Wolfgand Janisch, general manager of Billa Romania says the supermarket network will speed up its expansion pace and it may reach 150-200 stores in 10-15 years.
Billa Romania, the first international retail network that entered the local market in early 1999, reached an expansion pace of 10 new outlets per year, compared with 1-2 outlets registered in the first years of activity.
"The speeding up of the networkes growth pace is in line with our implanting strategy on the domestic market: in the beginning, we tested the market by opening 1-2 outlets per year, then we decided to expand faster and we took into account the increase in the consumerse incomes," says Wolfgand Janisch. He adds the expansion pace was also influenced by the growth of the real estate market, as well as by the competition in the retail field. "At the moment, in certain cities there are only 2-3 good plots of land, suitable for a supermarket, which can be purchased by the competitors. Moreover, the investors in the real estate field are keeping their eyes on the good plots of land in the big cities," says Janisch. The retailers say the plots located inside the cities are harder to find, although the prices have increased exponentially over the last 4-5 years.
"The prices of the plots in Bucharest amount to 1,800 euros per square metre, which is extremely expensive. In Vienna you can purchase a plot with a very good access, at the price of 1,000 euros per square metre. As we are a food retailer we operate low margins, thus we cannot afford to pay just any price for a good site," mentions Janisch. He expects the prices will fall after a while, just like it happened in the Czech Republic or in Hungary.
The prices on the real estate market are not the only factors that affect the expansion of the Billa network on the local market. "Our expansion on medium and long term also depends on the support of the local authorities. For instance, in Western Europe the city halls play a significant role in attracting the major food retailers in their cities," Janish also says.
The malls could be some of the future sites of the Billa outlets, but the most recent projects announced in the big cities use the hypermarkets as an anchor.
Janish says the malls in Romania are not attractive from his point of view, because the space earmarked for a supermarket is not located in a good area, which is uncomfortable for customers.
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