The chain will begin with small home appliances and then expand to large appliances, followed by mobile phones as of September. The private label product business should generate 15% to 20% of the total sales in three years. Flanco posted 663 million lei (EUR150 million) revenue last year.
“We don’t want to sell the cheapest products under private labels, we want to position ourselves at 10% to 15% below the top brand prices. We don’t want to sell a cheap phone that breaks down in two months, we want customers to return,” says Dragos Sirbu, chief executive officer of Flanco.
Sirbu says Flanco’s private label products are made in China and Turkey and not in Romania, because Romania does not have the necessary production facilities.
“Romania has the tradition in this business, has the skilled cheap labor but one needs infrastructure and some diplomatic ties to develop new plants. We, Flanco, are not considering investment in our own production facility.”
After having conquered supermarket and hypermarket chains, private labels have moved to sporting goods retail and now to computer and electronics retail. Dragos Sirbu did not reveal what name Flanco planned to use for its private label products.
Flanco has a 90-store chain, nine stores of which opened last year and two this year.
“We have two more openings planned by yearend and we may invest in even more.”
Flanco will continue expansion this year after a very good start of 2015, with first half sales up 20%. The market grew by 9% in the first half, Dragos Sirbu said.
Smartphones, tablets, video game consoles and beauty products saw the highest growth as far as Flanco’s sales are concerned.
“Consoles were the worst hit by the crisis but have bounced back, as did beauty products. This is a clear sign of consumer spending becoming healthy again as people are no longer directing money to necessities.”
(English version by Loredana Fratila-Cristescu)