“Sales on the existent area (not including expansion i.e.) dropped on the entire market on the fast expansion of some players. We have not expanded in the past year, so that revenue posted a slight decrease,” he explains.
The company’s revenue contracted from EUR768.9 million in 2012 to EUR699 million in 2013.
Sales per square meter, the most important indicator for Romanian trade, reached an average of EUR3,500-4,000 last year, from EUR6,500-7,000 in 2007-2008.
The figures once again show that in the past years marked by the declining consumption, new store openings managed to keep modern retailers’ revenue on a slightly upward trend, but sales per square meter have permanently declined. The 12 store networks have invested EUR1.5-2.5 billion in the past 4 years to double their sales area, according with ZF calculations.
However, Selgros is one of the most cautious players when it comes to expansion and it has opened just two stores since 2008 until now. A cash&carry store takes investments of around EUR20 million and a land plot of above 10,000 square meters.
Ever since it entered Romania, Selgros has been one of the most prudent companies in terms of expansion, opening three stores per annum at most in the first years of presence and in the boom period. However, during the crisis years the retailer, with EUR699 million in revenue last year, further slowed down expansion.
Vlad previously said the retailer wanted to reach 21 stores in Romania on the medium term, targeting cities of over 150,000 inhabitants where the company is not present.
The retailer has bet on large cities, being present in Bucharest with four units, Constanta with two units and one in each of the rest. According to ZF data, Selgros is not present in Pitesti and Sibiu.
Selgros opened the last store in December 2011 in Constanta, with the network including 19 units at that time.
“It’s difficult to say when the next stores will be opened, but what we can say is that we’re not at the end of expansion. We depend on land owners, approvals,” says Vlad.
Unlike the other stores of modern retail, cash&carry chains address resellers. In this context, the positioning of stores must take into account the areas close to large cities.
“Traditional retail is constant in terms of the number of players. At the opposite end, HoReCa is slightly growing”. These two segments are the main client categories for cash&carry chains.
On the aggressive expansion, modern retail for the first time outran traditional retail in 2013.
“Consumption is not rising and competition on the market is ever fiercer. These are the main factors with an impact over our business,” this is how Vlad accounts for the situation of Selgros business on the one hand and of trade on the other one.
While the National Statistics Institute announced consumption increases for the first months of 2014, Vlad says they are not felt on the market. “Since the start of the year, we’ve noticed some stagnation, but it is hard to anticipate what will happen in the next months”.
About Selgross business, Vlad does not provide any figures. “For 2014, we want to be better than in 2013, meaning a revenue increase without taking into account expansion”.
(English version by Catalina Apostoiu)