Home truths

Yes, the consumer market is witnessing a downturn – but there is no reason to panic - Liviu Popeneciu, general manager of the household appliances subsidiary BSH Electrocasnice, explains to Alexandra Pehlivan

February 2009 - From the Print Edition

Although wall-to-wall news stories paint an apocalyptic portrait of the current financial crisis, Liviu Popeneciu, general manager of BSH Electrocasnice, the Romanian subsidiary of BSH Bosch und Siemens Hausgerate in Munich, does not believe the situation will be that tragic.
“With products which consumers buy to improve the comfort and enjoy better standards in their home, we have seen sales decreasing as of last October, but it has not plummeted,” says Popeneciu.
True enough, end-users, distributors, wholesalers and retailers may have been harder hit by restricted access to financing since last autumn when some commercial banks toughened their rules on credit. On the other hand the main drivers in the white goods market are still present.
People get married and young families want to own a new modern and fitted kitchen. Manufacturers create new technologies and energy saving is always important. “The hard times should stimulate creative thinking and courageous action,” he adds.
At the beginning of 2008, some statistics showed that almost 50 per cent of sold units in the mid-segments of the household appliances market were financed through consumer credit offered by banks. Following new restrictions from the central bank (BNR) coming into force last October, this share dropped to 40 per cent. Popeneciu says this ten per cent drop is no reason for panic. Meanwhile in the premium segment of the market, where ten per cent used to be the share of consumer credit, this drop has only been of two per cent over the same period.

Psychological damage

However the socio-psychological effects surrounding the crisis are the most worrying. Popeneciu says that, due to the perceived uncertainty, the usual response of the consumer is to put on hold investments in big ticket items.
When besieged with negative news detailing businesses cutting costs and massive lay-offs, spending is inhibited and, for a while, the consumer normally delays the decision of purchase, even if they can afford such a product. “Once the state of uncertainty is over, sales will rise again in every sector of the economy,” he argues.
The household appliances market also has the benefit of providing products of necessity. “If one piece of household equipment breaks down, the consumer has no other choice but to replace it with a new one and the crisis cannot influence that,” argues the general manager.
Popeneciu’s business is also motivated by the number of new apartments on the market that need fully-fitted kitchens. Now a number of residential projects are shutting down or being put on hold. But Popeneciu does not think that the number of cancelled projects is that serious, as many residential projects announced over the last two years were only testing the market. Planning and financing for some projects were not fully accomplished by the time of their public launch.
Property in 2008 was enjoying a certain overheating and this cooling-off period is necessary. “In 2008 some projects were selling for around 2,400 Euro per square metre and so the availability for the usual local buyer was clearly restricted,” says Popeneciu. “According to statistics, about 150,000 Romanians earn yearly net salaries around 10,000 Euro, making only them eligible for a bank loan aiming at purchasing such an apartment. As prices have recently gone down by 20 to 30 per cent, the flow of transactions shall resume, and so we all learn where the predictable value of the market actually is.”
Concerning the expected evolution of household appliances in Romania, Popeneciu thinks that in the next five years every new apartment will be delivered to the new owner with fully-equipped kitchens, bathrooms and incorporated closets, the so-called turn-key projects, which is the situation in west Europe and the USA.
“In Poland a few years ago, new apartments were handed over almost ‘naked’, they did not provide even a fully equipped bathroom nor electric sockets,” says Popeneciu. “Nowadays, many new housing projects are delivered at standards similar to the American practices. This will also happen very fast in Romania too.” ■

Who is Liviu Popeneciu?

■ While managing the Iraqi branch of Romanian foreign trade company Electronum in the beginning of the 1990s, Liviu Popeneciu became worried after experiencing so many headaches, following long visits to his customers. He soon found out the cause of his concern. When doing business in the Middle East, the first 20 to 30 minutes in a meeting are the most crucial period: the parties assess each other’s state of mind and quickly adapt their style to form the terms for the negotiation. Every such meeting would start with a strong black tea, a refusal of which could jeopardise a positive outcome. Popeneciu then realised it was the vast quantity of tea that caused the headaches. So later on he had to politely decline the powerful local beverage, in exchange for soft drinks or sweeties to keep his head clear.
■ Such experiences equipped him with the tools necessary to market and professionally distribute premium brands in the local Romanian consumer market. Back in 1992, Popeneciu became local general manager of the haircare and cosmetics brand Wella. In 1999, he was hired as general manager of the new Romanian subsidiary of BSH Bosch und Siemens Hausgerate. Motivated to prove that even a relatively small market in electric consumer goods can accommodate sophisticated premium household appliances, Popeneciu and his team reached their targets last year in a turbulent market. The fulfillment of his fifth full term is closing, and he is already thinking of new challenges.
■ “Looking back, I now realise how much Romania has evolved over these years,” says Popeneciu. “But we should not refrain from further challenging the local end-user, there still are high potentials in his understanding of the new benefits and standards of quality for products and services available in Europe, we simply have to properly provide him with the required information and he will surely get increasingly demanding.” Liviu Popeneciu is also president of The Romanian Association for Recycling.