“The Romanian market holds potential, but because of the crisis we put a brake on expansion. Moreover, the past five years have not seen as many shopping centers develop as during the boom years, so that we have not found the right spaces,” says Catalin Pozdarie, Hervis boss.
Hervis, the sports retail arm of Austrian group Spar, entered the Romanian market in 2007 with a store outside Bucharest and Pozdarie says the company is still closely watching other cities in the country.
“We are not focused on Bucharest, we want to open stores in the cities that would render us profitable quickly, after the first year if possible”. As a matter of fact, Hervis head says the best three stores of the network are located outside Bucharest, where competition is not tight. However, he does not give any further information about these units.
Hervis holds 13 stores in Romania, with the last one opened in Promenada shopping center of northern Bucharest, last autumn. As a matter of fact, in each of the past three years, the company opened just one unit, compared to three in the first operational years.
For 2014, the retailer has budgeted two or three new stores, but Pozdarie says everything depends on real estate developers, as the company seeks only spaces in shopping centers.
“We do not have any stores in a street-front location. In Romania, rents in such locations are not adjusted to the business potential and I believe it will take several years for this area to develop”.
Pozdarie says the past year has been challenging for the market and for the company he runs and conditions are the same in 2014.
The company did not reach the budgeted increase in 2013 and the growth rate was a one-digit one. Pozdarie chose not to give any further details, though. Hervis ended 2012 with revenue of RON68 million (EUR15 million).
As regards 2014, the executive says the January snow helped sales, but it came too late to significantly lift revenue. Additionally, the discount period had already started.
“Still, we budgeted growth, but we must be realistic, so that we forecast a one-digit increase. There are no moves that should put more money into Romanians’ pockets and therefore spur consumption”.
(English version by Catalina Apostoiu)