In 2007, the company's second year of activity in Romania, the domestic network stepped into the black, which took the company's managers by surprise.
"Turning a profit was not a goal for the company as we're making massive investments to expand the domestic network. This year, we expect profit to rise to around 6m euros," says Alexander Frech, the new general manager of BauMax Romania. Before, Frech was a sales manager at the domestic subsidiary.
He says that this year profit growth will come amid the doubling of BauMax Romania's sales, from 61m euros in 2007 to 110m euros.
At present, each of the seven stores of the network generates a profit.
One of the biggest challenges the new manager is facing is to curb personnel turnover in stores, which generates additional costs. He also says he has lately seen personnel turnover reduce from 40% to around 30%.
On average, a domestic BauMax store employs 110 people, with the total number of people working at the Romanian subsidiary now standing at around 900 people.
"In Romania, BauMax has gone beyond the market testing period. After the first launches, we've tried to improve our store concept and among other things we've developed services particularly destined to professional customers and we've better adjusted our product offering to market demand," Frech also said.
Domestically, the retailer operates stores with sales areas ranging between 10,000 and 15,000 square metres, with around 30,000 items displayed.
At present, the company operates seven stores, two of them being opened this year. BauMax will open six stores next year, with one of these to mark the network's entrance on the Bucharest market. Expansion investments are put at 60m euros in 2009.
Originally, the company planned to open five stores in 2008, but will end this year with only two new stores.
Frech mentions the network will further bank on partnerships with real estate developers, but also on owned locations.
In Timisoara and Ploiesti (targeted for store openings in 2009), BauMax plans to develop some shopping centres on 8-9 hectare plots, with the projects due to also attract furniture retailers, supermarkets and apparel retailers.
"We want to be in prime locations within cities. At present, we're also mulling expansion in smaller towns, such as Focsani," the manager adds.
"We now have 15 definite locations for expansion. The Romanian market is still highly attractive and this is why we'll not stop at 22 stores," states Frech.
BauMax
- Entered the Romanian market in 2006
- Has already gained a position among the 5 largest DIY networks, with 7 stores
- In 2007, the company's second year of activity in Romania, the domestic network turned into the black
- In 2009 expects income to hit 6m euros
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