Assessing Competitiveness In Moldova's Economy - Economic Growth

Development Alternatives, Inc. Moldova Competitiveness Assessment: Market Architectures
Food and Nonfood Groceries
The large wholesalers and wholesale bases are set up to distribute Moldovan-made grocery
products and function fairly well in this capacity. As competition increases among them, they
are beginning to specialize, in order to buy higher volumes of a narrower range of products at
lower prices. These trends are welcome and they increase the competitiveness of these
services and the efficiencies in the value chain. Wholesalers are also buying the property on
which their warehouses are located, as an investment and to avoid the leasing charges that cut
into their margins. Large and medium-sized wholesalers prefer not to sell to smaller stores
because smaller stores usually need 30 days to make payment and the wholesalers generally
have to make payment upon delivery or within 3-4 days, maximum. It is therefore the smaller
wholesalers that are serving the small stores. Our interviews with owners and managers of
small stores indicate that they spend a good deal of time and effort trying to find the lowest
cost goods from wholesalers that will extend them the payment terms they need. Both the
small stores and small wholesalers are getting crowded out of the market. If some operation
like Metro were to come into the market, it would provide strong competition to the current
network of wholesalers, but might benefit the smaller stores, especially if it provided 30-day
terms of credit.
Bakeries and dairy and meat suppliers handle their own distribution. Many of them operate
their own, or leased, trucks with their own drivers. This helps to ensure on-time deliveries for
goods that need to be fresh. One dairy company has offered its distribution services to
beverages companies as well as yogurt and canned goods companies. A few have taken them
up on the offer, but others prefer to sell their goods at the bazaar or are not prepared to
increase their volumes (although they have the capacity) to meet the higher volume of orders.
Meat suppliers make extensive use of the bazaar to sell their products and a variety of
customers buy their meat there.
A high percentage of food items (approximately 50 percent) are sold through the bazaars or
municipal markets. Farmers, their representatives (friends or family), or individuals who
travel by train to agricultural areas to buy produce, set up their goods at the large bazaars in
the center or outskirts of Chisinau, as well as in other cities. Hotels, restaurants, and cafés
reportedly buy 40 percent of their fruits and vegetables and 35 percent of their meat at the
bazaar. Grocery stores and minimarkets buy 50 percent of their meat at the bazaar. However,
according to market research conducted by Metro, between 65-85 percent of institutional
buyers would substitute Metro as their wholesale supplier for fresh food, dry food, and
nonfood groceries, if given the option.
Construction Materials
Our research indicates that the construction materials industry has the most sophisticated
market access channels, with several levels of distributors organized geographically.
Producers sell their products at two discount levels so that the final prices of their products
are the same to final consumers no matter where they buy hem. The construction materials
companies with which we spoke used their own trucks for transport because this was cheaper
and more reliable.
July 2004 • DRAFT Page 6