Szarvadi, Domo: I expect a stagnating market. Things cannot get any worse

Lorand Szarvadi, founder and manager of home appliances retailer Domo, expects the electronics and home appliances market to reach around 850 million euros this year, a level similar to the 2009 one.

The forecast of the Domo manager nears predictions made by analysts and by other players on the market, who expect either a stagnation in 2010 or a fluctuation of up to 10%.

"I expect the market to stagnate in 2010, things cannot get any worse, i.e. gross turnover of 850-900 million euros," said Lorand Szarvadi.

In 2009 electronics and home appliances retail reported the biggest decline of the decade, by over 40%, with the value of the overall Romanian market down from 1.2-1.3 billion euros.

"I put last year's overall market at 750 million euros plus VAT. Hypermarkets saw a rise in terms of volume of sales, but the value was not high, because they went for cheaper products," Szarvadi said.

Domo, the second-largest electronics and home appliances retailer on the Romanian market, reported 170 million euros in sales in 2009, down by over 16% against the previous year. Last year the market saw a shift in the sales structure as a result of a decline in sales of home appliances. Consumers now take longer to analyse products, compare prices, and opt for medium and low-priced products. Therefore, some of the consumers chose to acquire home appliances from local hyper and supermarket chains, which launched aggressive campaigns and promotional offers for certain types of products.

Unlike the rest of the market, the segment of high-end home appliances recorded the same sales as in 2008, and its typical portfolio of clients has remained conservative, according to figures reported by Franke and Miele brands.

According to data from market research company GfK, the number of classic TV sets sold fell by 43% to 283,000 units between January and October 2009, while LCD TV sales fell by 14%, to 313,000 units.

Domo saw a sales decline by 35 million euros last year, as the market contracted, and reported its first financial loss, of 1.5 million euros. Szarvadi expects the company will be able to return to the 200 million-euro mark reached two years ago.

"Domo should have at least 27% (of the market i.e.), which means a 200 million-euro turnover plus VAT, a return to the 2008 level, but then the market exceeded 1.2 billion euros in gross figures."