Supermarkets in Cyprus are bracing for a trade war with heavy discounter Lidl expected to enter the market in early 2006, with the first store probably opening in Limassol’s busy Omonoia area already dubbed the ‘Bermuda Triangle’ of retailers.
This follows Carrefour-Marinopoulos’ recent takeover of the Chris Cash & Carry chain that is already planning to open a 8,000 sq.m. store on the busy Franklin Roosevelt Street that leads to the new Port, to complement the group’s three existing supermarkets in the area.
The new store would be placed in the same area as two of Orphanides’ high-revenue earning outlets, while Lidl, that assembles prefabricated steel-structure stores, only needs three to four months to put up its first outlet.
The secretive Lidl has already secured the necessary permits for its first store in Limassol’s ‘Bermuda Triangle’ that will have a shop space area of about 1200 to 1500 sq.m. and parking spaces for up to 200 cars.
Lidl’s success is based on its low-cost structure, with own-branded products it distributes to its worldwide stores in 26 countries at wholesale prices, while the absence of service staff and employment of counter staff that only accept cash keeps payrolls to a minimum.
Contacted by the Financial Mirror, a Lidl representative declined to comment on any of our questions saying this was “company policy.”
Rumours that the low-cost retailing giant would be leaving the island even before it started operations have been disproved in a report published by the Financial Mirror (see p. 5).
According to the report, Lidl, which has a turnover of USD 33 billion and ranks 16th of among the top global retailers, has already recruited some 17 Cypriot staff and plans to open 15 stores, half of which in the first phase of ‘overnight openings’.
The company is investing in Cyprus directly and has already secured most of its locations, in addition to a logistics centre and warehouse at the old Bravo factory in Latsia.
Market analysts predict a head-to-head clash between Lidl “and everybody else”, with some retailers preparing themselves with own-label products and focusing more on service counters (butchery, charcuterie, dairy, fresh meat and vegetables, bakery) that Lidl cannot afford to have.
They say that the first to be hit by Lidl’s arrival will be nationwide retailers Orphanides, Chris Cash & Carry (Carrefour-Marinopoulos), Papantoniou, as well as local stores such as Athienitis in Nicosia and discount retailers Smart Shops.
Lidl thrives on bulk discounted offers and boxed goods, making its stores attractive to all consumers, living by the adage “Poor people need low prices, rich people love prices.”
Other store chains such as Alfa Mega, Metro and Ermes are expected to take less of a hit, analysts say, because they have a bigger exposure in Nicosia that accounts for 40% of the retail market, but rely on ‘service counters’ as much as on shelf sales.
