The changes the domestic retail segment will go through over the next 4-5 years are the biggest opportunity for distribution companies.
The first few years after EU integration will witness rising FMCG consumption and increasing distribution businesses as new brands and store networks will enter the market and living standards will improve.
"After accession, new players from EU member states are likely to enter the Romanian market, which is an opportunity for the market (...)," says Rand Sherif, general manager of Interbrands Marketing and Distribution, the top player on the market, with turnover worth above 600 million euros last year.
Will small players survive over the following years?
Ioannis Ferfelis, CEO with Elgeka Ferfelis, foresees some small distribution firms will vanish from the market as the market becomes more demanding. He argues that small distributors find it difficult to switch to nationwide distribution since this is a high-cost activity.
On the other hand, small stores are growing reliant on small distributors only, which tend to focus on traditional channels. "Shops at the corner of the street will always be there, because consumers do not go to a supermarket or a hypermarket to buy a product they are in urgent need of. The small distributors will survive in the future because of them," explained Sherif.
After integration, there will be tougher competition in terms of distributed products as well, and in terms of brands on the FMCG market. EU integration will bring the advantage of more competitive prices for imported products, which will thus become more affordable to a higher number of buyers.
"National brands that will not adjust to EU standards will lose significant market share to international brands," said Gilda Ardeleanu, head of the Business Development and Internal Control department of Top Brands Distribution, the number two on the distribution market.
Retail will play the biggest role in the development of distribution. As retail is modernising, increasingly higher volumes of freight are distributed to networks of large stores.
Small district stores will continue to exist, as both distributors and retail market analysts believe. The weight of small stores in the value of the overall FMCG market has stayed at around 56% over the last five years, but the next 4-5 years will bring a considerable change, shows a GFK survey. Small stores will come to account for 41% of the FMCG trade around 2010, according to GFK estimates. Overall, traditional trade will have the same weight as the modern one, of 50%, in the domestic trade.
Large store chains, mostly global players, will see speedier growth once Romania joins the EU.
To adapt to various trade forms and to sustain the strong growth of the FMCG market, the major distribution companies have made massive investments over recent years.
Pentru alte știri, analize, articole și informații din business în timp real urmărește Ziarul Financiar pe WhatsApp Channels
