A focus on smaller retail formats, online expansion and an overall slowdown in store openings were some of the main developments on the local FMCG retail market in 2014. Fashion and footwear retailers saw their expansion hindered by the lack of new shopping malls being opened while the DIY market underwent some drastic changes.
Grocery retailers bet on small formats
FMCG retail players opened a total of 70 new units in the first half of 2014, according to data from DTZ Echinox. Kaufland was the only hypermarket operator who continued to invest in new store openings while the other players focused on smaller-sized formats. Mega Image was the absolute leader on this segment, having opened a total of some 58 Shop&Go proximity stores by early December. While the retailer expanded mostly in Bucharest, other players targeted smaller local towns as well.
This year has also seen existing players investing in bringing new retail formats to Romania. In September, French Carrefour opened its first local Supeco store and a second one was inaugurated the following month. The Supeco concept is a mix between a discounter and a cash&carry store and so far Carrefour has been present with this retail format only in Spain. Auchan, another major hypermarket operator, said in July that it was considering adding a new hypermarket format to its local presence. This would be a compact hypermarket selling fewer products than the regular Auchan hypermarket which would make it better suited to small towns. The concept has already been launched in Russia and China where it is proving very successful, according to company representatives.
By early December Carrefour was operating 167 stores in Romania, out of which only 27 were hypermarkets. In 2013 it became the first large FMCG retailer to launch an online store and the next year more retailers followed suit.
After Cora launched a local drive-through service in 2013, this November it also made available a home delivery service for goods ordered from its on-line platform coradrive.com. In the first year of activity the retailer’s online sales amounted to over EUR 450,000. Earlier in 2014, online retailer eMag and supermarket operator Mega Image also announced that they had reached an agreement to launch an online store selling grocery products.
A crowded market
The Vulcan Value Centre retail park and Shopping City Targu Jiu – both developed by real estate investment fund New Europe Property Investments (NEPI) – were the only two modern shopping centers to be delivered this year in Romania. Retailers such as Carrefour, H&M, Takko and Deichmann are tenants in both projects. The two projects’ combined surface of about 62,000 sqm marks the lowest annual level reported since 2005, according to JLL data.
While several big projects are presently under construction and approximately 270,000 sqm is expected to be delivered in the country in 2015 and 2016, retailers had a hard time finding space for additional stores in new locations this year. This meant many had to look at existing shopping centers.
As a result, the vacancy rate of prime shopping centers in Romania has been on a downward trend in Bucharest and other cities in the country, dropping to below 5 percent in the first half of the year, according to DTZ Echinox data.
Maxi Toys is one of the few new retailers to have entered the local market this year. Spanish sportswear retailer Decimas also announced it would open its first store in Romania in Coresi Shopping Resort Brasov next year.
Power shifts on the DIY market
After a turbulent 2013, the local DIY retail market underwent more changes in 2014. Local businessman Omer Susli officially took over the 27 local stores of insolvent Praktiker AG in February and by the end of December one more new location will be opened. German
Praktiker had seen five consecutive years of falling sales in Romania but the new owner was confident that losses could be recovered by the end of 2014. Praktiker was not the only international player to succumb to falling sales. Following poor results, OBI closed all seven of its local stores this September and some of the locations were taken over by Greek toy retailer Jumbo. OBI, which is part of German retailer Tengelmann, opened its first local shop in 2008 and expanded until 2010.
While OBI did not manage to sell its entire network, Austrian DIY retailer bauMax announced in July that all of its 15 stores in Romania would be taken over by French DIY group Adeo which owns several DIY retail brands, and is already present locally with a Leroy Merlin store in Bucharest.
While international players struggled in 2014, local Dedeman, which is owned by Romanian businessmen Dragos and Adrian Paval, has consolidated its position as the leader of the Romanian DIY market. Unlike its international competitors, the company has managed to maintain a steady expansion rhythm over recent years, reaching a network of 39 outlets at the end of November. Three of the stores were opened this year.