Kika, part of South Africa’s Steinhoff, the second largest furniture retailer in the world, entered Romania in 2008 and its officials have repeatedly said they will open new stores but so far have focused only on the store in the Militari area of Bucharest, which posted EUR12.5 million sales in the past fiscal year (July 2014 – June 2015).
“One can feel the market is on the rise, we posted double-digit growth in the first quarter of this fiscal year (which started in July 2015 i.e.),” Akos Forras, country manager kika told ZF in an interview.
Kika posted growth of about 11% in the last fiscal year, so by mid-2016 it should see sales upwards of EUR13 million. People are spending more, the number of visitors has increased and the average spending in a shopping trip is 20% up on the previous year, Akos Forras added.
The Hungarian executive replaced the former country manager Lars Lund and also kept his position of head of group services Central Eastern Europe, from which he supervises Czech Republic, Slovakia and Hungary.
Despite clear action towards opening new stores and negotiations, the process to get space for a store is difficult mostly because of the very high land price. In Prague (Czech Republic), where the parent company wants to expand kika, the price of land is 50% to 100% lower per square meter than in the popular areas of Bucharest (such as the north of the city), the executive says. Negotiations for a plot of land take at least three to six months.
Kika Romania (held by kika Mobilier SRL) is now looking for spaces of 4,000 to 6,000 square meters for smaller stores. The store in Military has a floor area of 14,000 square meters over several levels.
The development of the network will also lead to an increase in the number of employees from the about 90 at the moment to more than 120, as a smaller store only needs 15 people.
Akos Forras did not say how high the budget for the new openings scheduled until the end of 2016 was. The company is targeting cities with a population of more than 300,000.
Kika Romania operates on a market estimated at about EUR700 million, with about 200 stores, and the largest retailers are IKEA, Mobexpert, Casa Rusu, Lem’s and JYSK. More and more local manufacturers are gaining ground on the market as they choose to sell their products on their own without anything between them and consumers.
“This is rather unusual, this does not happen in the West,” Akos Forras says.
The reason for local manufacturers to establish their own retail chains might be the lack of many international retailers on this market, and of the distribution chain. In Bratislava there are at least twice as many international retailers as in Romania, so there is still room on the local market for more foreign investment, the kika country manager says.
(English version by Loredana Fratila-Cristescu)