Romanians spend about EUR2.5 billion on computer and electronics products a year, and the market has done very well in the last few years, even beating 2008, the last year of economic boom, in 2017.
People buy home appliances, mobile phones or electronics through a number of sales channels, from specialist stores to grocery retailers that also carry such products.
Market data show the brick and mortar specialist retailers remain the most important channel. This includes both major retailers like Altex and Flanco and small independent stores. The latter still have a presence in small and medium-sized cities of Romania, but the past decade led to a significant decline in their number and market share. Altex and Flanco, on the other hand, have more than 200 stores together and are present in the most important cities of the county.
The two retailers also have online stores, whose sales are on the rise. The two actually use an omnichannel model, which means they have some customers to buy exclusively online or in a physical store and others who use the Internet for information and then go to make the purchase in a store.
In all, the online channel contributed more than one third of the computer and electronics sales, gaining 3% market share, judging from the market data available to ZF.
The market is polarized, the online segment and the telecom operators are on the rise while specialist brick and mortar retail chains and non-specialist ones – hypermarkets and supermarkets, are seeing a decline.
Online sales include both the sales of online-only stores and of the retailers that have a brick and mortar operation, as well. On the other hand, sales via telecom operators have gone up, as the operators started relying on sales of products more not just on services, so they now account for 16% of the market.
The past decade brought other changes in structure for this market, as well, due to the same factors: the financial crisis and the change of spending patterns. A decade ago the battle on the market was between specialist stores and small independent retailers mostly. Altex, Flamingo (Flanco) and Domo were the top players, followed by smaller ones like Rombiz and Primex.
Only Altex is left standing today, despite struggling with debt in the first years of the crisis. It managed to reorganize without going insolvent and secure the top spot on the market. Flamingo went insolvent in 2009 and then barely dodged bankruptcy, and Flanco emerged from its ruins and was acquired by Iulian Stanciu, eMAG shareholder. It was one of the few companies in Romania that managed to reorganize while insolvent, a feat only 2% of the companies going through the same process can boast. Moreover, it has also managed to boost revenue and expects 5% to 8% growth his year.
Rombiz and Primex, as well as other smaller players went insolvent, too, and some of them were unable to overcome it. The latest victim is Domo, the retailer established by Lorand Szarvadi, which had several owners during a decade and underwent extensive restructuring, closing tens of stores that were not turning a profit. It was a top three retailer with EUR100 million revenue. In the fall of 2015, it closed its 75 stores citing difficult computer and electronics market. Altex and Flanco stepped in, snapping the best locations Domo had.
Online retailers got some of the customers of such stores, too, and they are becoming stronger by the day on a market that increased by 9.2% last year.
The computer and electronics market reached EUR2.5 billion in 2017, for the first time since 2008. The last two years were very good for this market, as consumers became more willing to replace their refrigerators and washing machines. The wage raises, the fiscal relaxation measures such as the VAT cut and computer and electronics products reaching the end of their lifecycle were growth factors for this market that saw growth of almost 10% in each of the last few years. The growth slowed down in 2017 but executives in the business still expect it to continue in 2018, albeit at a slower pace.
(English version by Loredana Fratila-Cristescu)