Appliances producers fight over savvier consumer

Now, these two producers claim to hold leading places on the market regarding the products traditionally produced in Romania, stoves
for Electrolux and refrigerators for Arctic.
Locally produced appliances are sold both on the Western European and North American markets with the two companies putting an increased accent on exports. In order to keep a leading position on a local market of complex home appliances, investing in technology, in the production capacity and in products is a must.
The market is continuously increasing, especially given the development of the niche sectors for dishwashers and driers, says Carmen Georgescu, marketing and communication manager of Electrolux Romania.
After the significant growth of recent years, in 2006 the home appliances market had a slight decrease.
At present, the value of the white goods market is about EUR 420 million, and the volume is 1.6 million units, Ugur Kayali, general manager of Arctic, said.
In the near future, Electrolux Romania will focus on changing the mentality of local consumers and teaching them about choosing the right appliance. Regarding the plant in Satu Mare, the aims are to develop new products in response to the market demands, to implement the environment management system (EMS) and to maintain a good service call rate percentage, Georgescu said.
From next month the price of home appliances will increase due to the green tax which will be charged for each sold unit according to the weight or electronic complexity of the product.
While at the beginning of the year industry representatives feared the negative effect that the tax may have upon sales volume, now the situation has changed. Georgescu believes the market will not suffer a setback once the tax is in place. “The collecting and recycling process is a step forward in making both producers and consumers accountable on environmental issues,” she said.
Kayali is confident in the positive development of the local appliances market. “We expect growth for the next few years, supported by the capitalization of the niche segments, such as dishwashers, dryers and built-in products,” he said.
Arctic's medium-term development strategy targets increasing productivity, increasing exports by entering new retail markets and launching products with complex characteristics and functions that will meet the growing demands of consumers, while the improvement of Arctic's distribution activity will generate a better presence on the market.
The brand holds a market share of 29 percent on the domestic market, being the most powerful Romanian home appliance brand.
The company had EUR 194 million in turnover in 2006, which represents a 30 percent increase compared to 2005. In the first quarter of 2007, it registered EUR 42 million turnover, a 24 percent sales increase compared to the same period of 2006.
In the last four years, Arctic investments have surpassed EUR 35 million and have aimed to improve the efficiency of the company's activities. “In 2007, EUR 10 million will be spent on increasing the company's productivity, upgrading production technology, and developing projects for over 20 new products, both for the local market and for export,” Kayali said.
One year after the takeover of Arctic, Arcelik started production of new products in Gaesti, like washing machines, gas cookers, vacuum cleaners and hoods, taking advantage of the brand awareness Arctic had on the market. “Currently, Arctic dominates the refrigerator segment with about a 45 percent market share and holds an 18 percent market share on the gas cooker segment, and 20 percent on the washing machine segment,” Arctic's GM said.
The privatization processes of both plants in Gaesti and Satu
Mare meant going through significant changes and bigger growth rates.
Since becoming part of Electrolux the production of the Satu Mare plant was modernized from the old one or two ring stoves to producing vitroceramics kitchen ranges which are exported all over the world in the countries where Electrolux is present.
The Satu Mare plant currently employs more than 1,600 people.
In 2006 Electrolux Romania had more than EUR 140 million in turnover and invested about EUR 4 million in improving the technological processes and product development.
Since privatization, Arctic has turned more to exports and the international market, being the only Romanian home appliance brand present on markets such as the UK and US. In 2006, Arctic's total
sales volume exceeded 1.4 million units.
Among these, up to 750,000 units were sold on the international markets, over 60 percent more than in 2005.
Company estimations indicate that by yearend, the exports volume will reach 900,000 units. Europe remains a very important area for the sale of Arctic home appliances, says the firm.
Presently, the main export markets are Poland, France, Germany, Spain, the Czech Republic, Serbia and the UK.
“In 2007, we will increase exports to North Africa and the Gulf countries. In 2007, 75 percent of the local production will be exported, with about 65 percent of the exports volume going to the European Union,” Kayali said.

Roxana Mihul