Romanian discounters not affected by the crisis

2009-12-23

The economic downturn appeared not to be a threat to whole Romanian retail market. Some retailers, for example discounters, have benefitted from the situation. In Romania, discounter chains expanded at three times the rate of hypermarket chains.

Discounters expand at a faster rate than hypermarkets
In 2008 both retail formats, discounts and hypermarkets, had a similar expansion rate of 40%. In the current economic climate, however, discount chains have an advantageous position as their main features, such as low prices, limited assortment and trading area, are seen as major competitive advantages during times of economic distress. In 2009 discounters increased their GLA by 35% compared to 2008 which represents a total of 75 new discounter stores openings in Romania – the equivalent of a new store every four to five days.
Hypermarket operators, on the other hand, expanded at a rate of just 10% this year and some even closed down stores for the first time since entering the country. A total of 28 hypermarkets were opened in the country this year, down by 50% from last year. The decline was mainly due to the postponement of most shopping centre projects initially planned for 2009, according to Colliers International.
Hypermarket operators spent a total combined amount of over €210m on the development of their chains while discount chains combined to invest €100m. The amount invested by hypermarket operators exceeded that invested by discounters predominately because of the difference in size between the two types of stores. On average, the investment required for a new hypermarket is about €20m, an amount sufficient for 10-15 new discount stores.
The discounters are set to continue with their expansion next year. Penny Market, having opened 28 new stores in 2009, plans to open a further 25 new establishments during 2010. In turn, the German discount chain Plus, with 23 openings concluded in 2009, aims to extend its business to all towns in Romania with more than 15,000 inhabitants.





Romanian retail market still attracting investors
In 2009 the Romanian market was entered by retailers such as the Polish Enterprise Fund VI, administrated by Enterprise Investors, and the Belgian retail group Delhaize, owner of the Mega Image supermarkets. Enterprise Investors has already announced its intention to double the number of its Profi stores over the next three to four years. Moreover, the German retail group Lidl & Schwartz plans to open the first stores in Romania of its hard-discount chain Lidl in H2 2010. Lidl & Schwartz already operates the supermarket discount chain Kaufland on the Romanian market. The retailer wants to build a chain of 100 outlets in Romania, according to market insiders.
Since Romania was ranked eighth (26% of respondents) out of 56 countries on the list of most attractive investment markets for 2010, according to a survey of the leading international retailers conducted by CB Richard Ellis, it is likely that in some new retailers will appear on the Romanian market in 2010.



Paulina Burzawa
Business Editor
PMR Publications