German Retailer Lidl Storms Bulgaria Low-End Market

German discount retailer Lidl opened its first stores in Bulgaria on Thursday morning, offering shockingly low prices, a move that will certainly heat up further the competition in the sector.

The fourteen shops are located in eleven cities - Sofia, Plovdiv, Varna, Stara Zagora, Pazardzhik, Sliven, Kurdjali, Petrich, Montana, Lovech and Gabrovo.

The investment totals EUR 100 M. The company plans to expand its operations in Bulgaria in the short term, bringing the total number of its outlets up to forty.

The German supermarket chain opened last month its logistics centre with TBA of 36,000 sq.m. in the village of Ravno Pole. The project also has office and retail area amounting to 6,000 sq.m. and 4,000 sq.m. respectively.

At the beginning of the year German retailer Tengelmann decided to sell its discount retail chains in Romania and Bulgaria to its rival Lidl, which is part of Germany's Schwarz retail group.

The price of the deal was not disclosed.

Tengelman, the parent company of Plus, owns 96 and 23 stores in Romania and Bulgaria respectively.

In 2007 and 2008 Plus sold its business in most European countries. For the last several years the chain has been active in Austria, Romania and Bulgaria, with divisions in those countries in May 2008 united under the name of Plus Eastern Europe.

According to realtors the economic crisis in the past year has proved fertile for the discount retailers stepping on Bulgarian soil in recent months and the country will see their boom in 2010.

Two more food discount chains are currently operating in Bulgaria; Kaufland and Penny Market.

Kaufland is a part of the Swartz Group which also owns Lidl. It is a soft discounter that entered the Bulgarian market in 2006 in Plovdiv. Now it is strongly positioned on the market with more than 26 hypermarkets.

Penny Market (Rewe Group) is another German soft discounter with an aggressive growth strategy for Bulgaria.