The group, controlled by Constantinescu family, has budgeted a revenue increase for this year as Noriel is launching a new store concept, namely supermarkets for babies and children, with which it wants to cover all the over 100,000-inhabitant cities of Romania in the coming years.
The biggest contribution to Noriel’s total revenue is brought by the 43-store network operated by Intertoy Zone company, which reached revenue of EUR25 million VAT not included in 2013, according to Cristian Constantinescu, one of the group’s shareholders. The data is not available on the Finance Ministry’s website.
“For the retail business, we’ve budgeted 40% growth in 2014, supported both by the launch of the new format and the sales of existent stores. We have like-for-like growth and we are thus gaining market share”.
Of the total 43 stores, the company opened 12 units last year alone. This year, the pace of expansion on the classic format, of 250-300 square meters, has slowed down, with just two new units being opened in the first months of the year and a third one due to open in Targu-Jiu, in the shopping center developed by South-African NEPI.
Three stores will be opened on the new format, Noriel Bebe, in Vitantis shopping center, in Baneasa Shopping City and in Vulcan project of Bucharest.
“We decided to launch a bigger format, of 1,000-1,500 square meters that should include all the products needed for babies. Moreover, we will try to bring the products we have in already existent stores to the new stores”.
With the new format, Constantinescu says he’s also looking at malls, but decisions are made depending on offered conditions. At the opposite end, the entrepreneur says he’s not looking at street-front locations as these do not match the company’s format. “Once we open stores under the new format, we may close down the already existent ones to bring the offer under a single format”.
Most units are in Bucharest, 11, namely a quarter of the total number of units. “Of total products in our stores, over 40% are under our own brand. However, we also have toys from some of the world’s biggest producers”.
Cristian Constantinescu says that Romania’s overall traditional toy market revolves around EUR160 million, and around one third of it is black. The money Romanians spend on video games and consoles is added to this sum.
Noriel’s biggest rival on the segment of traditional toys is modern retail, which holds a market share of around 30%, according to Constantinescu. Next come specialized players. Romanian toy retail is highly fragmented.
Noriel is as a matter of fact one of the ones that supply modern retail with toys, through Noriel Impex. According to Finance Ministry data, in 2011 the company generated RON31.5 million (EUR7.5 million) in revenue. “We distribute around 350 products, both under our own brand, as well as toys of some foreign groups such as Spin Master or MGA Entertainment”.
The company previously exported, but now only a small weight of distributed products reaches Bulgaria, with shareholders deciding to focus on Romania.
Noriel-branded products are manufactured both in the plant of Prahova and in China. “It is difficult to manufacture complex toys in Romania as, because of costs, prices would be too high for Romanians. Thus, if we cannot beat the Chinese, we are working with them”.
Romania has just 102 toy producers left, with overall revenue of RON134 million (EUR30 million), with the 20 biggest of them contributing over 90% to the overall business, according to Trade Registry data. One of these is Toys and Games Industry, which operates Noriel plant of Prahova and which posted revenue of RON2.5 million last year, up from RON2.1 million in 2012.
(English version by Catalina Apostoiu)