Staer to rely on franchising and expansion abroad

Stefan Nicolae, general manager of the Galati-based Staer furniture producer, says the aggressive expansion of the company”s store network and the opening of its first store in Bulgaria will boost turnover by more than 50%.

“In the first three months of last year, Staer had 11 stores in 8 cities. This year, we reached 37 stores by late March,” stated Stefan Nicolae.

He says the first quarter of this year has already brought an increase by 50% in turnover, to 7.34 million euros.

“Turnover expected this year will top 35 million euros, we are likely to get close to 40 million euros, that is 50-70% higher than the figure of 2005,” added the company”s representative.

Last year, Staer derived income worth 1.29 million euros amid turnover standing at 23.5 million euros.

Staer is likely to own 50 stores by yearend. The biggest one will have a surface area of 2,500 square metres and will be located close to one of Bucharest”s hypermarkets, in Colentina. “At the request of some local partners from various regions in the country, Staer will also open stores in a franchise system starting this year,” added Stefan Nicolae.

Two of the stores will be operated under a franchising agreement and will be opened by late August; another nine are due to be launched by yearend. Staer is looking to develop outlets in cities that have more than 50,000 inhabitants.

“This year”s investment plan includes the opening of new stores, improving logistics and the development of production and shipment capacities, which will entail investment of approximately 2.8 million euros,” specified Nicolae.

Also this year, the company plans to expand its network to other markets in the region, initially targeting the Bulgarian market. Up until now, the only Romanian group operating on the retail market in Bulgaria was Mobexpert, owned by businessman Dan Sucu.

“We”ve made this decision at the beginning of this year, since one of the company”s objectives is to become a regional company. The first Staer store to operate outside Romania will be opened by the end of this year, most likely in Varna,” he said.

According to Staer”s own estimates, the company owns 4.3% of the domestic furniture market and this year intends to “maintain its market share and strengthen its position on the domestic market”. Staer owns a furniture plant in Galati, on a 40,000 square metre plot, of which the facility takes up 18,000 square metres, and manufactures upholstered furniture (sofas and armchairs), unitary furniture (bookcases, offices, kitchens) and separate furniture items.

The rate of growth on the domestic furniture market has slowed down over the past year, and market experts are anticipating an increase by only 10 percent, two times less than last year.

Romanian furniture market

* Rate of growth has slowed over the past year

* Experts expect it to advance by a mere 10% this year, two times less than last year

* The value of production in 2005: 1.2 billion euros

* The number of people working in the sector: 89,400

* The value of furniture consumption on the domestic market: 529 million euros

House construction, estimated to be the catalyst this year.

ioana.david@zf.ro