Auchan starts buying retail space

French group Auchan, which in late 2008 entirely took over Romanian stores, changed its expansion strategy and started buying space instead of renting it from real estate developers.

"(...) The first two owned stores will be opened in Polus Constanta and Coresi Shopping City Brasov shopping centres," stated Patrick Espasa, general manager of Auchan Romania.

All the seven stores Auchan currently operates in Romania are in rented locations, and the French company may try to also buy part of these stores. As for the project in Constanta, the deal has been already completed, while in Brasov the French Auchan and the owners of Tractorul site are discussing the final details.

The two companies' representatives did not provide any details about the value of the deal, but according to some estimates the French firm is likely to pay around 30m euros for the two stores.

"We sealed the acquisition of the Constanta space shortly after I arrived in Romania (he took the general manager position in April 2009), which has sped up work on the project," said Espasa, mentioning investments in the operations of Auchan store of Constanta would revolve around 20m euros, similar to the one planned in Brasov, in Coresi Shopping City project.

On the other hand, Auchan announced it planned to double its store network in the following 3-5 years in the wake of investments worth around 140m euros in seven new locations.

"We're looking at cities with over 300,000 inhabitants. We'll further expand in Bucharest as well, where I see a potential for a total number of 25 hypermarkets. We're about to sign a contract for a new location in Bucharest," Espasa also said.

Expanding the network to 14 stores in three years may drive Auchan Romania's turnover to over 700m euros in 2012, from the 278m-euro level reported in 2008 with six hypermarkets.

Espasa also said Auchan Romania last year witnessed a like-for-like sales increase above inflation.