Romanian Retail & FMCG Market 2007
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Martie 2008 |
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MAGAZINUL PROGRESIV |
Adresa
Bulevardul Iuliu Maniu, Nr. 103
Cladirea B, Etaj 5, Ap. 24
Bucureşti, Sector 6
Telefon
+40-21-315.90.31
Fax
+40-21-325.90.29
Website
www.magazinulprogresiv.ro
Undoubtedly, 2007 was a turning point in the history of the Romanian retail sector, for at least two reasons: firstly, retailers’ territorial expansion was faster than ever and, secondly, a period of concentration began. These two phenomena mean that competition will become more intense and companies will fight for a higher market share, therefore, soon, retailers will need strong elements to set them apart from others in order to attract and keep customers. It is no longer a novelty that more stores belong to the same chain, or are present in the same city, this expansion being a policy which will continue to be applied in 2008. At the same time, modern retail has started to be more apparent in smaller towns, especially through discounters, which will soon target towns with as few as 15,000 inhabitants.
Although not exhaustive, this article tries to offer a glimpse of the modern retail sector, with major achievements in 2007 and future projects for 2008. As for the so-called traditional retail sector, according to Nielsen, it has maintained a stable course, at least when it comes to grocery stores larger than 20sqm. Kiosks began to regress significantly, but some specialized stores have grown, such as those that sell beauty products, pet stores and butcher shops, which are more and more important in terms of FMCG sales.
What independent traditional retailers should have learned in 2007 can be summarized in a single word: affiliation, meaning either establishing an association of retailers or adhering to an existing one, or to a franchise. Those that want to remain on their own will have to find a niche in order to be profitable. Local Key Accounts are now torn between fragmented and consolidated retail and have the difficult mission of building a bridge between the two markets they are present in, in order to ensure their customer’s fidelity, who are attracted by international chains. Therefore, Key Accounts have the constant frustration of not being able to offer customers the same conditions that major suppliers can offer their customers.
Difficulties in 2007
Land acquisition
All retailers agree upon the problems they encountered regarding land acquisitions and construction quality. Of course, these difficulties are not new, but they intensify because of the high rate of retail development, which increases the demand for land and retail space, either to buy, or to rent. “Land prices continue to grow unjustifiably. They will probably do so until the market finally balances itself”, states Rainer Exel, Minimax Discount, General Manager.
In addition, retailers mention more often the difficulties encountered during the construction process, as well as the rise of raw materials costs and the lengthy process of construction, because of a lack of personnel. “It has become more difficult to control the balance of efficiency when speaking of a price-quality rapport of the actual offer, which is controlled by speculations and trends rather than reality. These situations have led to cancellation or delay of certain projects”, said Rino Tizzanini, General Manager of Spar.
Staff
Finding the appropriate staff members was another major problem in 2007, an issue not encountered in past years. Now, however, recruiting qualified staff members has become a challenge for at least two reasons: the large number of stores being opened and work force migration abroad. Besides the staff necessary in stores, retailers also complain about a lack of staff for certain jobs such as butchers, bakers, confectioners, or pastry makers. “We don’t complain about a lack of higher education when it comes to these jobs, but most people don’t even have the basic necessary training”, explained the representatives of Real hypermarket. The lack of staff will reflect upon the quality of services, an aspect that will become essential, since it already is a major attribute in differentiating among stores, in the context of such a competitive market.
Harmonizing the legislation
Retailers also mention legislative difficulties, “brought about by EU accession, especially since Romania was not yet prepared for such a task. The manner in which laws were modified, often in contradiction with European directives, combined with the typical Romanian red tape, especially when attempting to obtain various authorizations, led to a more difficult unfolding of operations last year for our company”, said Penny Market representatives.
