The Competition Council in Romania will add an additional criterion when assessing retailer mergers or acquisitions. We look at what impact this change in regulation could have on Romania’s grocery retail market.
Competition council reduces geographic area of assessment
Romania’s competition council will consider the number of stores within each unit’s catchment area whenever retailers look to merge with or acquire another retailer. Previously, the council looked at number of stores within a 10 to 30-minute drive radius. Now the council will assess geographic areas within a 10-minute drive radius for stores above 400 sq. m., and a 10-minute walk radius for ones below 400 sq. m.
Lower area of assessment is boost for convenience stores
The regulatory change will mean a much smaller geographic area of assessment for small format stores. Retailers with aspirations to expand their supermarket portfolio will be limited from acquiring units that are geographically near. The regulations are aimed at supporting independent chains, mom and pop stores and markets by limiting the growth of chains in specific geographical areas.
Less market consolidation and more growth
Retailers looking to increase their store density in Bucharest will find it difficult to acquire market share in the capital due to the high saturation of stores. The change in regulation will give a boost to retailers such as Lidl and Kaufland that typically have an organic growth strategy.
Retailers also looking to expand to other Romanian cities will have their opportunities limited by this regulation. This is a boost for Profi that has more of a nationwide presence than the other top retailers in Romania. As a result, the market is encouraged to grow organically rather than focus on consolidating market share.
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Amin Alkhatib, Retail Analyst CEE, IGD International: based in London, UK, Amin is responsible for shaping IGD's research in Central and Eastern Europe; as well as contributing to IGD's broader European research programme. Follow me on Twitter @Amin_IGD for further insight on the region’s retail landscape.