Fast-moving consumer goods retail chains seem to have taken to heart the much-repeated adage about crises offering new opportunities. Despite gloomy forecasts about the state of Bulgaria’s economy and the purchasing power of Bulgarian consumers, the expansion drive of foreign retail chains in the country continues unabated.

After years of making plans, Slovenian chain Mercator finally delivered on its promises on October 7, opening its first store – a 2000 sq m hypermarket in Stara Zagora, which took six months and three million euro to build. The company said it would target the medium price range and plans to operate at least seven stores by the end of 2010.

The locations have been chosen, with Sofia, Plovdiv, Varna, Rousse and Bourgas next in line for Mercator stores. In Sofia, the retailer has already secured two plots, on the Vladimir Vazov Boulevard, next to the Baumax do-it-yourself store, and in Mega Mall in Lyulin borough.

Bulgaria is the sixth country in South-Eastern Europe where Mercator has operations, marking the start of the second wave of regional expansion for the retailer, with stores in Macedonia, Albania and Kosovo to follow. Mercator expects its initial expansion drive in Bulgaria to cost 40 million euro.

Mercator looks set to challenge Europe’s largest retailer, Carrefour, which opened its first Bulgarian store in Bourgas, but is yet to open a store in Sofia. Nationwide, its plans would also pit the Slovenian company against a familiar foe, against whom it has been competing in the region for years.

Unlike Mercator, Serbia’s Delta Maxi has been operating in Bulgaria since 2007, when it bought the majority stake in local retail chain Piccadilly. Having reached 20 stores earlier this year, the chain plans to double the number over the medium term.

In Bulgaria, the two regional chains have been competing for some time already, both intent to secure the prime locations. Mercator won out in several cases, including Vladimir Vazov Boulevard in Sofia and malls in Bourgas and Stara Zagora, by being willing to pay higher rents, Kapital weekly said, quoting sources familiar with the talks.

Aiming low
Mercator’s first store may be a milestone for the company, but in the landscape of Bulgaria’s fast-moving goods retail, it was just a short spike against a background of frenzied activity.

On the same day that Mercator unveiled its first location, German discount chain Penny Market said it would open 20 to 30 stores by the end of 2009, with a comparable number to follow in 2010.

Although the discount chain targets the low end of the market, a different segment from Mercator, the German retailer plans to commit a lot more money to expansion in Bulgaria.

"Investments until December 2009 alone will reach 100 million euro, while the projected value of investment over the first five years is about 250 million euro," country manager Vassil Fechko said on October 7, during the inauguration ceremony of the Penny Market logistics centre near Sofia.

The first stores to open doors for customers will be in Sofia, Botevgrad, Vratsa, and Nova Zagora.

Penny Market is a division of retail giant Rewe, which also owns the Billa chain, also present in Bulgaria.

Another German chain, Plus, plans an equally aggressive expansion in Bulgaria, scheduling the opening of its first five supermarkets for October 8. The locations for the new stores are Pernik, Gorna Oryahovitsa, Silistra, Sevlievo and Harmanli. By the end of the year, the chain plans to have 25 stores in Bulgaria, with a further 25 scheduled to open in 2010.

Plus has already invested 150 million leva in Bulgaria, largely in the acquisition of 70 plots that will serve as future locations. "In the medium term, we expect [investment] to reach 500 million leva," chief financial officer Georgi Doundev said on October 5, as quoted by Dnevnik daily.