Silvarom Bucharest, one of the top producers of furniture in Romania, will focus on the expansion of its network of stores starting in 2005. This comes after several years in which investment has been almost exclusively spent on technology updates.
"Next year we will open 5-6 new stores, some of which will be in Bucharest, with the rest in cities close to Bucharest, such as Ploiesti and Pitesti. This decision marks the beginning of investments in retail and marketing. There were several factors behind this decision, such as the fact that retail activity brings higher gains, and also the fact that we have been coping with difficulties lately as regards the marketing of our products on the domestic market," said Andrei Menhardt, chairman of Silvarom company.
The new stores will have surface areas of around 500 square metres, with investment per store ranging between 150,000 and 300,000 euros. The first to be opened will be in Bucharest.
Silvarom currently owns three stores and distribution on the domestic market is managed through around 40 stores countrywide.
"In parallel with the opening of these stores, we will also develop our own retail concept, which should bolster our brand recognition and in which we will place a special emphasis on modern design," added Menhardt.
Major furniture manufacturers are increasingly concerned about the establishment of domestic retail networks since retail profit margins are higher than in production.
Silvarom mainly produces office furniture and large wood bedroom suites.
"We have embraced the idea of specialisation in order to boost our productivity. In the case of Silvarom, in the first ten months of this year, labour productivity measured in hours increased by 16% as compared to 2003," said Menhardt.
Silvarom Bucharest last year made sales of 534 billion ROL (14.2 million euros) and this year expects turnover to reach 580 billion ROL (about 15 million euros).
"In the budget for 2005, we forecast turnover would reach 650 billion ROL (16.25 million euros). However, given the euro's recent depreciation, we will review the budget," explained Menhardt.
In the last month, Romanian furniture exporters were affected by the depreciation of the European single currency, reducing their revenues.
This year, some 60% of Silvarom's production has been for foreign markets, mostly EU countries, but also to Great Britain and Russia.
georgiana.stavarache@zf.ro
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