change the face of modern retail in Romania, and is set to eat into the market share of the other discount stores, as well as of big-format stores, consultants believe.
The opening in one go of 107 Lidl stores (by rebranding the former Plus stores) at the beginning of this week, one of the most awaited events of the last three years, means a fiercer price war, with price becoming the most important selection criterion for Romanians when they shop.
“The fact that many retailers are developing small formats is a natural trend, such store formats have competitive advantages: the investment is lower, space is easier to find, operating costs are much lower. This translates into a higher profitability per square meter and a faster investment amortization,” believes Sorin Spiridon, manager within Ensight Management Consulting.
Large-format stores, which cover as much as 10,000 square meters in some cases, were among the first to open in Romania over a decade ago. Afterwards, store areas started on a downward trend.
The first ones to tap into the modern retail market were Germany’s Metro Cash&Carry in 1996, while the first small-format retailer to enter the market was Billa, three years later.
In 2005, the cash&carry segment was the leader with a nearly 60% market share, followed by hyper and supermarkets, with 19% and 15% respectively, and by discount chains with 4%. 2009 came with a new leader, hypermarkets, with 46%. The cash&carry segment halved its market share against 2005. Discount chains managed to leave the supermarket segment behind, reaching a three times higher market share than four years before, and becoming the fastest growing segment.