Expansion can continue still this year - an interview with Jerzy Szkwarek, President of Sklepy Komfort

2010-02-17

Central Europe Retail Update is talking to Jerzy Szkwarek, President of the Management Board of Sklepy Komfort, about expansion into the Czech and Slovak markets and the markets in other countries of Central and Eastern Europe.

Paulina Burzawa, Central Europe Retail Update: Why are you looking to expand into new markets in the times of an economic slowdown? And why the Czech Republic and Slovakia?

Jerzy Szkwarek: Macroeconomics knows the phenomenon of business cycles where the economic crisis and depression is always followed by recovery and boom. We hope that the development of a retail chain abroad at the present stage of the economic slowdown will bring in benefits during the anticipated economic boom. What should be also noted is that we decided to speed up our operations in the Czech market in view of the “positive” outcomes of the crisis, such as good chances of finding a convenient location at an acceptable rental cost.
Competition in the Czech and Slovak markets is mostly comprised of popular store chains specialised in the sale of hard floors or fitted carpets and resilient floor coverings, while we hope to win new customers by offering a wider range of interior fitout solutions (in addition to hard and soft floor coverings, we also offer doors, curtains and blinds).

PB: What is your view of the condition of the interior fitout market in the Czech Republic and Slovakia? In particular, how would you describe the floor coverings industry, which is your core market?

JSZ: The flooring markets in these countries are similar to the Polish market. Due to past events, our countries are similar to one another, particularly in terms of the consumption potential of inhabitants. However, we are aware that the consumers in the neighbouring countries are more concerned about decoration and furnishing of their own homes. Thus, we hope that as their wealth increases, the need for interior decoration will be satisfied through a more refined product offering as compared to the one provided by DIY stores.

PB: What are your next steps going to be in terms of expanding the Sklepy Komfort chain?

JSZ: We plan to export and develop the model tested in Poland, which has also been put in practice in the Czech Republic in the past year, in other countries of Central and Eastern Europe, principally due to the logistics potential. We intend to launch our first store in Slovakia in March 2010; concurrently, we are also considering expanding into the markets in Hungary, Romania and Bulgaria. Our aim is to establish the Komfort brand as an internationally-recognised brand name; we will also strive to tailor our stores to suit the needs of potential customers regarding various types of flooring. Intensity of the chain’s growth will depend on the market’s potential and saturation level.

PB: What are the biggest threats for Sklepy Komfort entering new markets?

JSZ: Threats posed by new markets is stagnant economic growth, poorer investments and dwindling consumption. Rising wealth of populations results in an only slight increase in spending on food, whereas the resulting cash surplus will be, in our opinion, partly used to repair the existing housing stock (for instance, to replace flooring) and partly to acquire new housing units where fitting new flooring is a must.