ECONOMY

Fueled by changed consumer trends, invasion of foreign chains expected to reshape Greek retail

Small and medium-sized supermarket chains will feel the heat from the entry of foreign giants into the sector, one of the fastest growing in Greek commerce, a recent study concludes. «They will come under strong competitive pressure from both foreign hypermarkets and the large Greek supermarket chains, which will adopt an aggressive policy toward the foreigners so as to maintain market shares,» the employer-sponsored Foundation for Economic and Industrial Research (IOBE) said in the report. The supermarket sector has excellent growth prospects and its sales have risen from 4.4 billion euros in 1996 to 8.9 billion in 2003, at an average annual rate of 10.6 percent. The number of supermarkets grew at an average rate of nearly 3.9 percent per annum between 1999 and 2003, reaching 3,187, overwhelmingly chain outlets. Currently, the list of foreign chains planning to set up shop in Greece includes Tesco, Aldi, Tengelman and Wal Mart. According to the study, the development of new types of retail outlets, especially discount stores, is not so much due to the unfavorable economic climate, inflation and unemployment – which no doubt have an impact on households’ purchasing power – as the emergence of a new type of consumer which shifts the weight of purchases toward mobile phones, computers, the Internet and leisure-time activities. This has resulted in a significant reallocation of consumer disposable income, away from foodstuffs and supermarket items generally. The consequence is a trend toward greater savings in time and money, which favor the large chains. French chain Fnac, which specializes in electronic goods, information technology, books and CD/DVDs, plans to open six large stores in Greece over the next five years, it was announced yesterday. The general director of Fnac Hellas, Patrick Salomon, said the still low degree of penetration of new technologies in the Greek market bodes well for the growth of the chain, and that he is not concerned by the prospect of the entry of other foreign competitors, such as Germany’s Media Markt, or the expansion of existing Greek chains, such as Multirama, which announced the creation of a competitive chain to Fnac. «The philosophy that Fnac is introducing to Greece is focused on a different approach to commerce and the consumer,» he said. The French chain, which belongs to the Pinault-Printemps-Redoute collaboration, will develop the chain as a joint venture with the Marinopoulos group, which also collaborates with the Carrefour supermarket chain. The first store, measuring 2,200 sq.m., is planned to open in the Athens suburb of Maroussi in about a month’s time, and the company is looking for three more locations in Athens and two in Thessaloniki. The total cost of the first store is budgeted at 7 million euros, and turnover in the first year of operation is projected at 15-20 million euros. According to Salomon, Fnac’s operating model is based on the large variety of goods, independence from suppliers, specialized sales personnel, «intense cultural activity» and technical support. The book section, for instance, plans to offer about 40,000 titles and the possibility of ordering from among 300,000 others. The music and cinema section (CD/DVDs) will offer 60,000 titles, the audiovisual section about 3,000 products and the IT and mobile telephony section about 5,000.