From “bonanza”, Romania turns into a “very challenging” environment

In three years, Romania has lost the privileged El Dorado status for retail and has become a "very challenging" environment for Metro Cash & Carry, the biggest player in Romanian retail, with 1.6bn-euro annual sales.

"There is a very challenging economic environment at this moment in Romania, the food and non-food sector are falling. RON decline against the euro and banking and real estate problems are being felt in retail and we are feeling them, too. I cannot make any forecasts for 2010 because we lack visibility on the Romanian market," Frans Müller, a CEO with Metro Cash & Carry International, told ZF in Düsseldorf.

At the conference for the re-launch of Metro Cash & Carry's private labels in Düsseldorf, considerations about Romania were again extreme ones, but this time in the negative sense: the company's CEO spoke about a very difficult economic environment and about the lack of predictability on the Romanian market. In a more upbeat tone, Müller characterised other markets of south-eastern Europe, including Turkey and Ukraine, using terms such as "challenging environment" or "not very good".

In 2007, when Metro Cash & Carry saw Romania as a bonanza for all companies, the Romanian market led the group of countries that generated significant growth for Metro Cash & Carry.

Metro Cash & Carry announced the re-launch of its private labels, in a year of declining consumption, in which retailers' private labels are gaining ground against established brands as they provide a cheaper alternative to consumers.

Metro's own private label products reach shelves at 10-20% lower prices than those of established brands, according to the data provided by the retailer.

The move comes several months after the hypermarket network of Metro group, Real, launched Real Quality brand on the market, which it is now promoting as its most important brand.

Metro representatives announced the new strategy would double the weight of private labels in total sales generated by the cash & carry network on its 30 markets, by 2012.