New La Fourmi Management

These objectives are expected to be met within five years, after which the chain will either be sold or listed on the stock exchange. 

The La Fourmi supermarket network forecasts over €30 million worth of sales in 2007, up one fifth year-on-year, due to increased purchasing power and number of customers.

Expansion by acquiring local networks is the most viable solution for organic growth, Knight said. “Land prices in Bucharest are more than exorbitant. I recently participated in an auction to acquire a commercial space in Bucharest for which we
were willing to offer 3 million euros, but the location was sold for 5.2 million euros. These are astronomical prices which we cannot justify,” Knight added. “We will continue to grow, even if between April and December five of our stores will be closed for renovation and rebranding, each for two and a half months,” Patrick Knight told Business Standard. The average investment for the renova­tion of a store is €250,000-300,000. “If we did not close these stores, we would surely exceed €35 million in sales.”

Patrick Knight was appointed General Manager in June 2007 by the Greek investment company Global Finance, which administers the La Fourmi chain.

La Fourmi was the first supermarket network in Bucharest, and was introduced onto the Romanian market by Lebanese investors in 1993. In 2005, an 80 percent share package was sold to an investment fund administered by Global Finance. Following the acquisition, sales rose 37 percent to €25 million in 2006.

At the end of June, two stores of the three-store The Best chain, ac­quired by La Fourmi last October, will be re-opened. The network presently has 14 commercial units.

The chain’s main competitors in Bucharest are Mega Image (19 stores), Ethos (10 stores), Primavara (8 stores), G’Market (5 stores).

Supermarket chains owned by foreign investors will total 136 units by the end of 2007, compared to 90 in 2006, according to data supplied by the MEMRB Retail Tracking Services market research company. This year will be the most prolific for foreign supermarket networks, although they will be subject to slower expansion than hypermarkets and discount stores.

The fast moving consumer goods (FMCG) market is estimated to be worth €40 billion in 2007, a 17 percent increase from 2006, according to the Deloitte Romania consultancy company.

Modern commercial retail chains will account for more than 40 percent of sales by the end of 2007 according to a MEMRB report.

A study conducted by the GfK Roma­nia market research company indicates that retail sales in Romania made up 27 percent in 2005 compared to six percent in 2001. By 2010, retail sales could exceed 50 percent of all
sales in Romania. 

In Poland, where super and hypermarkets began developing earlier than in Romania, 45 percent of FMCG sales since 2002 were through such retail networks.