German Metro Group’s Real hypermarket chain announced plans to launch its chain in Ukraine
Ukraine’s booming retail sales market continues to attract more foreign players.
The Real hypermarket chain, a part of Germany’s Metro Group, announced plans last week to launch its chain in Ukraine. Thriving on the success of its wholesale business in Ukraine, where Metro Group has launched 15 Metro Cash & Carry wholesale centers within the last four years, the German retail giant is now eyeing a chunk of the country’s lucrative retail business.
According to Real, the company hopes to open its first Real retail hypermarket early next year and sees overall potential to launch 50 hypermarkets in the country overall.
“The opening of one hypermarket will require an investment of about 21 million euros,” said Hanna Honcharyk, PR manager of Real Hypermarket Ukraine. The company plans to open a Real hypermarket in Ukraine’s largest cities and in towns with populations of more than 200,000.
Plans envision that food products will comprise 60 percent of the products offered at Real hypermarkets, with home electronics, appliances, clothing, shoes, home care products and children’s products, among other non-food products, accounting for the rest.
Most products offered at the hypermarkets will be purchased from Ukrainian producers and manufacturers. The approximate sales area of a Real hypermarket in Ukraine will be from 7,500 to 10,000 square meters.
Ukraine’s expanding retail trade sector has lured the corporate appetite of many foreign chains in the last several years. According to state figures, retail trade turnover surged by a quarter to $26 billion in the first six months of this year alone compared with the same period last year.
Chicago-based consulting company A. T. Kearney has for the third consecutive year ranked Ukraine among the five most prospective retail markets worldwide. Ukraine placed fifth after India, Russia, China and Vietnam in the company’s 2007 Global Retail Development Index.
French retailer Auchan, the world’s 10th largest retail seller, with almost 400 hypermarkets and more than 700 supermarkets in 12 countries across the globe, announced plans this year to open 10 hypermarkets in Ukraine within the next two years. On March 13, Auchan and Kyiv-based Furshet, Ukraine’s second largest supermarket chain, inked a deal to join forces on Ukraine’s retail market.
As with Metro Cash & Carry’s entrance onto the market years ago, Real’s arrival on the retail scene is expected to shake up the market and force leading Ukrainian retailers to raise standards or wither away.
Real, however, does not have direct competitors among existing players on the market, according to Hlib Vyshlinsky, Custom Research Director at the market research company GfK Ukraine. Vyshlinsky said only a handful of Ukrainian retailers can be considered competitors for Real, including the Karavan shopping center group and the supermarket chain Megamarket.
Auchan, which has yet to launch a hypermarket, is expected to be the closest rival for retail sales.
“However, the strategy [chosen by Auchan] to develop together with a local partner has not been tested by the Ukrainian market,” Vyshlinsky added.
France’s Carrefour, the world’s second largest, and Europe’s largest retailer, is also expected to enter the Ukrainian market within the next several years.
When it comes to traditional difficulties related to attaining sizable land plots, Real is expected to successfully overcome such challenges, much as its wholesale sister company, Metro Cash & Carry, did within the last four years, Vyshlinsky added.
Real has swiftly expanded throughout Europe and former Eastern Bloc countries in the past decade. The group operates nearly 300 hypermarkets in Germany, Poland, Turkey and Russia. Altogether, Real has 438 locations in six countries and posted 9.9 billions euros in turnover in 2005.
Internationally, wholesaler Metro Cash & Carry employs more than 97,000 people at 585 locations in 28 countries. The company’s 2006 sales revenues totaled 29.9 billion euros.
In Ukraine, Metro Cash & Carry employs more than 5,500 Ukrainians. The company’s sales volume totaled 615 million euros in 2006.
