"It will take a while for us to be affected. The crisis is best understood as it is. It does not necessarily have to do with expenses, but with confidence. The confidence of financial institutions in clients; of the clients in financial institutions and of financial institutions in each other," says Cornel Oprisan, retail manager of IKEA Romania.
This September, the store saw its highest sales since opening - 11 million euros, or 10% of the 110 million-euro budgeted for the financial year (September 2008 - August 2009). The company's results in October followed the same trend, so that IKEA could revise its estimates upwards for the entire financial year.
IKEA Romania's boss says that there have not been any changes in costs since the beginning of the year, either. The highest costs incurred by the store in the Baneasa shopping area in northern Bucharest are for transport and for the approximately 500 employees.
The international economic crisis, IKEA officials say, has not affected expansion plans, either, with the initially announced target being six stores over the span of five or six years. For potential locations, they are considering Bucharest, Constanta, Iasi, Galati, Cluj and Timisoara.
"After having gone through a boom period, the real estate market is now waiting to see what happens. They say prices have gone down, but no deals have been made so I cannot say whether it's true or not," Oprisan adds.
The IKEA manager compared the current situation in real estate with that of banks, saying that everybody is waiting for lending terms to relax, but no one has the courage to take the first step.
As for investments in the next IKEA store, Oprisan says that they could be lower, given the current economic context, although "not significantly lower".
According to the data on the Finance Ministry's website, IKEA posted 4.6 million-euro net profit in 2007. "The 2008 profit will be comparable to that of last year. We still have to see how December goes, but so far we are on schedule," IKEA Romania's boss said. IKEA anticipates sales to go up by 20% in December, compared with the same month of 2007. Traditionally, January and February are slower in terms of sales.
The store in Baneasa is designed to reach a maximum sales capacity of 120-125 million euros and the retailer's representatives are considering expansion of the location in northern Bucharest over the coming period.
IKEA entered Romania in March 2007 following investments worth 25 million euros. The store in Baneasa is a franchise held by Moaro Trading. The shareholders are the Dutch investment consortium Engma, 75%, Turkmall (Netherlands), more than 24% and Inter IKEA Systems B.V, with less than 1%, according to Trade Registry data. Behind these entities is businessman Gabriel Puiu Popoviciu.
The presence of IKEA on the local market also entails a representative office, which the Swedes use to buy furniture from local producers.
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