Company officials said that the strategy shift was due to the fact that small distributors outside Bucharest, who used to generate a significant share of the revenues, have been affected by the economic crisis and the expansion of large retailers. “The ratio of major retailers in our sales has risen from 20 percent at the end of last year to some 30-35 percent at present. It is true that their orders are not as large as last year, but orders are come more frequently, which does not allow for accumulation of stock,” ElkoTech Romania’s General Manager, Mircea Ciucur, told Business Standard.
Another reason for changing the strategy was the freeze of state-supported projects. Through the distributor’s partners, public procurement projects generated some 15-20 percent of the company’s turnover, while this year the yield from this segment is close to zero.
In the first six months of 2009, the company’s turnover dropped some 50 percent year-on-year, to some €10.5 million. “We hope to end the year with a 20 percent decline, and to recover 10 percent in the second quarter. We can secure growth from the online segment, which is going very well,” Ciucur said.
On a market estimated to be worth €800 million in 2009, ElkoTech has a 5 percent market share and distributors Scop Computers, Asbis, Tornado Sistems, and R.H.S. Company as its main competitors.
