BELGRADE (Serbia), September 1 (SeeNews) – Boosting operational efficiency and product quality should come into sharper focus for grocery retailers in Southeast Europe (SEE) on the backdrop of the lacklustre economic growth in the region, Tomasz Telma, the regional director for Europe and Central Asia of the International Finance Corporation (IFC), said.
“These economies are not growing very fast and that is an environment that provides a competitive advantage to retailers that can keep costs low and yet deliver higher-quality products,” Telma told SeeNews in a phone interview from his office in Moscow.
“So rather than through rapid expansion, the successful retailers in the region are growing through qualitative improvements. This is a trend that puts premium on chains that are better managed and that are able to develop well both the logistics and retail side of their business,” the official added.
After the initial influx of international grocery chains some time ago, the pace for the next phase in the development of retail trade in SEE will be set by those supermarket operators who are committed to continuing to do business there over the medium term.
“EU members do not offer a rapidly expanding retail environment. But on the periphery of the EU, the market consolidation or reshuffle is probably not finished. In terms of investors coming and going, there is going to be much more activity there,” Telma said.
So if someone is not totally focused, or committed to a particular market, a competitor might come in and build on their platform. And there are not that many opportunities to do this on mature retail markets, the official added.
In Serbia, in particular, where market consolidation is still pending, Telma sees an opportunity for somebody to come in whether through organic expansion or through buying an existing operation. “I believe that if it is the right opportunity, the IFC would want to support such a move.”
The IFC, part of the World Bank Group, has provided $514 million (454.5 million euro) in total lending to the retail sector in SEE since 1999, including $404.8 million for its own account and $109.5 million mobilized from partners.
The international lender has worked in the region with local players like Croatia’s Konzum and Slovenia’s Mercator as well as with international majors like Germany’s Schwarz Gruppe.
The IFC is getting involved in supporting modern supermarket chains in emerging markets because they increase access to high-quality products, reduce prices for the consumer through economies of scale, improve general food safety standards and help create local supply chains, Telma said.
“In SEE, we have been working with a number of companies to achieve these objectives. One of the companies is privately-held Schwarz Gruppe, which in SEE operates through their Lidl and Kaufland brands. In several countries in the region, certainly in Romania and Bulgaria, both are significant players on the grocery market.”
The IFC is currently considering an 80 million euro loan to back Kaufland’s expansion in Bulgaria.
“Today, in Bulgaria, they employ 8,500 people and through this project they expect to generate an additional 400 jobs this year, with more jobs to follow later,” Telma said.
($=0.8843 euro)