Lorand Szarvadi, general manager of the second biggest home appliances retailer on the domestic market, has established the strategic target of focusing on the company''s core business - retail.
"The company has grown over recent years and we''ve decided to concentrate on our core activity, retail. We started spin-off operations three years ago, when a specialised company took over everything that was linked to our internal activity in the IT&C domain, including software programmes," says Leonard Szarvadi, general manager of Domo Retail, the company operating the Domo network.
The second part to be spun off was the consumer lending unit, with the retailer setting up the company Estima, together with the Romanian-American Investment Fund (RAEF), which last year took over lending activity within Domo stores. "Now, it''s the turn of logistics," Lorand Szarvadi explained.
In February, the retailer started a partnership with Dutch company KLG (Kuijken Logistics Group) Europe.
"KLG took over the entire logistics activity, including the 6 regional warehouses that are strategically located in Bucharest, Constanta, Craiova, Cluj-Napoca, Timisoara and Targu-Secuiesc, as well as the personnel involved in logistics activities," Szarvadi added. This way - the official says, the retailer can better focus on its core business and will in time also benefit from some cost savings.
"Last year, logistics costs accounted for less than two percent of turnover. Still, the lower profitability at the level of the entire industry and smaller margins are prompting us to consider all of our costs more carefully. Based on the contract signed with the Dutch company, our logistics costs will shrink by around 5% each year. We will derive some cost savings given KLG''s expertise in warehouse management, and moreover, financing costs, as well as the percentage of missing or damaged products, will go down," adds Szarvadi.
The strategy related to the spinning off of non-core activities will not stop here, according to Domo officials. "There will be another stage involving service and after sales activities. The first phase will entail spinning off activities related to the home delivery of goods, and this will start on April 1st".
The home appliances retailer last year derived turnover worth more than 115 million euros, about 15% higher than in 2004. The top player on this market is Altex, with turnover put at 275 million euros last year.
"At the beginning of the year, we forecast turnover worth 130 million euros, but the introduction of central bank restrictions had a negative impact on sales in instalments. Whereas August brought unexpectedly solid figures, September and October figures were seriously hit".
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