Altex Sales and Market Changes in Romania – European Digital Event Commerce Summit Update

In the first three months of the year, Altex, the leader of the electroIT market in Romania, sold “in line with the market” which increased in value, mainly as a result of inflation, by approximately 10%, he told Economica, during the European Digital event Commerce Summit, Edvin Abdulachim, commercial director of Altex.

According to him, however, there are reductions in the volumes sold in the area of ​​premium products and in certain categories of products such as refrigerators, televisions. On the other hand, sales of premium products are increasing, as are those of phones and entertainment products such as game consoles.

“I think the market will go towards 10% value growth, but it will probably be stagnant, overall (in terms of volumes, ed.). In the past years the electroIT market has grown significantly. It is normal to come, at some point, a stagnation or even a reduction. Quantitatively, the situation differs by product and price category. We estimate the decline of the entry level segment somewhere at 10% because we see some problem in the area of ​​customers who buy cheaper products. They are delaying the purchase, probably due to economic problems. In terms of product categories, we have seen healthy growth in mobile phones. In the same way, the entertainment has increased a lot and because the PlayStation 5 was not available in sufficient quantities last year. Instead, we noticed a quantitative decrease in products such as washing machines, refrigerators and televisions. We have an increase in turnover in line with the market (value, ed.)”, explained Edvin Abdulachim.

According to him, mobile phones in the higher price category have an increase of more than 20-30%.

“This year is challenging in that the prices of consumer products will increase and then people will have less money to spend on something else”, he concludes.

What will happen to the prices of electroIT products in 2023

As for prices, the Altex manager says that, at the moment, they ensure the company’s profitability and, theoretically, as long as the price of energy is capped, no other important influences should appear – the market is no longer facing a semiconductor crisis like in the pandemic, so there is no longer a significant supply problem. In contrast, shipping from China, Turkey, where the retailer’s own brand products generally come from, has become more expensive by 10-20%.

“In general, we try to keep the lowest price in Romania. At the same time, our mission is profitability. At the moment, the current prices as they are ensure that we are not losing money. So we don’t want the prices to go up. But it also depends on what happens. If electricity becomes more expensive tomorrow, for example, we will have to get that money from somewhere, although on this side of electricity costs we are quite prepared following the investments in photovoltaic panels”.

So far, the company has installed photovoltaic panels on 20% of the total of approximately 125 stores.

Challenges in the area of ​​private labels

Regarding private brands, generally purchased by people with low incomes, the Altex manager says that they represent a real challenge and that they are “quite limited” in this segment, with range extensions only where established brand manufacturers could no longer provide the necessary quantities.

For example, if a brand no longer produces TVs with a diagonal of 81 cm, but there is a demand for them, Altex will come up with the private brand alternative.

“These entry level products (often private brands of Altex ed.) usually come from China or Turkey with shipping costs that have increased by 10-15-20%, depending on the deals. Or, in this situation, you have to be very careful which products you choose and how you position them. You have to look at the profitability of that product and the utility for the end customer. You can’t have, for example, a private label product for a product that should be premium.”

Investment of 9 million euros in an Altex on two floors. The expansion continues

As for expansion plans, the retailer has planned for this year 10 new openingsincluding a unit in volunteer in which you will invest 9 million euros. It will be the retailer’s biggest store to date, a flagship store that will occupy two floors on a plot of land owned by the Altex group.

The network of Altex and Media Galaxy stores includes over 125 stores and the future locations target cities where Altex and Media Galaxy are not yet present.

“We open the stores in the optimal format according to the profitability of the respective area. But we want to have large format stores, even very large. We usually operate in the area of ​​1,500-2,500 square meters because the space allows us to display our products for the customer. We also have a few stores of 700-900 square meters, but there we do not manage to show the customer the whole range, so if there is an opportunity to relocate or expand, it can be done”, says the manager, according to whom own stores have some significant advantages – there is the possibility of manage costs and are built right from the ground up.

However, the expansion also requires efforts in terms of attracting labor, which is increasingly rare in the context of the expansion of delivery companies.

“The difficulty in finding employees comes from two components: the state apparatus and the non-taxing of various activities such as ridesharing or food delivery. People have started to appreciate activities that allow them to work when they want, how many hours they want, but they don’t pay the taxes that companies pay.”

Altex is a leader on the retail market in Romania, with over 120 stores open in the country.