Domo CEO Dragos Dinu says the local market, which GfK put at EUR1.4 billion in 2012, is too small for a computer and electronics retailer to operate two separate brands.
Bulgarian brand Tehnomarket, which had seven stores in its heyday, has just lost its last store in Tulcea (SE Romania), which was rebranded as Domo.
“The store in Tulcea is the last one to be rebranded, which marks the exit of Tehnomarket from Romania. Domo operated the stores but each of the two brands had a different policy.
Tehnomarket had large stores, which did not focus on the shopping experience. Domo, on the other hand, has always known how to create a sophisticated shopping experience.
“The market did not respond to the difference in positioning. Moreover, at a time when competition is charging from all sides especially from online [retail], we had no reason to operate two separate brands.”
Tehnomarket entered Romania in 2007 when private equity firm Equest Investment Balkans bought the controlling interests in both Domo and Tehnomarket. The shareholder wanted to develop the two brands on both markets (Romania and Bulgaria). Tehnomarket undertook to manage the stores Domo had opened in Bulgaria announcing it would keep the brand.
Domo officials wanted the same thing for Romania, i.e. develop the two brands in parallel, expecting the market to grow to EUR3 billion. The onset of the crisis upset their plans as the computer and electronics market shrank to a little more than EUR1 billion.
Romanians have been more and more careful to how they spend their money in the last five years usually preferring to save it and rather than buy a new fridge or washing machine just to keep up with the latest trends.
Domo suffered as a result, too, as its revenue shrank to about EUR100 million in 2012 from EUR165 million in 2011. Dragos Dinu said he was expecting growth for this year without providing any estimates.
Sources close to the company say keeping two brands is only worth it when sales exceed EUR300 million.
Domo has 100 stores in Romania, some 20 fewer than last year. Its main rival, Altex, operates two brands, as well, Altex and Media Galaxy, but the sales of the two amount to more than EUR250 million.
(English version by Loredana Fratila-Cristescu)