Billa invests 25 million euros in new stores and a new base in Bulgaria

Billa continues its expansion in Bulgaria and in 2025 it will invest over 25 million euros in the country. By the end of 2024, 4 more stores of the supermarket chain will open, and 13 new stores are planned for 2025. For the first time, there will be Billa stores in Vidin, Gorna Oryahovitsa, Tryavna, Tutrakan and other cities. The chain also continues with the renovation of its branches, for which it will invest 2 million euros. In 2025, the retail company’s new logistics base will open in the village of Zagore (with an invested amount of 2.4 million euros). This was announced by the company at a meeting with journalists.

Deflation 

Food prices continue to decline, although statistics for Bulgaria show mild inflation. At the same time, customers keep their consumption rate unchanged, and this negatively affects the financial results of retail companies. 

In October, BILLA reported a 0.72% deflation in sales prices. A price decrease is reported for cleaning products (-6.73%), basic foods (-5.80%), canned food (-4.46%), and meat and delicacies (-3.44%), among others. The data was presented by the CEO of Billa Bulgaria, Vygintas Šapokas.

The worst thing is that when individuals and companies reduce their spending, it leads to negative results for economic development," he said.

On the other hand, the increase in prices in the previous years made customers look for promotional offers and increasingly use loyalty programs (such as discount cards). More than 50% of the chain's turnover in Bulgaria can be linked to promotional offers. 

Workforce shortage

And it’s not only the ongoing deflation but also the state of the labor market in Bulgaria that worries the retail chain. Huge difficulties are reported due to the lack of staff, as every day there is a deficit of over 200 employees in the company’s stores. This is also the reason why you see empty shelves in the supermarkets, explained Šapokas.

The company is looking at opportunities to import staff from countries outside the European Union, such as Nepal or Uzbekistan, but is experiencing serious difficulties in the process, due to legislative burdens and heavy administrative procedures.

The uneven development of Bulgarian regions and the weak infrastructure is also a problem. What’s more, there is a lack of incentives to create jobs in areas with high unemployment.

According to Šapokas, the reason is not low pay, and the argument that there will be candidates if higher wages were offered is incorrect.

The reason there aren't workers is because there aren't enough people around."

This in turn leads to the question of whether there will be people to work in those places where the chain wants to open new stores.  

The investment that the company must make to open a new store in Bulgaria or in another EU country is the same, but the revenues are different. In Bulgaria, purchasing power is very low – the average annual salary is 13,500 euros, whereas the EU average is 37,900 euros, according to Eurostat data for 2023.

Problems

As another problem, BILLA considers the relatively weak degree of cooperation with state institutions and the government.

Šapokas gave the example of having worked in several other European countries where the business sector and the state work together.

In Bulgaria, "we are seen as a subject that must often be punished and sanctioned in some way, rather than a partner."

Global volatility also brings risks to companies. Elections in many countries, including the US, the political crisis in Germany, as well as the wars in Ukraine and the Middle East are causing difficulties.

It is very likely that there will be budgetary costs for the military, which does not contribute to having a better daily life for the rest of us."

The impending recession in Germany is also an insurmountable factor, and "as soon as Germany gets sick, there will be difficulties for the whole of Europe", according to Šapokas.

Yes to the euro

The CEO of Billa Bulgaria is a big supporter of the euro and sees the country’s entry into the eurozone and Schengen by land as key events for the economy, yet these important decisions are constantly postponed.

He gave his home country Lithuania as an example. The euro was adopted there in 2015, after which "the economy took off and continues to fly, and the same applies to having a Schengen membership," he said.

People will live better when we adopt the euro, and wages will rise faster than prices."

Billa remains stable

Despite this challenging environment, Billa has shown solid results this year. The chain maintains a market share of around 20% and continues to invest.

For the period January-October, the company reported a growth in turnover of 6.6% compared to last year. During this time, the number of customers also increased - by 4.5%.

Šapokas described the growth as healthy because it does suffer from the negative impact of inflation.

By the end of September, the company had 161 stores in Bulgaria, which makes it the national leader in terms of number of stores. 

Translated by Tzvetozar Vincent Iolov