In an interview for Monitor, Julian Mane, BALFIN Group’s Vice President of Retail, says that an optimistic year is expected for retail sales. The challenge will be the increase in international shipping costs. While as an opportunity that 2022 brought, he highlights the retail park concept, which started in the city of Korça, and its expansion to other cities.
What was the retail sector like in 2022, according to BALFIN Group?
BALFIN Group’s retail sales consist of Neptun or the largest company of consumer electronic products in Albania, Kosovo, and North Macedonia; the company KidZone International which represents Jumbo products in Albania, Kosovo, Montenegro, and Bosnia and Herzegovina; SPAR Albania which counts 40,000 products; as well as Fashion Group Albania with international clothing brands for the whole family. Some of the largest shopping centers in the region, TEG and QTU in Albania, as well as EGM in Skopje are essential parts.
If we go back a little earlier than 2022, the pandemic caused an all-round contraction of the world economy. Since then, and especially during this year, a trend of buyers “catching up on lost time” has been observed. People’s willingness to spend has been an important factor in the growth of consumption in general and this trend has included retail sales and many other sectors.
With regards to our country, the expansion of the construction sector has directly affected the increase in retail sales, as new apartments naturally increased the demand for products and equipment necessary for homes. At the same time, the stable level of remittances has had a positive impact.
During 2022, we have added 14 new service units, in line with consumer trends. Meanwhile, long-awaited international brands have been introduced to our market for the first time. Our shopping centers have added 17,000 m2 of space available to citizens, which corresponds to the greater presence of national and international businesses, respecting the environment and natural resources.
What were the challenges encountered?
An important challenge, since the time of the pandemic, is the increase in international transport costs and supply delays. The conflict in Ukraine highlighted this issue. Over a period of time, it became difficult to even provide basic products, in addition to the significant increase in prices in the global market, which continue to be high and negatively affect consumption.
The variety of products offered by the retail companies of BALFIN Group has helped us mitigate these unwanted effects. The 40,000 products in the 76 SPAR stores in Albania meet the basic needs of families, with products marketed in the highest hygienic and sanitary parameters and with international quality certifications.
Even the expertise formed over decades has taught us to create alternative channels to provide the required products. For example, the Jumbo network in Albania, Kosovo, Montenegro, Bosnia and Herzegovina managed to keep intact throughout this time the record figure of over 30,000 products for children and entertainment for the whole family, produced for the European market. Likewise, the Neptun company, consolidated for decades in each market where it operates, maintains the leading position for household appliances and electronic products.
Can we talk about a post-pandemic e-commerce boom?
The pandemic presented unparalleled difficulties for trade, but also taught us how to deal with such a situation. Online sales in the world during the pandemic increased significantly, while in Albania, the pace of other countries was not reached even though the efforts were great. Of course, a significant jump was recorded, but it was fragile, because the companies found themselves unprepared.
Now the volume of online sales has fallen again, but remains at slightly higher levels than before the pandemic. The boom you mention is coming very soon and we are preparing. In addition to online sales that are active for all our companies, on the respective websites and applications, we are considering the possibility of adopting some practices that have proven successful in similar situations.
What are the expected developments in the sector for 2023?
The beginning of the year is predicted with the usual difficulties, but then I believe in a satisfactory pace of sales, due to the end of the cold months and the possible reduction in the price of electricity and oil.
Online sales will increase in 2023 and beyond. Albanian consumers are changing compared to those of the region and Europe. They have more information and choices available to them. For their part, our companies are always in the process of adapting to anticipate the needs of customers.
An important development for our customers in cities other than Tirana will be the retail park concept. In other words, they are simplified mall formats, tailored for small markets. We did the first test in Korça with West Park, which was well received by the buyers there. There are four businesses located in 7,400 m2, which meet the most diverse needs of the local market, with the same standards as in Europe. 2023 will bring the extension to other cities as well.
In summary, I expect an optimistic year in terms of retail sales performance for BALFIN Group companies.