Kaufland aims big in Bulgaria
build its first hypermarket in Bulgaria. The outlet will be located
in Yambol, in the southeast of the country.
After winning a tender from the town authorities for the plot last year, Kaufland says that municipal planning permission has been given the go ahead for the €3 million project and that construction should start during the Summer. This means that the 5,200 square metre hypermarket should be open for business in the first quarter of 2005.
Currently Kaufland is battling it out with German competitor Hit which is also planning to expand in Bulgaria. However Kaufland's strategic plan is the most advanced with its planning for a number of new store openings already in full swing. Currently the group has an allocated investment programme of €120 million to develop its interests in Bulgaria, with which it aims to open 23 to 30 outlets in the space of the next five years. Indeed Kaufland-Bulgaria has already purchased land plots in Plovdiv, Haskovo and Shumen.
Kaufland is also present in the Czech Republic, Croatia and Poland, where its plans for expansion are more advanced. In these markets the company is competing against big retail names such as Auchan, Carrefour and Tesco. Not being able to match the such players in terms of investment, Kaufland has chosen to make its presence in small urban areas, mainly in towns with populations of around 50,000. In Poland, the company is aiming to open 200 outlets of 3,500 to 5,000 square metres within the next three years.
The food industry in Bulgaria was estimated to be worth $2billion in 2003, a figure that is comparatively small by western European standards, but one that also represents a great deal of potential given the economic growth in recent years. Currently the population stands at 7.5 million and the annual GDP growth rate stands at 4.5 per cent.
Fuelled by the healthy growth in the economy is the increasing number of supermarkets and hypermarkets in the country. The overall number of food retail outlets has tripled in the last ten years. Supermarkets and hypermarket chains began to emerge in 1997 and although such outlets only makes up a relatively small percentage of the total number of retail outlets, they accounted for a 23 per cent market share in 2001.
The first hypermarket chain to enter the Bulgarian market was German retailer Metro, followed by Austria's Billa and the Turkish-owned Ramstore chain.
