“It will be a chain built around the price. We will also sell older models here and product with small defects or with a shorter warranty.” Dinu does not say if new stores will be opened as outlets or if existing ones will be remodeled.
This business model is popular in western countries, but has not been promoted in Romania.
Dinu plans a cautious growth of the Domo chain, after the company has been through a significant restructuring in the past two years, closing down 30 non-profitable stores.
“Since the beginning of the year we have had six relocations, and another two will follow. We could also open two new stores if negotiations are finalized and we sign the contracts.”
Dragos Dinu, who until 2008 was CEO of A&D Pharma, the largest group in the Romanian drug industry, says through relocations the company is seeking to bring the stores back to areas with intense traffic. The company is also planning to either cut or increase the area of certain stores.
“There are towns like Mangalia, where we saw the need to double the store area. On the other hand, in Sfantu Gheorghe we had to cut the area.” Dinu, 45, was recruited in November last year by Domo to its board of directors, which also includes Lorand Szarvadi and Lucian Ghitescu. Less than three months later, Dragos Dinu was appointed CEO.
Dinu says the chain currently has around 100 stores and that the company’s current plans do not entail major changes to this number.
“The overall number of stores could slightly increase, but the total area could decline.” This means the stores will become smaller.
Domo has stores covering several hundred square meters in small and medium-sized towns, while in Bucharest and in a number of large cities the area ranges between 2,000 and 3,000 square meters.
The store chain has been through a major reorganization, with over 30 stores closed down in the past two years.
Sales slightly up
Domo’s online sales exceeded EUR12 million in 2012, according to data previously supplied by Dragos Dinu, out of total sales of around EUR100 recorded by the company.
Domo separated its online operations from its offline ones, with online operations currently being registered to a new company.
“The company’s online sales could rise by 40-50% this year,” Dinu says.
Previously he said figures for the online business could double or treble within three or four years.
“The turnover [for physical stores] will be in line with that of 2012 or slightly above. For the first six months we are above last year, although we have 20 fewer stores. This means sales per square meter went up.” He does not provide more figures or say what sales the chain had in 2012.
The executive believes the electronics and IT market declined in the first three months of the year and saw a slight rise in the subsequent three months.
“The second quarter was a very good one for us, with sales rising against the first three months of the year and against the similar period of last year.”
As for the future performance of the market, Dinu says no decision taken at economic level “can lead us to be optimistic.” So he expects the market this year to be similar to last year.
Sales of durable goods went up two percent last year, to EUR1.4 billion, amid a significant rise recorded in the last three months of the year, which offset the decline in the first three quarters.
(English version by Daniela Stoican)