Alexandru Vlad, CEO of the Selgros Cash & Carry Romania network, has revealed that around 50% of the investment in a new location will be spent on land, whereas in 2001, when the group first entered the market, land accounted for just 1/5 of overall investments.
Selgros Cash & Carry, which registered sales worth 800 million euros in 2007 and boasts over 16 units on the local market, plans to open another 4-5 new stores over the coming years.
"This year, we will largely finish our expansion in the Eastern part of the country," said Vlad. However, the manager remained reserved when it came to forecasting this year's expansion rate, and added that the high price of local real estate could slow down all retailers' expansion plans, not just Selgros'. The company has announced two new stores this year, with investments worth over 30 million euros, a lower expansion rate than last year when 3 new stores were opened.
"Selgros came to Romania before it was too late, and caught the last train on the real estate market," said the CEO. Considering the price boom on the real estate market over the last few years, the company would have found it difficult to develop a network exclusively with its own locations had it entered the Romanian market a few years later.
For any retailer, owning the land where its stores are built offers more stability than renting locations.
"The Romanian real estate market has become more expensive compared to neighbouring countries, with prices approaching those paid for similar locations in Western Europe," explained the manager.
"We could open more than two stores in 2008, but this depends on the real estate market and how our expansion plans evolve. All investors aim to recover what they put in, however, as long as prices remain high, all retailers stand to suffer, and expansion will slow down because of the evolution of the real estate market," added the CEO.
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