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May 15, 2021

Romanian shopping centre market, fragmented, but still attractive

The intensifying competition in the Romanian shopping centre market will lead to an increasingly need for sophisticated managerial competencies and commercial approaches, which will enable players to leverage success factors in creating sustainable businesses, shows the Sonae Sierra and PwC joint study  “Success Formulas for Romanian Shopping Centres,” released yesterday.The analysis furthermore shows that the Romanian market is relatively fragmented. For example, of the top 40 centres analysed, 5 account for approximately 38 pc of total turnover, but only 21 pc of GLA (Gross Lettable Area). Most modern retail is located in Bucharest and other larger cities with high retail penetration and above-average income. Judging by the size expressed in GLA, small centres are the most numerous in the country, with large and very large centres being located predominantly in Bucharest. Less complex centres, i.e. neighbourhood and community centres, represent approximately 50 pc of the total number. Furthermore, regional and super-regional centres are located in the main cities and in Bucharest. Recently, there has been a rise in the number of “power centres”, meaning centres which use high profile anchors as their main attraction. It is expected that key success factors such as location, access and leisure will continue to represent important growth drivers, but tight competition and changes in demand are expected to augment the role of professional management, marketing activities and the tenant mix, factors that are crucial to attracting customers and differentiating among shopping centres. This is particularly important for Bucharest and a number of other larger cities.A significant trend will be the shift towards a category of professional managers that can bring valuable contributions in terms of rental contract design, tenant mix and shopping centre branding and positioning. Aspects such as uniqueness and differentiation are expected to become crucial in future retail developments and shopping centre management is expected to be responsible for this change.

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