RETAILZOOM

 | 

ROXANA BACIU

  |  2016-08-11

Super Is the New Hyper

‘All over the world, convenience stores represent the fastest growing channel’, a well-known shopper marketing consultant recently said. Romania is very well aligned to this trend, with nearly 160 supermarkets opened in 2015.

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RETAILZOOM




ROXANA BACIU

ROXANA BACIU

MANAGING DIRECTOR at RETAILZOOM

For a better understanding of the following lines, some clarifications are necessary first. This article is based on sales data from the international food retail chains active in Romania. A list of these chains is available at the end of this article.


 The major tendency emphasized by the sales data of 2015 is the migration of purchasing behaviour towards small format, a tendency that has been already present for some years. We don’t use hypermarkets anymore for big weekly shopping, but the small store next door for more often purchases. We go to the supermarket on our way home from work even for shopping the big articles we previously used to buy from hypermarkets, like detergents, cosmetics or diapers. Data also say that only during big holiday seasons, like Christmas or Easter, hypermarkets manage to attract the majority of sales. In the rest of the year, their sales share goes below 50% in favour of their smaller counterparts.


Another important trend we have noticed is the up trading. Yes, commodity categories like milk, edible oil or sugar are decreasing, but within them, value added segments start to grow, as premium or bio products.


So, after years of educating the shopper, big hypermarkets need to find their readjusting formula.

 

How has 2016 begun?

The phenomenon described above continues strongly this year also. Figures for the first quarter of 2016 confirm the continuous increase of the proximity channel (supermarkets). Unlike big selling surfaces (hypermarkets), small stores continue to increase sales, both in volumes and values. The main food categories also continued to increase in volumes, with the drivers of this growth being an increase in general consumption and the migration of purchases from traditional, unorganized trade towards the modern retail.


Should we consider FMCG as comprising food, drug (detergents and cosmetics), tobacco and non-food (IT&C, white goods, apparel, shoes, small furniture and so on), food constitutes the biggest chunk of this market, with approximately 70% of sales value. The rest of 30% is split between drug – 11%, tobacco – 9% and non-food – 10%. In supermarkets, however, food represents over three quarters of value sales, thus confirming the role these stores play in serving daily, mainly fresh, food purchases. In the case of hypermarkets, food is responsible for over two thirds of sales value, taking into account that non-food is far better represented, with over 18% contribution to revenue, in the first quarter of this year.

 

Supermarkets gain also in drug and non-food

How does each channel perform? Keeping in mind that we compare Q1 2016 versus Q1 2015 all throughout this article, the value of the retail market monitored by RetailZoom generated an 8% increase overall. Hypermarkets marked just a mere 1% growth, while the lion share went to supermarkets, with 16%!


If we further split these figures into each big segment, we may notice that, although food is the most important category, it does not have the biggest contribution to growth. Especially in the case of supermarkets, the segment which registered the biggest increase in value was… drug. If we take into account the fact that, in hypermarkets, drug has a tiny 1% increase in value (and 1% decrease on like for like), we can clearly see that shoppers migrated towards small stores also for detergents and cosmetics necessities.


What does that mean? Simply put, if one goes to the supermarket every other day for groceries, one might as well buy a pack of detergent or a shampoo, knowing one will run out of it the other day. It has definitely become far more convenient and financially reasonable not to do stock up anymore, but just once a month or even seldom. The size of the supermarket basket constantly enlarged in recent years, starting to include personal and home care and baby products. It is not as we predict the extinction of big selling surfaces, as supermarkets will never be able, nor should they try to compete on choice, shopping experience, prices or entertainment. Each format caters for different needs and shopping missions, but as supermarkets are on their ascending curve – in Romania and everywhere else in the world –, hypermarkets are on their descending path, at least until they find another enticing proposition for their customers.

 

Winners and losers in food

Which are the categories with the biggest sales increases and decreases? Fresh food, (including fruits & vegetables), cakes and pastries are those with double digit value growth. The trend was somehow foreseeable for at least two reasons: rapid expansion of supermarkets, along with the introduction of in-store bakeries. Supermarket operators have seen and seized the opportunity represented by freshly baked bread and bread products in their stores.


Meat products don’t fare as well, on the other hand. A shy 5% increase in value is driven only by new supermarkets, while if we take into consideration the same stores universe (stores existing in January 2014), the sales value decreased by 3%. Same goes for dairy products or groceries (staple food). It is interesting to notice that within the grocery segment, diminished value is driven by decreases in categories like rice, seasonings, tomato paste or pate. On the side of winning categories we may as well note edible oil, sugar, flours or prepacked bread.

 

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TOP SPARE PARTS TRADE COMPANIES (2015)
Scoring Methodology by ERNST&YOUNG


 
#
COMPANY NAME
MCR TOTAL SCORING
 
1 BEDA IMPEX SRL 2,2500
2 AUTOVEST SRL 2,2500
3 TOP LAC AUTO SRL 2,1875
4 AUTO GROUP C.M.B. SRL 1,6875
5 TRAIAN MULTIPREST SRL 1,2500