Discount Retail Chain MERE's mother Discount Retail Chain Svetofor is active in Russia, Kazakhstan, Belarus and China. Svetofor controls over 1,500 stores opened its first discount stores in Germany and Romania in 2018 and 2019 respectively Lituania and Poland this year under the MERE brand. Svetofor is managed by Russian Torgservis. The owners are the Schneider family (92.5%), Valery Yakovlev (4.5%), Andrey Veykulainen (3%). Torgservis took the ninth place in the ranking of Russian retailers, compiled by InfoLine at the end of 2019, with around 500 stores opened in 2019 alone. This makes the company one of the fastest growing supermarket chains in the country, right after the market leaders X5 Retail Group and Magnit. Both X5 and Magnit also recently opened a discount store format in Russia. Torgservis revenue in 2019 amounted to a little more than $1.4B (26% more than in 2018).
At MERE, the pans, brushes and brooms are in the original carton boxes stacked on top of each other, milk, orange juice and the like are presented on wooden euro pallets. Canned food can be found here on the heavy-duty shelves and pickles come in cardboard boxes instead of jars. There is almost no storage rooms, as almost all delivered products end up in the store.
MERE isn't about looks, it's about lightness and savings. Accordingly, their motto is “cheap”. The concept of “daily lowest prices” is causing a stir and attracting savers to its stores. The discounter is often referred to as the Aldi clone of the “Seventies” because of its simple store concept it reminds many people on the early days German Aldi stores.
But what some may find simple and tasteless works well for the discounter. When the first German store was opened in Leipzig-Portitz on January 29, 2019, it attracted a lot of attention. The consequence of the cheap prices was an unexpectedly disproportionate run of customers on the store. Due to out-of-stocks, MERE had to close its doors for a short time. As a result, customers felt set-back to the DDR times, when essential food was frequently sold out in supermarkets.
No end for MERE?
In Germany there are only a few MERE stores so far. These are in Leipzig-Portlitz, Homburg (in Saarland), Zwickau and Halle-Neustadt. Further planned store openings in Dresden and Chemnitz had to be canceled for the time being due to the Corona crisis. In general, however, MERE's expansion plans are very ambitious. At the beginning of 2019, they announced that they would open up to 100 stores in Germany. Further stores are planned in the greater Berlin and Frankfurt areas. Furthermore, MERE will open a new store in Wilhelmshaven on October 1st.
Good selected locations should score points
The German MERE holding company TS Markt GmbH only selects special locations for its MERE stores. In doing so, they not only look for cities with good locations, it is also primarily investigated whether cheap rents are feasible. For this reason, vacant, abandoned rental space is mainly rented.
Every beginning is difficult ...
Retail experts saw the market launch of MERE 2019 as a “trial run”, insiders expected the discounter to have little chance. The planned 100 stores by the end of 2021 were also only described as “manageable” by experts. Because there is a lot of pressure in German food retailing that new retailers with few stores can hardly withstand. The extremely cheap concept of MERE was also assessed by the German trade association as having little success chance. One must expect high transportation, rental and personnel costs. Especially in the Munich and Stuttgart regions, you have to calculate rental costs of up to € 19 per square meter per month. These costs then have to be borne by the shoppers.
At MERE, the price counts
But despite all doubts, the new Russian MERE discount stores in Germany were able to assert themselves quite well at the few opened locations. The concept works and some shoppers have no problem with the missing of shelves. Because it is about the price. We are excited to see how this discounter will develop and realize in Germany and abroad. The chances for a successful German roll-out are certainly there given the extreme shoopers' price sensitivity in Aldi and Lidl's home country.
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