“Last year was better than expected for us, so we ended 2014 with EUR340 million to EUR350 million sales, the same amount in euros as in 2008, the last year of economic boom,” says businessman Dan Ostahie, Altex owner and one of the most powerful local entrepreneurs.
“We had expected to reach this level next year but an outstanding second half helped us reach this milestone faster.”
Ostahie started his own business in 1991, right after graduating college, when he got into importing second-hand TV sets from Switzerland. He needed $10,000 at first, which he borrowed from the bank pledging his parents’ home as collateral. Two decades later, he owns the most powerful computer, electronics and home appliances retailer in Romania.
“The growth was driven by the sales of smartphones and tablets that continued to increase. We’ve also eaten market share from our online and offline competitors,” Ostahie says.
Altex’s business grew by 35.4% last year, about double as fast as the entire market. The computer and electronics market went beyond EUR2 billion last year for the first time after 2008, having grown by about 16%, according to market research company GfK.
Computer and electronics sales dropped by more than 50% in 2008-2010 after which they started to slowly recover. The decline of the computer and electronics market was so serious because of the lending freeze, as loan-fuelled sales had grown to 70% or 80% of the total sales on this market in 2007-2008. The percentage fell to some 20% during the crisis, according to ZF data.
Altex’s business saw significant growth in line with the market and the whole economy until 2008, only to almost halve in 2009. It later returned to growth and has been growing year by year ever since.
“Our online growth stood at more than 100% in 2014. I mean here the products ordered online and delivered at home; online sales account for 10% of our sales, EUR35 million. Our target is to have them reach 20% in two years.”
The ‘spectacular’ growth continues this year, as well, Ostahie says. There are also some customers who order online and choose to go to a store to check out the product and pick it up. This is especially true for large goods, such as kitchen appliances or multimedia products, where the customer wants to see the accessories, the color, the details, design and size. One thing that matters when it comes to multimedia products is interaction.
“An omnichannel business model (where online interacts with offline i.e.) is an advantage for a computer and electronics retailer. Customers can do their research online, come to the store to see the products and then decide whether they want to pay in store and pick up the products themselves or have them delivered at a home and pay on delivery. We’ve been working on an omnichannel model for years and we believe this is the future in our business.”
Altex owns about 90 mortar and brick stores under two brands Media Galaxy and Altex. The former take up 2,000 to 3,000 square meters, while the latter 1,200 to 1,500 square meters.
“These are the optimal floor areas today. We will see where the market is headed in the future, because we move with the market. There is no recipe that can be used indefinitely.”
The company started an extensive restructuring process in 2009, the first crisis year, closing a number of stores and relocating others. The businessman has previously said the company relocated most of its street front stores to shopping centers and malls because they are the main shopping destinations of Romanian consumers.
Ostahie says he plans to open more stores this year, although the retailer will mostly relocate stores to malls and retail parks in 2015. Altex will focus on big cities, starting with Bucharest, where it will open a store in the Mega Mall.
“There’s a urbanization phenomenon worldwide and we need to keep up with it.”
Altex’s competitors are specialist offline retailers Flanco and Domo, as well as the hypermarket and cash & carry chains, the online stores and the small independent retailers. The small independent retailers were the worst hit by the crisis, while online sales posted the highest growth.
“We have grown a lot in the last few years so we are not thinking of buying a competitor. I think an alliance of the other top players, Domo and Flanco, would benefit the market because we need a strong competitor.”
The revenues of the two taken together stand at about EUR300 million to EUR350 million, as much as Altex’s, according to ZF estimates.
Ostahie says the market and his business will continue to grow this year.
“Altex benefits from three growth supporting factors this year. First of all, the market continues to grow. Second, we are gaining online market share because we have diversified our portfolio, we worked on offering more competitive prices and additional on-offline services.”
The third growth driver is the large format stores, from 1,000 to 3,000 square meters.
“The market has recovered and customers are looking for a wide range of products in store,” the entrepreneur concluded.
(English version by Loredana Fratila-Cristescu)