Romanian retail also has its losers

With every year, the Romanian retail segment attracts more new and big names to the market, while existing players devise increasingly aggressive expansion plans. However, the potential of a market of nearly 22 million consumers does not always guarantee success for all who open stores on the market.

The most recent examples of this are Gamma and Profi.

After having expanded to more than 20 stores by last year, the Profi network recently had to close its first two stores in Timisoara and Lugoj. To make matters worse, the former head of the Timisoara store recently sued the management for abusive dismissal.

“The two stores were just a test for a sales space smaller than standard at 200-250 square metres. We usually have 800 square metres. We will replace the two stores as quickly as possible with other stores of a standard format,” said Gabriela Mengher, a marketing director with Profi Rom Food, the company that manages the Profi network in Romania.

Profi opened its first store in Romania in 2000 and plans to expand over the coming years from the current number of around 20 to 70 stores by the end of 2007. Profi is part of the Belgian Louis Delhaize group, which owns Cora supermarket.

Romgros, however, which is owned by Enaco, a Spanish group involved in distribution, is set to suffer a worse fate.

According to market sources, the two stores Romgros manages under the Gamma brand in Bucharest and Pitesti are to be closed. Romgros’ management has already started informing its partners and suppliers of the decision.

After being contacted by Ziarul Financiar, Romgros representatives had provided no comment on the issue by the time of going to press.

The first Gamma outlet, a cash & carry store, was opened in 2000 in Piata de Gros (Wholesale Market) in the southern part of Bucharest. Investment in the store reached one million dollars. The second store was opened in Pitesti, also as a cash & carry store, but later turned into a supermarket.

On entering the Romanian market (their first foreign market outside Spain), the Spanish company announced an investment plan that was to entail 10 cash & carry stores and 20 supermarkets.

There is also Gima, a supermarket chain that had a slower period on the Romanian market a few years back. It opened its first store on the domestic market in 1999 inside Bucuresti Mall. The good results of this store prompted it to open two more, one inside the Prisma Complex close to Bucharest and one in the Iulius Mall in Iasi and then another store in Constanta in 2001. It later had to close the store in Prisma and that in Constanta in 2002.

Despite all this, most international players on the Romanian market have enjoyed better than expected results since entering Romania.
ionut.bonoiu@zf.ro ; transilvania@zf.ro