The discounter, owned by Russian retail group Torgservis, has opened its first store in Lithuania on 15 June 2020.
Limited assortment and very low prices
The first store opened in Kaunas, the country’s second largest city. For now, the discounter only offers a very limited range of products with prices 20% cheaper than the market on average. Mere stores have a very simple and efficient concept with products sold directly on palettes in a warehouse type environment. The limited grocery assortment is expected to grow as it currently only includes ambient food products.
Torgservis is expanding rapidly in Russia, where it operates its discount stores under the Svetofor banner. As of December 2019, it operated 1,400 stores and is seen as a potential threat in the short term by competitor Pyaterochka.
Could it disrupt the Lithuanian market?
Mere is the second discounter to enter Lithuania, after Lidl in 2016. The German discounter now operates 49 stores thanks to a rapid expansion strategy, which has seen it quickly become the country’s third largest retailer. There is shopper interest in the discount channel, but Mere will need to find the right balance of price and assortment to compete with Lidl. Also, we expect market leader Maxima to keep a close eye on this new discounter and adapt where and when needed.
If we look at other European markets, where Mere is already operating, its success seems to be limited. In Germany, it only opened a few stores during its first year. The COVID-19 pandemic has reinforced the low-price competition between discounters in the market, challenging Mere even more directly. In Romania, where it entered in 2018, it has a target to reach 100 stores in four to five years but is still far from reaching it.
We do expect Mere to have a limited impact on the grocery market in Lithuania, especially if it follows the same opening pace it has in Germany and Romania. Even if hard discount might not come back in Western and Central and Eastern Europe, it shows the growing trend for value and low prices, which has been accelerated by the COVID-19 pandemic.
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