He appreciated the new Russian trading network that had entered Lithuania: there wouldn’t be enough room for everyone in the sun

Mauricas: in Lithuania it is already tight

Commenting on the next player in the Lithuanian market, economist Žygimantas Mauricas noted for the first time that Lithuania is already notable for the abundance of large retail chains – we have up to five of them. At that time, there are 3-4 large networks and several smaller ones in Scandinavian countries.

“In Lithuania, competition is very high, because there are even five large retail chains, which is a large number for a state of this size.” Other sales channels, e-commerce, are also gaining popularity. During the quarantine, great progress was made here, so competition is high now and will continue to grow, ”he says.

The economist also noted that in recent years all the major retail chains have been actively expanding.

“As e-commerce emerges, some projects are likely to face challenges, which could lead to even more competition between retail chains. In a competitive sense, I think the new network will not change the situation very much, (.. .) but there won’t be enough room for everyone under the sun. No one will want to leave, and the price fight can escalate at certain times. From that, consumers only to good.

Furthermore, we still have Poland, which breathes on our backs and creates additional competition. In any case, it would be positive: the more competition, the better “, – Ž. Mauricas

See risks in the cheap segment

Delfi has already written that the Mere store stands out at extremely low prices, but so far there is a poor selection of products. In evaluating the possibilities of the new network establishing itself in the Lithuanian market, the economist assures that it will be difficult and risky to do so.

“It will be more difficult to establish unless (the network Delphi) will define your niche and fill it. There may be a shortage of cheaper products in the segment, but the world is currently moving in the other direction.

There is a high risk of going only to the low-cost segment, unless development is more focused on regions with less competition and price-sensitive populations, and e-commerce is not developing enough in the near future. And in the big cities it’s getting pretty narrow, “says Ž. Mauricas

According to him, the realization of the commercial network would be successful when there is less competition and people are more sensitive to the price, because the big Lithuanian cities are changing to online commerce.

“A convenient network has already been developed: we have three emails. Stores, there will only be many. City residents, if they go to the store, look for a wider range. There is a tendency for stores to focus on the Low cost to become logistics centers.

In terms of a decade longer term, it is this segment that will face the most competition, as it will be very easy for people to compare prices: the shopping cart consists of a single email. in the store, in the second, in the third, where the cheapest ones shop there, ”says Ž. Mauricas

According to the economist, managing to maintain prices much lower than other retail chains depends on supply chains, business ideas, competitive advantage and which segments are expected to obtain the highest income.

“It will mainly depend on the niche they want to fill, but it will no longer be easy.” (…) It is necessary to choose a certain direction, for example, organic products with a much higher margin, or it would be a greater choice of products that would attract people to physically come to stores, because in the long run, the price it will only be increasingly difficult to compete. Such a strategic direction raises many questions, especially since Lidlas, which has large supply chains, can offer a part of the product category at a very low price, “says Ž. Mauricas

It will be more difficult to establish because of the image.

Retail expert Justas Gavėnas notes that the retail cartel in Lithuania is extremely high.

“By providing the consumer with a product from the warehouse, it will be possible to compete only at a very good price. And they will have to recover the good price for a few years from their own resources. Until it gains scale, it certainly will not be able to make good prices, it needs a broad trading system. Temporarily, it will be a large investment, which has been very unprofitable for some time, “says J. Gavėnas.

According to him, the large Lithuanian networks are ready for a new player, but he points out that Mere will find it more difficult to establish himself due to his image.

“Our networks will be heavily prepared, they are not the first news that someone is trying to enter the market.” Also, the Russian capital is not very favorable, especially in Kaunas. Part of the image, the shadow, all the time, you want, you don’t want, competition is emphasized, ”he says.

The interviewer is not inclined to believe that people will choose a poor-looking item at a cheap price just because the price is better.

Asked where to see the potential to develop a new retail chain, the retail expert notes that stores of this type and size require high flows, making traveling to the regions extremely risky.

“We are probably talking about the 5–6 main Lithuanian cities. I would see several scenarios: there is an attempt to buy a less functional retail network, because otherwise there are relatively few of these types of hangars and the plots will not be cheap ”, considers the interlocutor.

According to him, a large part of the success will be determined by the communication of the retail network: public relations, image campaigns, the amount of advertising, but J. Gavėnas emphasizes that he does not believe that it is easy to establish himself in retail.

Waiting for public reaction

The opening of the Mere shopping center was not announced anywhere, only a message appeared on the social network Facebook. Additionally, the store said there were no plans to invest in marketing, advertising, or shelving.

In evaluating this step, marketing expert Linas Šimonis notes that the amount of advertising does not guarantee success or failure.

“Success is guaranteed, whether they can bring something different to the market than it is now. It is very difficult to” crown “exclusivity, but Lidlas did it,” crowned “Norfa as the cheapest network. It depends on how cheap Compare the new network with Lidl, said the interlocutor.

However, L. Šimonis emphasized that “cheaper” does not mean the lowest price on the label.

“It just came to our attention then. Opinion is much more important than reality because people make decisions based on their opinion, not the facts. The facts only shape our opinion, but that doesn’t mean we really have to listen to them. ”, Explains the brand expert.

Furthermore, according to him, Lidlas is associated with western quality, therefore it is a more acceptable option for Lithuanians. If Mere has Russian products, a significant number of people may have negative associations.

“Lidlo – western goods, if they are here (Mere – Delphi) are Russian goods, it will be very interesting to see the public reaction to the supply of Russian goods. If there were Ukrainian goods, everything would be good, because the attitude of the Lithuanians towards the Ukrainians is not bad. Russian products in smaller cities and on the outskirts may also be poorly valued, ”says L. Šimonis.

The interlocutor states that he believes that the new Russian commercial network will focus its development in eastern Lithuania, as well as in smaller cities.

“Vilnius is also located in eastern Lithuania, so in some districts it might also be possible to settle, and in some they would fail, where people from” others “Lithuania have come together, created a career, bought houses and apartments, winning much more than average salary, “he said.

According to the company’s website, the Svetofor brand unites more than 1,500 stores in Russia, Kazakhstan, Belarus and China, and the Mere brand is currently being launched in the European Union.

Today, Mere stores operate in Germany and Romania. It is written that in 2020. At the beginning of the year, the first Mere stores will be opened in Lithuania and Poland. Development plans include opening the Mere chain of stores in France, Spain, Italy, Greece, the Czech Republic and other countries in the European Union. You can read more about the advent of this network here.