The retailer is therefore overshooting this mark a year earlier than it had anticipated.
There were a lot of things that “helped us grow by 20% this year. First of all, we saw a rise in consumer spending, which drove the market up. Second we gained ground online and regained what we lost during the crisis offline,” says Dan Ostahie.
He started his own business as soon as he graduated from college in 1991, at first importing TV sets from Switzerland. Over the next 23 years he built the most powerful computer and electronics retailer in Romania, which now numbers 92 Altex and Media Galaxy mortar and brick stores and an online store.
Altex revenue plummeted in 2009 at the onset of the crisis, when the computer and electronics market halved. It returned to growth in the years after that but was far from the peak of EUR344 million reached in 2008.
The company’s business followed the trend of the computer and electronics retail, one of the worst hit markets by the crisis. The durable goods market lost more than half of its value in the first two years of recession, 2009 and 2010.
The lending freeze, the lack of confidence in the future and the change of consumer spending behavior drove sales of TV sets, refrigerators and computers down from EUR2.5 billion in 2008 to EUR1.2 billion in 2010, the worst year of the crisis for computer and electronics retail. The market rebound started the following year but the progress was not enough to offset the decline of 2009 and 2010.
“The consumer spending growth helped the computer and electronics market achieve a double-digit increase, the first after 2008.”
The 2014 growth is not enough for the market to hit the EUR2.5 billion of 2008, but it could come close to EUR2 billion. The actors on this market are specialist retailers like Altex, Flanco, Domo and the small independent specialist stores, the hypermarket and supermarket chains and online stores.
“We will be seeing growth of 3% to 5%, even 7%, in the coming years but I don’t think we’ll match this year’s growth until the real estate market thaws up. This year’s growth is because of the replacement of products in already existing households.”
Ostahie believes there is potential for double-digit growth in Romania but it needs new homes built for Romanians who are buying their first refrigerator, TV set or washing machine to materialize.
“Sales of tablets and smartphones have kept the market up over the last few years, but the growth thereof will slow down in the coming years.”
While the market grew by about 10%, Altex’s revenue rose by more than 20% in 2014, Ostahie says, with the growth generated by both offline and online stores.
Online currently contributes 10% to Altex’s business and the Romanian entrepreneur hopes it will stabilize at 20% over the next few years.
The mortar and brick network will expand in new important retail projects, but the focus will be on upgrading the already existing stores and relocating those that are too small and perform poorly.
“We want medium-sized stores (1,200 to 1,500 square meters) for Altex and large stores (2,000 to 3,000 square meters) for Media Galaxy. Nothing will be able to replace the in-store experience, especially when it comes to special products with special features. If it’s only price-based a purchase can also be made online.”
(English version by Loredana Fratila-Cristescu)