The company will thus reach 64 stores in Romania, in both large cities such as Bucharest, as well as small ones of 20,000-30,000 inhabitants where there is little competition. However, on the latter markets the German chain will have to battle grey and black market players as many buyers are still shopping in markets or bazaars, where storekeepers do not issue cash receipts.
“We’re looking at cities of 20-25,000 inhabitants where there are no rivals from among foreign retailers. There, though, we’re fighting with grey market actors,” says Cosmin Ulmean, who runs Takko Fashion’s Romanian and Serbian operations.
“I think that in Romania the grey and black markets account for 30%-40% of the overall fashion market, as in Bulgaria and the former Yugoslav countries. However, I can see people are slowly shifting from counterfeit products to products of some well-known brands.”
The Romanian apparel and footwear market is put at around EUR1.5 billion annually and is dominated by foreign brands such as Inditex, H&M, Deichmann and Takko, according with ZF calculations based on data from market research company PMR.
“The Romanian market has reached maturity, the most important retailers are already present. There will be two or three new entrants and two or three exits, but no more,” Ulmean says.
As for the market and consumer spending, Ulmean says he felt a rebound in autumn, but Takko’s like for like sales only increased at a single-digit rate.
According to the latest available data Takko Fashion reported revenue of EUR26.1 million in 2012. “For this year, we’ve budgeted a similar increase, provided that the economy and the exchange rate remain stable”.
In recent years, established fashion brands have expanded strongly, covering both large cities and cities with only tens of thousands of inhabitants.
“We have 20% of the country to cover yet, we want to be present in all the counties, in Romania’s major cities. For this year, we have already signed contracts for Sfantu Gheorghe, Petrosani and Bucharest, with the stores due to open in spring. We’re now in talks for further spaces,” Ulmean says.
In each of the first six years of presence in Romania, Takko opened around ten new stores, aided by the fast pace of shopping centre openings. Last year, the pace slowed as the number of new projects went down and the number of new openings scheduled for this year is even smaller.
“We want to keep up the expansion pace, but we depend on the projects being launched. Beside the new stores, we’ll also operate relocations,” says Ulmean without providing further details.
The company has preferred to seek spaces in shopping centers ever since it arrived in Romania. Recently, on developed markets, the retailer has started developing street-front concepts, but they cannot be implemented in Romania for the time being. “In Romania, I believe the Old Town (of Bucharest i.e.) could become a fashion hub”.
The German-owned fashion retail chain’s plans for Romania do not stop here, though, as it wants to cover the country with 100 Takko stores.
The company is present only on the retail segment in Romania, with production being particularly handled in Asia. “For now, there are no plans to manufacture in Romania,” Ulmean says.
(English version by Catalina Apostoiu)