Kika plans to expand local chain

Juhász said no decision has been made as to whether Kika’s Austrian parent, the Kika-Leiner Group, will also introduce its new discount furniture store format, Möbel Lager, to the Hungarian market.
“The first Möbel Lager store will open on June 11 in Krems, near Vienna. The group’s management earlier said plans do not exclude the introduction of the new format to its Central European target markets,” Juhász said.
“As for the expansion of the Kika chain, by 2007 we are planning to develop a new store in Budapest as well as others in large cities in the provinces,” he added.
At the end of May, Austrian business newspaper Wirtschaftsblatt reported that the Kika-Leiner Group plans to open a discount store near Budapest as part of a three-year plan to implement a new discount retail concept in Austria and elsewhere in the region. The paper said that, starting on June 11 in Krems, the company has scheduled 15 discount store openings in Austria, and will gradually expand its discount chain to the east.
According to Wirtschaftsblatt, the self-service discount units will be able to keep prices 10% lower than other Kika stores by saving on overheads.
Juhász last week dismissed market rumors that said the company is planning to transform its retail operations in the Törökbálint Kika store under the new discount format.
“Retail operations are undisturbed in the Törökbálint store and I have no information about any upcoming change to the store,” he said.
Juhász said the introduction of the new discount retailing format in Austria is due to a rapid increase in the market share of such outlets on the furniture market, which itself has been stagnant in the last two years.
Discount furniture stores Möbelix and Mömax, both held by rival Austrian furniture retailer Möbel Lutz, saw 5% annual revenue growth last year and account for 27% of the group’s total revenues. These brands are not present in Hungary.

Furnishing new stores

The Kika-Leiner Group recently announced that it will spend €150 million on its Central European network development project, one-third of which will be spent on the refurbishing of its existing Austrian outlets and the kickoff of the new discount chain.
The remaining €100 million will be spent on two store development projects in Prague, and one each in Brno, Bratislava and Zagreb, respectively, as well as on the Hungarian projects.
The group is Austria’s leading furniture retailer, with over 50 Kika and Leiner outlets countrywide. On the group level – including the Central European outlets – it posted net revenues of €1.17 billion on a total retail area of 850,000 square meters in 2003.
Kika-Leiner entered the Hungarian market in 1999 by buying out Austrian furniture chain Michelfeit, which at that time operated two stores in Hungary.
Aside from Giga Kika, in District 13, whose retail space was boosted to around 19,000 square meters in 2001, the other purchased store is located in Törökbálint, on the southwest outskirts of the capital.
Since its market entry, Kika has been aggressively increasing its local presence by enlarging its stores. It also opened a third local store at the end of 2003, in Budaörs, near Budapest.
The Budaörs development, which cost around Ft 8 billion (€31.8 million), increased the company’s existing stock of retail space by about 25,000 square meters.
The concentration of the retail furniture and household goods market will intensify as major players such as Ikea Furnishing Kft, and Kika Furnishing Kft continue to expand, according to recent comments by industry observers.
Currently, Ikea and Kika have a 7% and 4% share respectively, with the total market valued at around Ft 300 billion.
Analysts believe smaller Hungarian retailers such as Domus, which has been forced to close stores, could be the victims of increased competition among multinationals.
Ikea enlarged its flagship store at Örs Vezér tere last year, while 2003 also saw Kika opening its new facility in Budaörs.




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