Romanian retail events in 2019
Grocery retail, a EUR20 billion market a year was the stage of deals between foreign and local actors. Foreign chains continued to cement their position with new openings from scratch of several hundred stores. Unlike the previous years, no top management changes occurred, so the executives already on the job continued the project started without any major strategy changes.
Consumer spending continues upward trend
The retail sales, the most important indicator of the private consumer spending, rose by more than 7% in the first ten months of this year compared with the year-ago period, so the strong upward trend that started about four years ago continued, despite expert expectations to the contrary.
Lots of new store openings
More than 400 grocery stores opened in 2019, which makes it the best year in the history of local modern retail, which started with the arrival of Metro Cash & Carry in 1996.
In comparison, the previous years saw 250 to 300 stores opened. Foreign retailers therefore invested more than EUR300 milion in new hypermarkets, supermarkets, convenience, discount and cash & carry stores, according to ZF estimates.
Entrepreneurial businesses throw in the towel
Modern retail actors continued to take over entrepreneurial businesses to consolidate their position in new markets or on markets they were not covering well enough. The latest such move is Profi’s acquisition of 18-store Maya chain, whose operator posted EUR15 million revenue in 2018. Mega Image bought Zanfir network in Moldavia, where it did not have a presence yet. With ten stores and annual sales of 150 million lei (EUR31.42 million), Zanfir was one of the largest independent retailers.
Kaufland Romania beyond the border
Germany’s Kaufland group coordinated expansion to the Republic of Moldova from its Bucharest offices. It opened two stores in Moldova, in addition to the seven inaugurated in Romania.
Metro Cash & Carry steps up development of LaDoiPasi
The LaDoiPasi franchise, which Germany’s Metro Cash & Carry introduced in 2012, now numbers more than 1,000 stores, after about 300 openings in 2019, the group officials say, adding they plan to step-up expansion in 2020. The network was launched as a solution to the loss of traditional retail stores at a rate of several thousand stores a year.
Carrefour bets on discount format
Supeco store chain, a mix of discount and cash & carry formats, has grown to 24 stores after 11 openings and expansion will continue, as Carrefour Romania CEO Jean Richard de Latour said.
Carrefour introduced the brand in Romania in the fall of 2014, when the first store opened in Ramnicu Valcea. The decision to step-up expansion comes as a result of Romanian consumers looking for low price stores, as shown by the fast-paced growth of Lidl’s business.
Profi, the first retailer to reach 1,000 stores
Retailer Profi, held by buyout investor Mid Europa Partners, grew to 1,000 stores – supermarkets and convenience stores, in May. The retailer reached a milestone no other retailer has in Romania. It continued expansion, opening 260 stores in Romania for a total of almost 1,200 in 2019.
Retail not only develops, it transforms
On a market that is becoming increasingly competitive, it is no longer enough for retailers to open regular stores, which is why the battle over customers is fought on several fronts. Mega Image, for instance, opened #MegaStreetFood, a food court integrated into its Barbu Vacarescu concept store. The 300 square meter space groups four international cuisine restaurants – La Finca by Alioli, SteakAway, Za German and Pane & Pomodoro. Mega Image is not the only retailer to go with restaurants, as Auchan is another example of this and is now preparing to open a restaurant on the ground floor of the Bucur Obor store, which replaces a McDonald’s.
Private labels continue to gain ground
Private labels grew to 16.5% of the total FMCG sales at the end of last year, after having gained 1% in 2017. The market share will continue to increase, with retailers announcing big plans to that end. Private labels contribute 10% of Auchan’s sales, but the retailer wants to double the share of such products in five years. Kaufland’s sales of private label products stand at RON1.6 billion or 15% of its sales. Private label products gained 4% market in the last four years and now account for more than 25% in Penny Market’s sales, for instance.
Romanian entrepreneurs find ways to cope
On a market still dominated by major foreign retailers, Romanian entrepreneurs find ways to cope and develop specific concepts such as butcher’s shops, bakeries and groceries. They do not want to battle foreign chains directly but make room on a market where consumers are looking for more expensive, healthier, ‘Made in Romania’ products. The Romanian market follows the model of the West, where local entrepreneurs stay in business but choose to specialize.(EUR1=RON4.7736)
Source: ZFCorporate
