Retail trade will radically change during the next two-three years, once the chains of supermarkets already operating in Romania expand and new such companies enter the market, specialists in this sector consider.
This tendency will strongly influence all players from the trajectory followed by products between producers and consumers, from small traders to distributors and to international and local producers. A decisive role is played by the consumer, whose buying “habits” will set the pace of these changes. A recent study by marketing research company Daedalus Consulting shows that one of five Romanians living in cities already shops at least once a week at a supermarket or a mini-market.
Dragos Rosca, a project manager with Roland Berger & Partner consultancy, considers that at present we find ourselves in the exact point Hungary was 4-5 years ago or Poland three years ago. The introduction of large international supermarket chains on the market, which started about three years ago and is intensifying, will lead to the concentration of retail trade in this type of shops. “These networks cover about 70 percent of sales in Hungary for each producer of consumables, which completely modifies the structure of distribution. In our country, this percentage comes to about 10-15 percent,” Rosca estimates.
Analysts consider that this tendency is clear, because profit margins in the industry are very low worldwide, and, to be efficient, shop chains need to expand. Dragos Rosca says that networks of small shops will have to expand, so as to reach 200-500 sale points, while for supermarkets this “critical point” of efficiency would be of several dozens of outlets and, in the case of hyper-markets, the level will reach approximately 10 units on the Romanian market.
The first to be affected will be small traders, who will very quickly lose the possible competitive advantage of smaller prices. Large supermarket chains will largely benefit from this evolution, due to high sale volumes they secure for distributors and producers. Distribution firms will also suffer essential changes. Large shop chains prefer to negotiate with as few distributors as possible, which should supply a varied range of products. “As a result, smaller producers and distributors will no longer be able to become network suppliers,” explains Nikos Vorlas, a sale director with Elgeka Romania distribution firm
Consequently, the distributors market will also include, beside very strong firms, small distributors that will serve small outlets that will survive, for example kiosks.
“The market presence of international retail networks will have a positive impact over the local food industry. For us and for our competitors to succeed on this market, we need to buy Romanian products,” says Clemens Petschnikar, a general director with Billa Romania.
Last, but not least, this new type of trade will influence consumers’ behaviour, because it will shape up their taste for more diversified and high quality products. They will also benefit from cheaper products, owing to increasing competition between traders.