Last week, kika, CEE's biggest furniture and home décor retailer, opened its first store in Romania in the wake of investments topping 30m euros, thus raising the standards of furniture retail, a market worth above 1bn euros. How is the Austrian retailer trying to stand out from its main rivals, IKEA and Mobexpert?
Kika comes with a new concept for Romania, an offering targeting all price ranges, as well as with a plan to open a further 10 stores in the following years. So far, three definite locations have been set: Oradea and Constanta in 2010 and Timisoara in late 2010-early 2011.
"Our teams of lawyers are in Bucharest right now, holding talks for new locations," said Paul Koch, general manager of kika/Leiner group, during the press conference held ahead of the official opening of the store on December 4.
The three locations will require investments of above 30m euros, given that the Bucharest store entailed 31m-euro funds.
The Austrian retailer does not have its own production facilities, but works with suppliers throughout the world, including Romania. Last year alone, Romanian producers delivered furniture worth around 50m euros on the European market kika is present on. Normally, the freight from Romanian producers should go to the company's regional warehouses, but to shorten the transport cycle the company's representatives decided to boost the warehousing capacities at West Park.
Through the 50,000-item offering, seven times bigger than IKEA's, kika wants to tackle all price segments. So far, the other retailers have avoided this approach.
Dan Sucu, Mobexpert chairman, believes kika will undergo "quite a lot of price adjustments" as the German model is not necessarily to Romanians' taste.
One of kika's stated goals is to become market leader in the cities it is present in. So far, kika has hired 250 people in Romania, with the number to reach 120-150 per store for the future stores. Hence, the number of employees could go beyond 600 people in 2011.
Koch specified the financial crisis is not hurting kika's expansion plans, as it is a privately held company, with a low indebtedness rate.
Asked whether there are plans for the opening of a Leiner store domestically (targeting the premium segment), Koch said "not now".
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