Istvan Egresi Fatih University Istanbul, Turkey

TRANSNATIONAL RETAIL CORPORATIONS AND THE MODERNIZATION OF THE ROMANIAN RETAIL SECTOR

INTRODUCTION

Retail is one of the most dynamic sectors in Romania; Romanian food-based retail market 16 billion euro. Purpose of the paper: to assess the intensity of retail FDI and its role in the transformation of the Romanian retail sector.

THEORETICAL FRAMEWORK
Two parts: 1. Modernization of the retail sector (supermarketization) Reardon and colleagues 2. Globalization of the retail sector Alexander, 1997; Wrigley, 2000; Coe and Hess, 2005; Coe and Wrigley, 2007; Wrigley et al 2005; Wrigley & Currah, 2005; Poole et al, 2002, etc.

RETAIL DEVELOPMENT: 3 STAGES

1.

2.
3.

pre-transition period; Early transition period; globalization period.

RETAIL TRANSFORMATION IN ROMANIA

1.

2.
3.

Interwar period Socialism Transition and Internationalization

1. INTERWAR PERIOD
1930s the retail sector was very fragmented 147,000 stores in Romania 120 people to a store

2. DURING SOCIALISM
almost no privately-owned store left of the economy Shortage of retail space Shortage of goods long lines
Nationalized
pariah

THE TRANSITION AND INTERNATIONALIZATION PERIOD

1990-1995 1996-2002 2003-2008 2009-2012

EARLY TRANSITION PERIOD 1990-1995

Initial retail privatization Fragmentation of retail Very little FDI First Romanian supermarket 1992

1996-2002
Modern retail formats expand slowly First international chains Market dominated by traditional formats

2003-2008
Rapid expansion of modern formats especially hypermarkets Internationalization Changing shopping habits

AFTER 2008

Consumption decreased by 20% # of modern stores continued to increase 900 units 50% modern retail 74,000 traditional retail units Domination of international chains

TRADITIONAL AND MODERN RETAIL SOURCE: ZIARUL FINANCIAR, NOV. 30, 2011
Year Small Indep. Grocerie s Kiosks Gas stations Discount SuperM HyperM Other Total

2006 2007 2008 2009

74,795 73,742 72,292 71,218

5730 5001 4514 3759

1463 1241 1326 1255

95 139 210 292

298 350 379 403

36 64 89 103

9038 10,020 10,844 11,415

91,455 90,557 89,654 88,445

2010

70,923

3130

1330

323

436

113

11,787

88,042

TOP 10 RETAIL COMPANIES IN ROMANIA IN 2010 (CASH & CARRY NOT INCLUDED) SOURCE: ZIARUL FINANCIAR, NOV. 19, 2011
No. Company Turnover (mil. Euro) 1112 933 781 385.3 356.7 327.8 272 210 146.7 97.3 No. of employee s 9993 7123 7530 2075 3184 3146 2752 2998 1492 1068 Owner

1. 2. 3. 4. 5. 6. 7. 8. 9. 10.

Kaufland Carrefour Real Rewe Auchan Cora Billa Mega Image Profi Rom Food Artima

Schwartz Group (Ger.) Carrefour (Fr.) Real Group Holding (Ger.) Rewe Group (Ger.) Auchan Group (Fr.) Louis Delhaize Group (Fr.) Rewe Group (Ger.) Delhaize Group (Bel.) Enterprise Inv. (Pol.) Carrefour (Fr.)

REGIONAL DISTRIBUTION OF MODERN RETAIL UNITS

Region No. of units Population Population/unit % total # of units

Ilfov & Bucharest

Northwest Region West Region Center Region Northeast Region Southeast Region South Region Southwest Region

173
90 101 95 81 78 89 52

2,043,226
2,495,247 1,729,379 2,251,268 3,148,578 2,399,602 2,998,643 1,977,993

11,810
27,724 17,122 23,697 38,871 30,764 33,692 38,038

22.80
11.90 13.30 12.50 10.67 10.27 11.72 6.85

REGIONAL DISTRIBUTION OF HYPERMARKETS IN ROMANIA

Region
Ilfov & Bucharest
Northwest West Center Northeast Southeast

Carrefou r

Real

Kaufland

Auchan

Cora

Total

Pop/ Hmarket

8
3 1 3 4 4

4
5 4 3 2 3

3
12 9 12 10 9

2
1 1 1 1 1

3
2 1 0 0 1

20
23 16 19 17 18

102,161
108,489 108,086 118,487 185,210 133,311

South
Southwest Romana

1 1
25

2 1
24

10 5
70

1 0
8

0 1
8

14 8
135

214,188 247,249
141,058

AFTER 2008
2009-2010 discounters 2011-2012 supermarkets + convenience stores

FUTURE TRENDS

Smaller sizes Closer to the neighborhoods Multi-formats Romanian retail becoming more mature Moving to smaller towns and even some large villages Mergers and acquisitions Slower expansions Cannibalization of other units

FUTURE TRENDS
Traditional retail units will survive, although their number will continue to be reduced Two main reasons for this