Rates are going down. Rates go even lower. Rates won't stop from shrinking. Ziarul Financiar has pretty much bored its readers this year with this particular information. However, it's now the turn of increases: in consumption. For now, home appliances. The biggest sellers announce double sales for 2002, a performance engineered by the increase in instalments sales.
Before 1989, whether it was a washing machine, a TV set, or a refrigerator, many used the instalments system to make such an acquisition. After 1989, given the galloping inflation and the interest rates that often exceeded 100%, but also the restructuring of the old crediting formulas, people's appetite for this system seemed to fade away. However, things changed this year, when inflation has dropped and banking rates have been gradually cut. Especially since banks understood that, given the new circumstances, it may be more profitable to lend many small customers than to credit the state, a big client, very sensitive to rates. Almost at the same time, the big specialised chains grew, as they were strong enough to provide financing solutions. Once the banks charged the retail market, Romanians got back their appetite for credits.
And even an exaggerated appetite for that matter, fuelled by the media campaigns of the past few months, which focused on promoting various funding systems applied by the retailers specialising in electronic and home appliances, such as Flanco, Altex and Domo. The effects were almost instant, as most retailers have revised their turnover and profit estimates upwards.
Flanco, the largest specialised retailer, early this year forecast turnover to grow from 20m euros (last year's level) to 35 million euros, but then revised estimates to 40 million euros, only to change them again, this time into 45-46 million euros.
"Eventually, we will earn more than 50 million euros this year, which is an all-time high for us," says Marius Ghenea, general manager of the Flanco store network, which teamed up with Banca tiriac (tiriac Bank) to provide a financing system.
The Altex store chain is almost just as optimistic. "While at the beginning of the year we were expecting sales of 27 million euros, up from the 20 million euros logged last year, I now believe we will go up to 40 million euros this year, as we have already recorded sales of 32 million euros," says Dan Ostahie, Altex general manager.
"The rate cuts applied by the banks for the ROL credits have made it possible for a bigger part of the population to afford credits in the past few months and have implicitly triggered an impressive increase in this type of loans," Ostahie added.
Consequently, the instalments system has come to account for 30% of Altex sales. "This level is surely going to increase next year, considering the rate cuts, which are set to continue in the years to come," said the general manager of Altex, which yesterday launched a fixed instalments system, under a partnership with Finansbank Romania.
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