Regis Mougel, general manager of the Auchan Romania hypermarket network, says fewer investments in promotion and more directly imported goods, form part of the company's strategy for reducing shelf prices.
The French group, which last year entered the ever more competitive segment of hypermarket retail is the only retailer without a promotional catalogue displaying product items. "Promoting the store would increase our costs and would ultimately be reflected in the shelf prices of products, a situation we wish to avoid," explains Regis Mougel.
"Three quarters of the inhabitants living in Titan, the area where the Auchan hypermarket is located, have very low incomes, meaning even a reduction by 0.1 RON is significant as it allows these customers to save a substantial cost on an entire basket of shopping (...)," argues Mougel.
Auchan intends to develop a hypermarket network domestically by launching two new outlets every year, with the expansion policy being more aggressive in the first two years. In total, it will have 2 hypermarkets in Bucharest and another 3 in Pitesti, Cluj-Napoca and Targu-Mures by the end of the year. The company also has plans to open hypermarkets in Constanta and Timisoara, through investments worth 30-40 million euros, which are to be finalised next year.
The only store of the network in Romania is located in Titan district of Bucharest and was inaugurated last November, with investments of 40 million euros.
Auchan intends to differentiate itself from its direct rivals on the domestic market, by relying on its large offer of products including around 60,000 items and a policy of general discount pricing. The company's earnings would come from a large volume of sales, added Mougel.
Auchan is also banking on its use of directly imported goods to add competition in the sector of discount stores. These currently account for 10-15% of the overall products displayed in Auchan outlets, an amount that significantly increased after Romania's EU integration, according to data provided by Auchan.
The network works with 1,200 suppliers, of which more than 80% are small and medium-sized companies in Romania, according to company data. Auchan offers a range of domestically manufactured food products, which account for 90% of goods sold within this segment.
Auchan intends to introduce its own branded products to Romanian stores, towards the end of this year or in 2008.
The store in Titan is currently Bucharest's biggest hypermarket, with a sales area of 16,000 square metres.
Pentru alte știri, analize, articole și informații din business în timp real urmărește Ziarul Financiar pe WhatsApp Channels
