The announcement of the Russian hard-discounter Mere on its conquest of Western Europe caused a bit of a stir. On paper, the pure discount model has a chance of being successful. But so far, the company seems to lack the power of action. RetailDetail investigated the matter.
Spartan discount model
In May, Mere announced its West-European plans. The chain was already active in nine countries, accounting for a total of approximately 2,000 stores. However, those stores are mainly located in Russia, Belarus and Kazakhstan, under the brand name Svetofor. In other words, it’s an Eastern European juggernaut that saw potential at the bottom of the market with a spartan discount model.
This market estimate did not come without its merits, as we also touched upon earlier. On the Belgian market, Aldi and Lidl, the archetypal discounters, gradually moved away from that pure hard-discount model. They are now profiling themselves as ‘smart discounters’, where there is room for A-brands in the fixed range and a high-quality fresh range, to name but a few differences.
Valencian store reveals potential
RetailDetail founder Jorg Snoeck visited a store in Valencia and saw the potential of the concept. The store looked neat and was able to offer razor-sharp prices on items such as Coca-Cola and Pringles. The rest of the offer consists of leftover batches. The bright and constantly changing assortment does not make Mere a supermarket for weekly shopping.
So far, so good, you might think. Mere has a distinct profile and might well be able to fill the gap that Aldi and Lidl left. But what should we make of the chain’s sky-high ambitions, with stores in the UK, France, Austria, Italy and now Belgium as well?
Missed deadline in Opwijk
In Belgium, the first store is expected in Opwijk, on the site of the former Red Market – the now-defunct concept of what was then Delhaize Group. In May, Claude De Gheest, who, as far as is known, is in charge of the Belgian expansion of Mere, announced that the store would be completed in June, with its opening planned for September.
We could see with our own eyes that they already missed the first deadline. In the beginning, even the mayor of Opwijk didn’t know what was happening. In the meantime, administratively speaking, everything seems to be in order: the necessary permits have been applied for. On the site, a panel of the property’s real estate agent is still present, but stickers saying “Let” clearly show that something is about to happen. Although for the time being, there is no sign of a completed store. A pile of insulation panels, a forklift truck and some tools give away that something is underway, but the building is not exactly buzzing with activity.
Also, Mere is not very active online. The website that went live around the time of the announcement of the Belgian launch has not been updated since. If you want to switch from standard English to the Dutch version, you will get a Russian version. The vacancy for an “agent” to find new store locations is still open. If you send an e-mail to the address provided for information on the website, you will receive an automatic reply saying that you will be contacted one month before the store is due to open.
Claude De Gheest and Dmitrii Nesterov
RetailDetail tried to contact Claude De Gheest through various channels, but since his comments in Belgian newspaper Het Nieuwsblad, he did not respond anymore. The phone number of Safir Consulting, the company that De Gheest runs according to his LinkedIn profile, does not seem to be accurate. According to the memorandum of association of Lightkommerz, the company with which Mere established itself in Belgium in October 2020, De Gheest is the only director.
The only other name on that document is that of a Russian person named Dmitrii Nesterov. The document does not clarify what his role is exactly. He provided the initial capital for the company but otherwise takes no active part in the Belgian operations. An online investigation yields no link between Nesterov and Mere, Svetofor or Torgservis, the chain’s Siberian parent company.
Five German stores in two years
In other words, it all seems a bit obscure. Not exactly the basis one looks for when it comes to a major expansion. The question is whether it will ever happen. The experiences of Mere in Germany have shown that it is best not to raise expectations too high. When Mere launched in Germany in 2019, it was initially a blowout. The first store had to close temporarily after only five days because nearly all the goods had been sold out. Yet, Mere started in 2019 with the ambition of opening a hundred stores in Germany. We are now two years down the line, and the counter is at… five.
In the UK, the first Mere store is about to open. However, the chain cannot say when that will be exactly. Mere depends entirely on the suppliers of the goods it wants to sell. There are no fixed partners, so it is simply a matter of waiting until enough leftover batches get delivered. That’s how it immediately becomes clear how Mere makes its razor-sharp prices possible. Suppliers are responsible for delivering the goods to the store and are only paid for what is actually sold in the outlets.
So, should we write Mere off straight away? That would be too harsh a judgment. The concept in itself still has a place within the market. But to suddenly declare Mere to be the big Russian challenger that is coming to take the western European retailers by storm is, for the time being, a bridge too far.
