Russian Mere struggling in Hungary due to the management’s unreal expectations, instructions

In July, we reported that the first Russian Mere shop is planned to open in H2 2024 in Budapest, in the place of a closed Spar supermarket. Nothing happened, and it seems that the chain is struggling to open its first store in Hungary. The reason is that the Russian and Belarusian management of the company set unreal expectations and would like to invest almost nothing into kicking off the chain in Hungary, while at the same time, they expect profit. Despite being successful in Lithuania and Romania, it seems the Hungarians have to wait a little longer until they can go shopping in one of the stores.

Russian Mere already has 4 companies in Hungary

The basic concept of the Russian Mere chains is that they compete with approximately 20% cheaper prices and, in return, their shops are more store-like than fancy places. However, it seems they are struggling in Hungary.

According to Telex, many thought it was a joke last April that Mere planned to come to Hungary. However, after such news emerged, the media discovered that the company already had more than 10 employees, so they were serious about entering the market. Furthermore, they registered four companies in Hungary, TS Retail Ltd, Hungarétel Ltd, Huntorg Service Ltd and Shoper Ltd. These four subsidiaries are attached to Serbian parents, of which Sergei Schneider has 60-80%, Andrei Schneider obtains 12-20%, and there is a third owner.

The Russian business model

Mere works as a franchise: the stores are separate with separate acquisition teams sharing only the name and the brand. Three different teams are operating in Hungary (Budapest – TS Retail Ltd, Debrecen-Miskolc-Nyíregyháza triangle Hungarétel Ltd, and Huntorg Service Ltd in Western Hungary). They do not communicate with each other, and it is forbidden for them to cooperate. They negotiated with many suppliers but could not launch the first store for multiple reasons.

Sources close to the Hungarian Mere management told Telex that the core problem is that the business model of the Russian company does not work in Hungary because, in Russia, all shops have 3 months to prove they can operate profitably. As a result, Mere does not pay a deposit for their rental, so if the shop is loss-making, they can terminate the rental contract whenever they want. However, that does not work in Hungary, where all tenants require deposits and choose long-term contracts.