After rejecting bids from Carrefour, Rewe and other international retailers that have voiced interest in Plus stores of Romania, Germany's Tengelmann group is further expanding its discount network to 175-200 stores on the Romanian market.
"We're expanding in all the regions of the country, targeting cities with over 15,000 inhabitants," says Uwe Klostermann, general manager of Plus network in Romania.
The retailer plans to expand at a pace of 25-30 new stores every year, to a number of 175-200. The average investment per store stands at 2m euros.
At present, Plus operates 52 discount stores domestically, being the biggest discount store network, closely followed by Penny Market, a unit of Germany's Rewe.
Klostermann also says that, besides the sales increase brought by network expansion, the company will also register organic growth, above the growth pace of the retail market. "We expect organic growth of above 20% in the fiscal year ending on April 30 compared with the previous period (...)," says Klostermann.
As a matter of fact, the solid results Plus network boasts on the Romanian market were the reason why Tengelmann decided not to exit Romanian discount retail, according to Klostermann.
Last year, Tengelmann representatives stated they considered selling Plus stores outside Germany, being in talks with several rivals to that end. Several Plus subsidiaries have already been sold, including the networks in Hungary, the Czech Republic, Poland, Portugal, Greece and Spain.
Tengelmann's strategy on the discount segment will centre on Eastern European expansion in the following years. Tengelmann will next year open its first Plus stores in Bulgaria, where it targets the leading position.
Plus entered Romania in 2005, opening its first 11 stores simultaneously. The company has a logistic centre in Ploiesti, in which it plans to invest around 10m euros in the following period to expand its area to 40,000 square metres.
Klostermann expects the Romanian discount retail to witness fast growth in the following years, both owing to the expansion of networks present on the market and to changing consumer behaviour. However, he does not believe Romanian discount retail will reach the market share it holds in Germany, of 40%.
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