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| The Development of Supermarket and Hypermarket Chains 08/02/2011 |
| (2011-02-08) |
| Last updated: 2011-02-17 16:19 EET |
1996 was the year when the German group METRO opened its first Cash &Carry store in Romania. In the last 10 years, the Romanian market has witnessed an extraordinary boom of all types of modern commerce: supermarkets, hypermarkets or shopping malls. Despite the economic downturn and the severe drop in sales, market chains have further expanded in the last two years.
As regards the supermarket and hypermarket chains with business operations in Romania, foreign investors, especially from Germany, France and Belgium have tipped the balance in their favour. Nevertheless, it is equally important to note that in recent years, certain Romanian supermarket chains such as Altex, Media Galaxy, Domo or Flanco dealing in electronics, IT and domestic appliances, but also some furniture retailers like Mobexpert or Elvila have seen a substantial growth.
The German group METRO however remains the absolute leader in self-service wholesale. After 1996, the group METRO further introduced the do-it-yourself store Paraktiker, but also the hypermarket chain Real on the Romanian market. Another cash & carry retailer that has been conducting operations in Romania since 2001 is Selgros Cash&Carry, currently owned by the food and staples retailer transGourmet, a joint venture set up by REWE Group Cologne and Coop of Switzerland. REWE group also controls such hard discount supermarket chains on the Romanian market as Billa, XXL, Megadiscount and Penny Market.
One major player on the Romanian market is the hypermarket chain Carrefour, the most successful in this country in terms of sales. The Belgian group Louis Delhaize is also present in Romania through its Cora hypermarkets, Mega Image supermarkets and Profi hard discount stores. Another German company on the Romanian market is the group Lidl & Schwarz, owner of the Kaufland hypermarket chain. Last year, the German group took over the Plus chain in Romania from Tengelmann, another German company, and late last month, opened the first Lidl supermarket in Bucharest.
The French hypermarket chain Auchan is another notable presence on the Romanian market. The do-it-yourself sector in Romania is dominated by the German chains Prakitker, OBI and Hornbach, the Austrian group BauMax, Bricostore and Mr. Bricolage from France and the Romanian company Dedeman. This year, the French network Leroy Merlin is expected to open up its first store in Romania. Valentin Mircea, member of the Council of Competition board, told us more about what’s going on in Romanian retail.
“Modern commerce has begun to get the upper hand at a national level. In the big cities, it had gained ground long ago, and grows even stronger now. Modern commerce is expected to grow in terms of concentration, so to say. There is a fairly large number of chains competing with each other. The age of Greenfield investments, where one big chain comes and builds stores across the country, is most likely over. Although we will continue to see such investments, we expect chain buyouts, where a company takes over another, as other countries have experienced.”
In turn, CEO of Selgros Cash and Carry Romania, Alexandru Vlad, said this.
“Metro entered the market in 1996, Billa, three years later, Selgros and Carrefour in 2001, and we had a boom year in 2005, when Penny and Kaufland joined the Romanian market; Auchan and Real soon followed suit. Those supermarket chains opened outlets in cities with over 200 thousand residents, with some exceptions. Discount shops are still in their infancy here in Romania. If, in 2004, we only had 7 hypermarkets, 28 cash & carry centers and 22 hard discount stores, in 2010 we had 43 cash & carry centers, not a very higher number as compared to 2004, 117 hypermarkets and 343 hard discount stores. Maybe this is the tendency for the following period, hard discount shops will enter both the urban area and the small towns and big communes.”
After a year in which the Romanians’ reduced purchasing power and a swollen VAT from 19 up to 24% affected both retailers and producers, most of them expect the market to shrink in 2011 as well. According to the Retail Year Book, issued by the Mediafax News Agency, leaders of employers’ associations expect increased prices for several basic food products such as bread, pork and sugar, as a result of imports and increased prices on foreign markets.
Producers, included in the Mediafax yearbook, also forecast lower sales of some products, such as beer, wine and cigarettes as well as the customers’ pragmatic approach, just like in 2010, when Romanians gave up compulsive shopping and stockpile supplies and preferred to buy the products they needed and familiar brands. The retailers’ preoccupation with streamlining their activity by rethinking out the products they present, continuing investment in their own brands, the careful choice of new retail spaces, are other top trade activities they are focusing on in 2011.
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