Never one to rest on its laurels, the Office 1 Superstores International brand is packing its bags again and heading off toSlovenia
This week brought the news that Office 1 has found a Slovenian master franchisee, in Vele, and is planning to launch stores in May.
Slovenia has always been a potentially attractive proposition for foreign investors due to its political and economic stability – not always a must-have in the region. The country joined the European Union in 2005 and will also be the first of the new members to join the Eurozone in 2007.
Nevertheless, foreign direct investment has not entirely taken off as it has in other countries of the ‘New Europe’. This could perhaps come down to the lack of flexibility in the economy, with the labour market being particularly rigid, as well as high levels of government regulation and bureaucracy as well as a tax system described by Vele board president Andrej Andoljsek as "non-motivational".
The country has an office products market that is estimated to be worth in the region of $150 million and is a fairly price competitive environment where quality brands and 24 to 48-hour delivery is a standard.
So where does Vele fit into all this? Well, Vele is a non-food retailer that recorded sales of $65 million in 2005. In the last two years, after becoming part of a privately-owned group of companies called Tus Group, it restructured from a general retailer into a non-food ‘lifestyle’ specialist with four retail formats incorporating apparel, drugs, houseware and kitchenware and stationery stores under the brand of Tempera.
The company currently has 55 stores of different formats with an expansion plan of around 40 new stores in 2006 – 31 opened in 2005. Andoljsek told OPI+: "In 2005 we started searching for a partner to further develop our Tempera stationery business and to expand more competently into the B2B market segment. Office 1 International matches what we have been looking for perfectly. It’s got a well developed multichannel sales concept which expands beyond retail, a well developed and price competitive private label in all major product groups, and one of the most experienced management teams in the business."
And the Vele man expects Office 1 to work its mojo in double quick time, "This brings us into a very competitive position on the day we open our first Office 1 superstore and we expect to build market share fairly quickly," he said.
Andoljsek is clearly excited about his new business partner and believes the effect on the Slovenian market will be swift and significant. The market is currently dominated by a couple of larger, partly government-owned companies while the mass market is dominated by Tus Group, Mercator and Spar – although these companies only really provide direct competition to OP retailers during the profitable back-to-school season. Nevertheless, the Office 1 format is expected to bring something new that will spark changes in the entire OP market.
He explained: "The Office 1 Superstore concept is a novelty in Slovenia that we expect will definitely change the market structure and dynamics. We will introduce a new and fresh way of multichannel marketing and selling of office products."
In addition to this, Office 1 will focus on offering the customer a choice between brand names and attractively priced private label while providing a high level of service that it expects will raise the current market standards.
Vele has been speeding up the learning curve since its first meeting with Office 1 and will look to split the Office 1 brand over superstores and its smaller Tempera outlets.
Andoljsek explained: "Our plan is to open three stores in 2006 and we already have two locations available and ready. I hope we will be able to find the third one soon although that is not as important as the correct application of the Office 1 concept in every store we open. We plan to expand further in 2007 with at least two new locations. My opinion is that there is room for five to six larger superstores in Slovenia and we plan to cover the rest of the market through the Tempera stores that will also carry Office 1 merchandise."