A new landscape is expected to be formed in retail and specifically in the supermarket sector, if the deal between the Greek group Sklavenitis and Papantoniou supermarkets proceeds and is finalized, changing the balance and creating new data in the market.
After the two years of the pandemic, during which retail businesses recorded a significant increase in turnover, the next day, at a time when inflationary pressures have changed consumers' buying habits, the "map" of the industry seems to be differentiated again.
It is worth noting that, as a result of the prevailing conditions, businesses are faced on the one hand with high operating costs and on the other with extremely tough competition. It is no coincidence, after all, according to market factors, that even in cases where a company announces excellent performance in terms of turnover, profits do not follow accordingly. This is because products are sold more expensive, but it does not mean that the number of products sold per unit or the rate of profit has increased.
Discussions since the summer
As of the summer of 2023, it had been leaked that the Sklavenitis Group side is in negotiations with the management of Papantoniou supermarket, without however there being an agreement between the two sides and even the Papantoniou side hastened to informally deny the existence of any agreement.
However, in the last couple of weeks, there has been more information in retail circles that the two parties involved are close to an agreement, which will be announced in the next month or months.
The two interested players remain silent, despite the fact that "F" has been asking for their positions for 15 days, amid the buyout scenarios that exist in the market. However, for the time being, neither side has confirmed or denied the possible acquisition of the Cypriot supermarket by the Greek group, especially when last Thursday it began to be published on websites that the deal is proceeding.
Estimates by market players indicate that discussions were on the table about the possibility of acquiring some of the stores of the Cypriot company, but all possibilities are open and it is not excluded that we will see an acquisition of all Papantoniou supermarkets.
Of course, the Sklavenitis movement cannot be considered accidental. Having risen these years to the top of the Greek market and even with a difference of about €2.5 billion in turnover from its second competitor, it wants to achieve something similar in Cyprus.
18 + 9 hypermarkets
The Sklavenitis Group took delivery of 18 stores during the absorption – acquisition of Marinopoulos supermarkets, which was completed in 2017, while it is currently the third player in the Cypriot market.
The stores in its network are located in Nicosia (8), Limassol (5), Paphos (2), Larnaca (2) and Paralimni (1). In total, it employs about 1,500 people and, as noted on the company's website, it is estimated that about 20,000 people enter its stores daily.
According to reports in the Greek electronic press, the Greek chain has a share corresponding to 20% of the Cypriot market and its turnover is estimated at €200 million.
Papantoniou supermarket started in Chloraka in 1987. Today it maintains nine hypermarkets (Paphos, Chloraka, Kato Paphos, Polis Chrysochous, Geroskipou, Ypsonas, Katholiki (Limassol Centre), Pissouri, Engomi Nicosia) and according to Greek press reports has a turnover of approximately €150 million.
What about the rest?
As far as the market and the supermarket chains that play a leading role are concerned, there is Lidl Cyprus with 22 stores and a turnover of approximately €350 million, having significantly increased its power in recent years.
A strong force in the market is the Cypriot interest hypermarket Alphamega, of the Papaellinas Group, with 17 stores and a turnover also close to €350 million, with a share of 25% of the market.
The fourth player is the cooperative consisting of smaller retail points, MAS Supermarkets, with 50 stores and a turnover of €150 million.
Also, Athienitis supermarket with just two stores has managed to maintain 10% share and turnover at levels of €150 million.
As far as the Metro chain is concerned, it has an annual turnover of €100 million, maintaining 6 stores.
However, there are not only large chains but also small supermarkets in each province, which are mainly family businesses. It is estimated by market players that supermarkets are active all over Cyprus at about 155, resulting in particularly increased competition.
M. ANTONIOU – PASYLE: Retail trade is a major contributor
Retail trade is one of the largest sectors in the Cypriot economy, with a contribution to the country's GDP of 15%, notes PASYLE Secretary General Marios Antoniou and explains that about 75,000 employees, who constitute 18% to 19% of human resources, are employed in the trade sector.
If we look at the food sector, from the research done recently, about 2,500 premises operate in the market, including supermarkets, discount supermarkets, bakeries, kiosks.
Mr. Antoniou does not omit to stress that among the biggest challenges facing trade in general are the digital transformation of businesses, the green transition and the energy crisis, which is part of a more general environment that has to do with Russia's war in Ukraine, the crisis in the Middle East, combined with the attacks of the Houthis against merchant ships sailing in the Red Sea. Despite the challenges and the small size of the market, there is interest from foreign companies to operate in Cyprus.
Reflection in Europe
For retail trade in 2024, estimates, not only in Cyprus but also in Europe, indicate that it presents several challenges. EuroCommerce and McKinsey's State of Grocery Retail 2024 report said consumers plan to make fewer purchases than in 2023, but some consumer groups plan to resume transactions. If this trend is maintained, it is expected that supermarket volumes in Europe will return to growth in the second half of 2024. The supermarket CEOs' agenda for 2024, according to the report, remains similar to last year's. Increased margin pressure and declining trades are again occupying the top two positions, well ahead of other priorities.
