Steinhoff, which has developed operations in 15 European states under several brands, has built its current foothold on the basis of a plan implemented over the past 3 years and which is now starting to bear fruit. Central and West European markets largely returned to growth last year, so that the group’s profit hit a record high in 2013.
For the South-African company, expansion in Western Europe has come to an end, so that the next area on its radar should be the East. The company is an exception in the furniture industry as it’s listed on the bourse of Johannesburg, while the rest of large companies are closed ones.
Small retailers of Eastern states are worried about the concentration process unfolding in Western Europe and the producers supplying furniture to these stores can see the number of clients decline and options for new partnerships are ever fewer in Europe.
“The phenomenon can be a threat for Romanian producers working for several groups. Romanian producers’ options are also falling and demands are higher,” said Dan Sucu, owner of Mobexpert, the biggest group on the Romanian furniture market.
The tighter selection of chains among suppliers is doubled by another problem hitting the plants’ competitiveness. In other words, pressures come from two directions: on the one hand the number of clients is falling and on the other one raw material costs are rising.
Acquisitions made the growth recipe of Steinhoff group, which reached revenue of EUR7.6 billion in the fiscal year that ended in June 30, 2013. In 2013, the group took over kika/Leiner group from two families of Austria. The value of the deal was not disclosed. Through this acquisition, Steinhoff also entered the Romanian market, through kika store of western Bucharest.
“The group estimates it will expand further through the purchase of small retailers of Eastern Europe,” says Cristina Tarziu, senior manager at the consulting department of EY Romania.
(English version by Catalina Apostoiu)