Sales Per Sqm Down 40% Despite EUR2B Investments By Retailers

The figures serve to prove once more that the store openings in the last few years of consumer spending decline helped the business of modern retailers grow slightly but sales per square meter have been dwindling. The 12 retail chains have invested EUR1.5 billion to EUR2 billion in the last four years to boost retail space by about 80%, according to ZF analysis.

“The aggressive expansion in the crisis years is behind the decline in sales per square meter. Many networks felt this was a good time to expand because it was cheaper to do it, expecting an increase in sales per square meter soon,” says Marcelo Mihai, senior consultant of management advisory firm Geva&Company.

“Sales per square meter will not rebound next year, it will take somewhat longer instead. They will not match the boom year levels when the market had not expanded that much.”

The total floor space of modern retailers increased by 80% during the crisis and reached 1.8 million square meters, while sales fell by about 40%, which means they managed to attract new consumers and serve new markets. The financial crisis and the appetite for spending in the last few years did make an impact, though.

In every year after 2008, retail chains opened 100 to 200 new stores a year and invested hundreds of millions of euros in them.

Expansion has eroded sales per square meter, and one such example is Metro Cash&Carry, which ZF calculated has the highest sales per square meter, EUR5,350 on average. This is down 42% since 2008 the last boom year.

ZF calculated sales per square meter without taking into account the opening date of stores. It is therefore obvious that the actual sales of the networks that relied on the fourth quarter to open stores are higher. Sales per square meter in the new stores opened in 2012 are lower than average and a store may take as much as over a year to reach maturity in case of a large format store such as hypermarket.

An example in this regard is Kaufland, which opened ten hypermarkets in 2012, while Metro Cash&Carry’s last opening was in 2011.

(English version by Loredana Fratila-Cristescu)

Highest sales/sqm

* revenue taken from the corporate report

** revenue and number of stores are valid for 2011 because Lidl has not yet revealed 2012 results. ZF calculated its total floor space based on the information about the average floor space of the network stores provided by its officials

Note: ZF used previous information about floor space to estimate it for Penny Market, Carrefour and Mega Image. ZF calculated sales per square meter without taking into account the opening data of the stores.

Sources: ZF, companies, Finance Ministry

Trend of sales/sqm in 2008-2012

Source: ZF