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Day 4 - IFA International

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Trade News Euronics

Trade News Euronics turns to the East Multinational buying group sets sights on €20 billion by 2015 Euronics President Hans Carpelss Euronics celebrates its 20th birthday this year, and the buying group, which represents 11,000 independent retailers across the European continent, is feeling confident after a year which was especially bruising on for its eastern European business interested. IFA International sat down with Carpels to hear about his firm’s expansion plans.... You’re arriving today; what’s on your mind right now? We are expanding our group. This morning we signed a contract with a new player By Mark Dezzani Hans Carpels is an industry veteran still settling into a new role as President of Euronics, the longtime managing director of Euronics Belgium took over the top spot in July 2010. in Ukraine and Moldova. We will now be in 31 countries. [Managing Director] Klaus Lahrmann and I have taken up a challenge: 2009 turnover was €14.1 billion. Our challenge is to grow the company to €20 billion by 2015. We want to do this with organic growth, by expanding product categories. In different countries, our member groups are for the most part focusing on consumer appliances and white goods. We are making a clear statement to expand into so-called IT products. What do you mean? I say so-called because laptops and netbooks, are, for the consumer, not IT products any more. They are entertainment products. We have eight or nine members leading the way. They explain to their peers that these types of products, which is a novelty to the others—due to the technology and way of distribution—can be handled. You once had one washing machine, one television set: now you have more than one of everything. We will gear this up in the countries which are not yet focusing on that. Organic growth will be there, and expansion into new territories will happen. How is that progressing? We had a decline of 2% in our total turnover. We put our relationship with our Russian partner, Expert- Retail, on hold. Now we have renewed it. We did so because we expect renewed growth in Russia, which is a major market. We have to face it: in the east, it can only grow again. The markets encountered a crisis from which they will certainly recover. We see forecasts for 25% to 30% in the major countries like Russia and Ukraine. That’s quite a shift in direction. HC: Russia has suffered. Last year, we suffered from their performance, from there and Poland. They coped with a huge downturn which I don’t wish on anybody. They were also based on a wholesale structure: that exposed them to staggering currency fluctuations. Now it is more under control and we are dealing with the retail arm. They’ve launched a Euronics shop as a pilot in Yekaterinburg. On both sides last year we suspended our relationship because they said they couldn’t deliver what was promised. Now the air is clear: that’s a good sign. Why Ukraine and Moldova? Moldova is the poorest country in Europe. You’re right, but you can take a market position within the country where you are a clear number one. And if you look at this area, you have a huge population. The demand is big. You’re looking at cameras, video, mp3, gps, laptops here, what’s hot? HC: Well, dedicated GPS is going down, that’s a service that is no longer based around stand-alone devices due to its success on the mobile phone. The main market driver is still flat screen TVs. And connectivity in all things is attractive to consumers. Being able to link your digital camera to your flat screen, so quickly and simply, just by a movement of your hand; is very powerful. For the consumers, you just have to explain these things. Then there’s 3D TV: but that market will only take off when the content is there. What about the smartphones and PC tablets, the idea of wireless devices with screens being everywhere?. HC: It’s tremendous. You just have to look at the Galaxy [Samsung’s new tablet]. At the same time, you have Android really coming of age. The Galaxy tab, for me, is the breakthrough of the year. It is an eye-opener. I’m a classical conservative. I read books. But on the other hand, I read four newspapers a day; they arrive at 5.15 in the morning. But if I have those to my tablet or iPhone, I’m faster. It’s an economy of time. What do you expect results-wise this year, and what do you expect to see at IFA? “Laptops and netbooks are, for the consumer, not IT products any more. They are entertainment products” If I am choose to stay on the safe side, it is reasonable to expect a 5% to 6% increase in results. We are focusing on implementing a new selective distribution system through the group. Members will have to abide by some rules: to demonstrate certain products, provide room on the show floor and provide trained staff. If you aren’t constantly training, you can’t reach out effectively to consumers. And IFA, for me? I’ve been coming here since 1977. Each time, it gives me answers and ideas. In a week from now, I’ll be able to see more clearly for the future. This is how it was with flat screens, when they debuted here. All our retailers had cathode ray tubes. We grasped it, got them quickly into the shops with a payment system contingent on them bringing 30 models into their retail spaces. It was tough—they almost lynched me. But then we jumped into new technology and grasped the market two years earlier than the competition. Hall 23 Stand 108 IFA International • Monday, 6 th September 2010 41

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