On Friday, the last day of his term in Romania, he talked to ZF about the chain’s plans and about his accomplishments. He will be replaced by Greek executive Vassilis Stavrou at the helm of the retailer.
“When the group reaches 500 stores in Bucharest alone, the city wil have been covered,” the executive said.
The idea behind opening stores so close to each other was not to block competition but to properly cover each community in Bucharest and by community he means the people who live on a 500 meter radius around each store, Piesvaux added.
The 48-old Belgian executive remembers that when he started the Mega Image project he looked into whether the retailer should expand to the country or stay in Bucharest. He chose the latter because he realized it would be too risky for Mega Image, a small player at the time, to tackle the whole country.
“We would have lost control of the business. Moreover, one has to be strong, even the leader where one is.”
Now Mega Image has more than 420 stores, about 80% of which operate in Bucharest. The network includes the Mega Image supermarkets, the Shop&Go convenience stores, an online store and specialist stores Gusturi Romanesti and AB Cool Food.
He came to Mega Image in 2006, when the network numbered 19 stores, had no well-oiled logistic systems and no private labels. It was just a retailer like any other back then. Delhaize’s (Mega Image owner i.e.) plan from the beginning was to transform the network and develop it in full gear because volume is important in retail, Piesvaux said. He first served as chief operating officer and became CEO in 2008.
He recalls that when he arrived in Romania, the market was booming, everyone was opening stores. Shortly afterwards Romania joined the EU, wages started to rise and Romanians started spending.
Mega Image knew the boom would not last so in 2007 it started devising its long-term strategy, Xavier Piesvaux said. This is when it bet on private labels (which today generate more than 20% of the revenue), on a well-oiled logistic system and on convenience because its CEO knew the lifestyle of the people in Bucharest would change. Many retailers failed in 2009-2014 because the industry works with low margins and any mistake can throw one off-balance, he added.
Mega Image expanded on a 250-kilometer radius around Bucharest, to keep costs manageable. It decided to expand around its logistics center, wanted to have everything centralized, the executive says. It will open a new center in northern Bucharest, following a EUR25 million to EUR30 million investment, because its current center would be saturated next year.
“The group invested EUR250 million in Romania until the end of 2014, in stores, logistics centers and remodeling. We will invest a further EUR50 million in the new logistic center and new stores by yearend.”
Mega Image bet on a niche yet unexplored by rivals a few years ago, convenience stores. It has therefore expanded in full gear, reaching a pace of 100 new stores a year, which it will keep in 2015, as well.
(English version by Loredana Fratila-Cristescu)