December, 2020 / Volume 24, Issue 11
www.business-review.eu
BENEFITS OF 5G TO SIGNIFICANTLY OUTWEIGH ITS COSTS
18
PROMOTING STARTUP CULTURE IN TIMES OF REMOTE WORK
20
HOW ROMANIA’S BIG CITIES CAN BOOST COMPETITIVENESS
24
HOW BRANDS CAN TAKE ADVANTAGE OF THE TIKTOK PHENOMENON
31
PANDEMIC SHAKES UP LOCAL RETAIL MARKET
www.business-review.eu Business Review | December 2020
EDITORIAL 3
• Editorial •
COVER STORY
Anda Sebesi • Editor-in-Chief • 6 Pandemic shakes up local retail market
ENTREPRENEURSHIP
It’s time for a change
20 Promoting startup culture in times of remote working: a challenge for founders
C
ompanies across the world, regardless of the sector in which they operate, must now push the restart button and
MACROECONOMY
stop expecting business to get back to normal anytime
soon. Although signs are pointing to a slow but steady recovery
24 How Romania’s big cities
next year, as a vaccine against the coronavirus has been discovered
can boost competitiveness
and its distribution has started in some countries, it is obvious that
26 Long way to recovery
there is no going back to how things were before. The COVID-19
from pandemic’s economic damage
pandemic has amplified the “battle” between brick-and-mortar retailers and e-commerce players. The latest data from McKinsey, cited by Harvard Business Review magazine, shows that consum-
MUSIC
ers are likely to stick to the habits they developed during the stayat-home orders, namely doing more online shopping and making fewer mall visits, and retailers can’t afford to be in wait-and-see mode. First, they need to reimagine their baseline requirements and then to turn their attention to taking customer experience to the next level. In other words, retailers have to innovate and find new ways to connect with their customers. This is why we have dedicated this month’s cover story to retail and logistics – sectors which will be in the spotlight at Business Review’s next event, which will take place
33 Trends that will reshape the music industry
CITY
in January 2021. According to experts, brick-and-mortar retail will not disappear as clients will continue to visit stores in the future for various reasons, from having instant access to products to interacting with other people. But physical stores will go through some changes in terms of business models. Some may start to focus more on quick grab-and-go items and on delivering faster shopping experiences, while others might decide to increase their investments in technology.
35 High hopes: Local social entrepreneurship offering real-time solutions
37 It’s the most wonderful time of the year: pandemic Christmas shopping
EDITOR-IN-CHIEF: Anda Sebesi JOURNALISTS: Aurel Constantin, Mihai Cristea, Romanita Oprea, Oana Vasiliu CONTRIBUTORS: Ovidiu Posirca, Sorin Melenciuc, Claudiu Vrinceanu COPY EDITOR: Anca Alexe PHOTO EDITOR: Mihai Constantineanu PHOTOS: Dreamstime ART DIRECTOR: Raluca Dumitru PUBLISHER: Bloc-Notes Media Network ADDRESS: 4-6 Dimitrie Pompeiu Blvd, 6th floor, Globalworth Campus A, Bucharest, Romania SALES MANAGERS: Radu Fireteanu, Alexandra Rosca MARKETING & SALES MANAGER: Luiza Luca PRODUCTION: Dan Mitroi DISTRIBUTION: Eugen Musat EXECUTIVE DIRECTOR: George Moise GENERAL MANAGER: Catalin Alistari USA MANAGER: Oana Molodoi FOUNDING EDITOR: Bill Avery EMAILS: editorial@business-review.eu, sales@business-review.eu, events@business-review.eu SUBSCRIPTIONS on Manpres Distribution Business Review is a member of Fwei
Publicație auditată pe perioada Apr 2015 - Mar 2016
ISSN NO. 1453-729X
www.business-review.eu Business Review | December 2020
4 NEWS
WHO’S NEWS BR welcomes information for Who’s News. Submissions may be edited for length and clarity. Get in touch at mihai.cristea@business-review.eu
Electric vehicle sales expected to record 30 percent annual growth over next decade By Mihai Cristea gradually dissipate. Prices are getting closer to those of diesel or petrol cars, while the range of models available is diversifying. However, consumers’ concerns regarding the driving range and the lack of charging
Maria Grachnova will be the new CEO of dentsu Romania, starting January 4, 2021. She has built a successful career to date at dentsu, after joining the business as Managing Director in 2012. In 2015 she was promoted to the role of CEO for dentsu Bulgaria and since 2017 Grachnova has also been the CEO of dentsu Balkans. Maria was listed among the 10 best “Managers of the Year” for 2019, becoming the only marketing industry representative in the shortlist of 45 nominees and one of the few women on the list.
infrastructure remain. “Measures taken by governments in order to help their countries recover after the COVID-19 pandemic could influ-
Germany has designated USD 2.8 billion to electric car charging infrastructure
page 5
electric vehicles. As part of the economic recovery plan, Ger-
Sales of electric vehicles are
report says that, as world econo-
many has designated USD 2.8
expected to reach an annual
mies recover from COVID-19,
billion to electric car charging
growth rate of 30 percent over
sales of internal combustion
infrastructure and announced
the next ten years, so that by
engine vehicles will return to
new legislation introducing an
the end of the decade one in
growth, going up to 81.7 million
obligation for all fuel stations
three new cars sold globally
by 2025, and that they will then
to have a charging point. Ro-
will be electric, according to
experience a decline in market
mania can follow this example
the Deloitte report titled “Elec-
penetration.
as well as those related to the
tric Vehicles. Setting a course
Nicolas Leitienne is the new Marketing Director of Dacia Renault’s South Eastern Europe Cluster and he will manage the relevant activity of both brands in Romania, Bulgaria and the Republic of Moldova. Leitienne graduated from the EM Lyon Business School and from the University of Birmingham. He joined the Group in 2000, previously holding several positions in both Sales (Regional then National Sales Manager in France) and Marketing (Product Manager, e-Commerce Project Manager, Marketing Coordinator).
ence consumer sentiment on
Deloitte experts have identi-
financial incentives offered by
for 2030.” The total number of
fied a key factor that will drive
other states for the purchase of
electric cars sold is expected to
the growth of electric vehicles in
an electric car, both for indivi-
grow from 2.5 million in 2020
the next ten years, namely the
duals and for companies,” said
to 11.2 million in 2025, then
changing consumer sentiment,
Ciprian Gavriliu, Tax Partner at
reach 31.1 million by 2030. The
as many barriers to adoption will
Deloitte Romania.
Over half of Bucharest renters to skip real estate acquisitions in 2021 By Aurel Constantin More than half (55 percent) of
However, 45 percent of them
people who are currently renting
were thinking of changing their
homes in Bucharest said they
rented unit, with the majority (66
were not planning to buy an
percent) saying that they wanted
apartment next year and would
a more spacious or better posi-
continue renting, in a recent
tioned apartment, including new
study conducted by Unlock Re-
buildings, and only a third look-
search for Colliers International.
ing to lower their rental costs.
The residential tenant is much more dynamic than the buyer
www.business-review.eu Business Review | December 2020
NEWS 5
Catalyst launches new fund to invest in breakthrough technology companies By Mihai Cristea Catalyst Romania, backed by 3TS Capital Partners, is deploying a second venture capital fund targeting TMT (technology, media, telecom) companies, following an initial closing with institutional and private investors. Catalyst Romania Fund II, with a target fund size of EUR 40-50 million, was established as a result of being selected through the European Investment Fund’s (EIF) call for expression of interest to invest capital from JEREMIE Romania Reflows and the EU’s InnovFin
Catalyst Romania is deploying a second venture capital fund targeting TMT companies
Programme. In parallel, Cata-
fund invested more than EUR 12
social, and economic turmoil,
lyst has secured significant fi-
million in 10 well-known Roma-
the pandemic is pushing us
nancial support from a plethora
nian tech companies in recent
to advance to a safer, more
of notable private investors.
years, including Elefant.ro, Vola.
flexible, and digital world at a
ro, Vector Watch, AvocatNet.ro,
faster pace than usual. We are
II is the first ever second-
SmartBill, GreenHorse Games,
ready to provide much-needed
generation early stage venture
and Omniconvert. Catalyst
financial resources as well as
capital fund in Romania. It
Romania Fund II will continue
our vast expertise in supporting
follows Catalyst Romania
focusing on tech companies that
the growth of software, inter-
Fund I, operated by 3TS’ lo-
have already launched products
net, and other TMT businesses
cal management team and
into their target markets and
in Romania and abroad,” stated
financed through the JEREMIE
have experienced management
Marius Ghenea, Managing Part-
Romania initiative. The first
teams. "Despite the human,
ner at Catalyst Romania.
Catalyst Romania Fund
Radu Diaconu is the new leader of Radu si Asociatii SPRL. Diaconu has been a part of the Radu si Asociatii team since 2013 and became associate partner in 2017. He has extensive expertise in providing legal assistance to both strategic and financial investors in a wide range of transactions on the Romanian market. With a background of legal and business studies, including a PhD in the regulation of financial institutions, his expertise covers both mergers & acquisitions and financing operations.
Vladan Pekovic was appointed CEO of Telekom Romania on November 9. He is the former Chief Technology and Information Officer for the company’s operations in Romania. Pekovic’s mandate is to continue to develop Telekom’s fixed and mobile operations, to the benefit of all stakeholders.
“The residential tenant is much more dynamic than the buyer, and rental market trends can be valuable for housing developers. The need for security in the relationship with the landlord will lead to the professionalisation of the housing rental market, and more and more developers will turn their attention to this segment. We have already seen transactions with apartment buildings intended exclusively for rent,” said Gabriel Blanita, associate director of Colliers Valuation and Advisory.
Silviu Antohe is the new Executive Creative Director at MullenLowe Romania, a position that will enable him to coordinate the agency’s creative operations. In his four years at Mullen, Antohe has contributed to the development of the creative team, as well as the agency’s partner position for its clients, through solutions based on storytelling and craft in brands’ business and competitive contexts.
6 COVER STORY
www.business-review.eu Business Review | December 2020
PANDEMIC SHAKES UP LOCAL RETAIL MARKET With retailers making efforts to attract customers to their shops during the pandemic, the current medical crisis has a positive side as well: it has given rise to some trends which retailers could capitalise on in order to be successful in times like these. “Consumer is king� according to a well-known saying, and this is especially true right now. BR sat down with players from different segments of the retail industry and found out how they were coping in this new context and how they had adjusted their businesses to best serve their customers and offer them the safest shopping conditions. By Anda Sebesi
www.business-review.eu Business Review | December 2020
COVER STORY 7
A
ccording to Roretail, the retail business owners’ organisation in Romania, more and more retailers in the non-food segment are risking bankruptcy this year as a result of be-
ing hit hard by the pandemic. Small companies in the field were the first to fall victim to the crisis. The same source says that Black Friday sales were down by about 50 percent from last year. “Non-food retailers have started to fall one by one, like in a game of dominoes. We’re talking about local brands which are having major difficulties in paying taxes and salaries, without taking into account other operational costs or rentals,” said recently Roxana Socaciu, the executive director of Roretail. In the July-September period, sales in the nonfood retail segment dropped by as much as 75 percent compared to the similar period of last year, with an average decline between 35 and 45 percent, according to data gathered by Roretail. They also found that foot traffic in the non-food retail segment went down between 60 and 75 percent in some cases versus the same period 2019. But the Romanian retail sector is not an exception, as this industry has been struggling across the globe due to the pandemic. “Many businesses have permanently shut down and others have had to find ways to reinvent themselves. While some companies are thriving in areas such as groceries, other sectors like hospitality will face major losses. According to the latest data, hospitality will lose about EUR 3 billion. On the other hand, the COVID-19 crisis accelerated the expansion of e-commerce, opening the door to new opportunities and possibilities for the retail industry,” says Adrian Ariciu, the CEO of Metro Cash&Carry Romania. It seems that the e-commerce path was paved with success this year. Glovo says that any player with a strong e-commerce presence has definitely had something to gain during this period, estimating that the whole market has grown by 30-35 percent. “In general, e-commerce is based on concepts like funnel, new customer, retention, and recurrence. A new customer obtained during this period generally has some retention depending on the type of industry, as well as a certain recurrence. Whoever became an e-commerce user and had a pleasant experience, with fast delivery and without any problems will probably remain a customer in the future because the advantages are clearly obvious,” Glovo representatives argue. According to them, the e-commerce market currently represents 10 percent of the total Romanian retail market, compared with more than 20 percent in the UK. “Romania is following the same trend, and in 4-5 years it will probably reach 20 percent here as well, as online offers diversify and services improve.” As pundits say, safety has definitely been the key word for the retail sector this year, on all business segments. “It has been difficult not being able to fully operate our shopping centres; this had a direct impact on our business and the business of our tenants. But we have stayed in close contact with our tenants and maintained active communication with all parties involved, which has played an important role, allowing us to find common solutions,” says Fulga Dinu, the country manager of Immofinanz Romania.
THE RETAIL SECTOR IN REAL ESTATE INDICATORS 2020 was not easy for the retail sector from a real estate perspec-
8 COVER STORY
www.business-review.eu Business Review | December 2020
tive, either. According to CBRE Romania, the real estate consultancy
ing faster shopping experiences, while other might invest more
firm, Romania’s modern retail stock reached 3.84 million sqm at the
in technology and in implementing a cashierless shopping model
end of the third quarter of 2020, with about 90,000 sqm delivered
which can keep customers and employees safer,” he adds.
in projects like NEST Miercurea Ciuc, NEST Oradea, Dambovita
According to Dragos Sirbu, CEO at Flanco Retail, one of the com-
Mall and Shopping City. In the fourth quarter, another 82,000 sqm
pany’s main advantages during these times has been its omnichan-
will be inaugurated in cities such as Alba Iulia, Baia Mare, Brasov,
nel business model, which had been implemented before the crisis.
Slobozia, Sibiu, and Timisoara, either through new deliveries or
“Our customers rapidly adjusted and started to buy online as their
extensions to existing projects, getting us closer and closer to the 4
priorities changed. But home appliances have not been erased from
million sqm milestone.
their shopping list,” he says. In his opinion, there has been a shift in
CBRE research says that an
consumer behaviour from a gen-
important trend taking shape in
eral sense of hesitation to thinking
the first three quarters of 2020 is
in terms such as “let’s try to keep
retail’s move towards omnichan-
our personal and professional lives
nel. On the one hand, retailers
as close to normal as possible"
are focusing on physical store
and ”let’s compensate for the fact
networks, and on the other hand,
that we are stuck at home." "This
they are investing new resources
shift has generated increases
that will allow them to benefit
for product categories like large
from the increase in online sales,
screen TVs and high performing
expanding their logistics capabili-
audio systems. Customers became
ties. “The evolution of retail to-
more interested in high-quality
wards omnichannel generates an
products and top brands as a way
increased need for logistics space,
to compensate for the lack of
fuelled by the lack of predic-
holidays they could take abroad.
tability amid concerns of possible
On the other hand, sales of IT&C
restrictions imposed by authori-
products also increased during the
ties at key moments for retailers.
spring and fall seasons – to make
The fourth quarter, through Black
working from home and online
Friday, Saint Nicholas, and Christ-
schooling more accessible for all
mas, generates over 30 percent of
the members of the family," Sirbu
total online retail sales, and the
added.
expansion of logistics spaces influences both the shopping experi-
A ROLLERCOASTER FOR MALLS
ence and retail sales,” said Carmen
Sebastian Mahu, head of asset
Ravon, Head of Retail and Land,
management at Iulius, says that
Omnichannel Real Estate Solu-
this year brought fluctuations in
tions at CBRE Romania.
customers’ buying preferences. “Some retail segments like sports, home and deco, homewear or
A SHIFT IN CONSUMER BEHAVIOUR
jewellery increased by up to 20 percent, while food and beverage
During this period, consumers have been more reluctant to make
operators have been by far the most affected by the current situa-
major purchases, choosing to focus on necessities and savings. Ari-
tion as restrictions are still in force,” Mahu explains. He adds that
iciu says that this trend will certainly continue for several months.
his company worked with retailers to find solutions to reduce the
“At the same time, we have seen a significant shift to digital as more
impact of the restrictions that were enforced to limit the spread of
consumers are shopping online. For the retail industry, this means
the coronavirus, and to allow tenants to hold on to their positions
that the need for innovation and finding new ways to connect with
on the market. “So far, in the hospitality segment, Iulius Group has
customers are primordial,” he adds. According to him, a customer-
absorbed the entire pressure generated by the health restrictions in
centric approach, a deep understanding of current needs, fast reac-
order to help players survive this difficult period,” adds Mahu.
tion and adaptation are all key in this situation. “Brick-and-mortar
He says that in all of the group’s projects, the drop in foot traffic
retail will not disappear, clients will still go to stores in the future
was counterbalanced by a significant increase in the conversion rate
for different reasons – to have instant access to products, to sample
of visits into purchases, an indicator that highlights the customers’
new ones or to interact with people. Of course, physical stores will
focus on acquisition. “Still, we saw many tenants making significant
go through some changes in terms of their business models. Some
efforts and running discount campaigns which diminished their
may start to focus more on quick grab-and-go items and on deliver-
margins. At similar sales levels with 2019, retailers’ profitability
www.business-review.eu Business Review | December 2020
COVER STORY 9
dropped by 75 percent,” Mahu notes, adding that Iulius’s five retail
period. “As a result, the visitor frequency in our STOP SHOP park in
projects posted traffic fluctuations ranging between 7 and 35 percent
Botosani quickly returned to pre-crisis levels,” she says.
this year, depending on the evolution of the pandemic in the cities where the group operates.
WHAT’S NEXT FOR THE RETAIL SECTOR?
All in all, the Iulius representative says that the pandemic has
Specialists expect 2021 to be
not had a significant impact on
as challenging as 2020, as the
the company’s retail portfolio in
pandemic will continue to impact
what concerns the mix of ten-
economies across the world,
ants. “We have managed to stick
including the Romanian economy.
to our schedule of inaugurations
“We will continue to adapt and
and even to close new partner-
identify solutions to optimise our
ships. This year we’ve had over
activity and results. We expect
30 launches of high-end brands,
the first quarter of 2021 to be very
new entertainment concepts, and
difficult for the entire industry,
local entrepreneurial initiatives,”
which means that it will need
he points out. Yet, he notes that a
a significant support from both
share of their local tenants posted
the owners and the authorities.
major drops as they were not able
It is clear that some businesses,
to adapt their business to the new
especially the local ones, will not
context or cope with the financial
be able to cope during a quarter
pressures. “After nine months of
which is usually considered to be
a social and medical crisis, the
the weakest in any year. Later, we
unoccupancy rate across all five
expect a slow recovery in Q2 and
of our retail projects is around 1.4
Q3 based on a reduced impact of
percent,” Mahu adds. Dinu of Immofinanz Romania says that consumers have switched to “safe” shopping, driven by the mobility restrictions imposed
the pandemic on the economy. In the fourth quarter of next year, we expect sales to return to the levels posted in Q4 2019,” says Mahu.
during the lockdown period.
Along similar lines, Sirbu of
“However, on our end we made
Flanco Retail expects the coming
sure that we could provide the
year to be similar to 2020. “Things
highest safety level possible in our
will not be much different in 2021.
premises, with measures including
The pandemic will continue to be
temperature monitoring, people
present, we will continue to wit-
counters, an abundance of disin-
ness uncertainties, but Romanians
fectants, and circulation routes,”
will be used to all of these by then.
says Dinu. According to her, the
We will see increases in the IT&C
average footfall in the company’s
and high-quality product catego-
centres is now recovering. “In the
ries,” he believes.
first month after restrictions were
Last but not least, according
lifted, we recorded approximately
to Dinu of Immofinanz Romania,
the same footfall as last year. We
over the coming years, consumers
expect a gradual return to con-
will most likely demand supple-
sumption, with average footfall
mentary retail shopping experi-
still recovering, as customers want
ences that will include wider
to resume their usual activities.
forms of entertainment, educa-
Our VIVO! shopping centres in
tion, and services, apart from
Romania are operating with a high
mere shopping. “A lot of emphasis
occupancy rate of 98 percent,”
will be placed on families spend-
Dinu explains, adding that retail
ing time together. It is not only the
parks have had an advantage
pandemic, but also the expanding
because visitors are able to enter shops from the outside, which
world of technology that brings a shift in consumer patterns and
allowed them to resume operations sooner after the lockdown
retail demands.”
www.business-review.eu Business Review | December 2020
10 COVER STORY
E-commerce boosts local industrial and logistics market With 2020 looking like it’s going to be remembered not just as the year of the pandemic, but also the year when e-commerce crossed the chasm from niche to mainstream, the industrial and logistics segment seems to be the star of the real estate segment right now. By Anda Sebesi The pandemic has placed the
60 percent. An integration of 80
industrial and logistics segment
percent, which is targeted by most
into the spotlight, as it was among
players, will lead the volume of
the business sectors that were
logistics spaces for retailers to
generally less affected in the short-
increase by at least 50 percent.
term and were even expected to
Although we’ll see an increas-
benefit in the medium and long
ing number of transactions in the
run from the structural shifts
non-food area, we still expect
brought about by the health crisis.
large transactions from FMCG
“The pandemic has shown us that
companies in different areas of the
the industrial-logistics sector is an
country," said Andrei Jerca, Head
essential cog in the machine that
of Industrial Services at CBRE
makes our modern society work,”
Romania.
says Sinziana Pardhan, managing director for Romania at P3 Logistic
A PROMISING FUTURE
Parks. Yet, she adds, the main
CBRE expects high demand for
problem of the sector since the be-
logistics premises in the coming
ginning of the pandemic has been
years, and a couple of factors will
the lack of predictability in terms of volumes. “Over the past nine
contribute to maintaining it: the crossing of the 10 percent threshold
months, we’ve seen some large companies expanding their
for the share of e-commerce in total retail sales in Romania – which is
operations, while smaller ones hesitated on their growth or reloca-
expected to happen in 2020 – together with an upward e-commerce
tion plans,” she explains.
trend in the coming years, and the further development of modern
In turn, Ana Dumitrache, Romania country head at CTP, says that if we were to draw a line, the positive effects would be more visible than the negative ones. “It’s all been about the growth of
grocery store networks, both of which will be combined with the general economic growth predicted for 2021-2022. "Given retailers’ need to efficiently address distribution costs
e-commerce, new players entering the market more rapidly than be-
and delivery times, we estimate that Bucharest will attract the main
fore, and existing clients expanding in order to better handle online
share of future deliveries, while we’ll see a need for in-city logistics
orders,” she says.
and last miles in both Bucharest and Cluj-Napoca. There are also
At the end of the third quarter of 2020, Romania’s modern in-
several cities with limited or even non-existent developments that
dustrial stock had reached 4.84 million sqm, with 45 percent of the
will turn into new points of interest for tenants and developers:
total located in Bucharest, according to CBRE. New supply delivered
Constanta, Iasi, Craiova, and Bacau. CBRE calculations indicate an
since the beginning of the year accounts for 389,000 sqm. Moreover,
increase in the stock of industrial spaces of over 50 percent in the
during the fourth quarter of the year, 260,000 sqm are scheduled to
next 5 years, up to 8 million sqm," Jerca explains.
be added to the modern industrial stock, while another 246,000 sqm are expected to be delivered by Q3 2021. With Q4 looking like it’s going to be a strong quarter as well, the
Experts say that e-commerce will continue to be a driving force for the industrial and logistics sector in the coming years. “It will definitely drive demand next year, but so will last mile delivery-type
expectation is that 2020 will be a record year in terms of industrial
operations. Our clients need to be closer to their own customers
demand. As CBRE says, demand will continue to come from retailers
in order to dispatch in a timely manner, while infrastructure is not
in general, and especially from food retailers, generated by the need
progressing quickly enough to cover the gap. Players who have only
for new regional hubs, the increase of the controlled temperature
been shipping from Czech or Polish warehouses will be establish-
surface, and the degree of integration in logistics platforms. “The
ing facilities here to get closer not just to Romanians, but also to the
current integration average for the top 10 food retailers is about
larger Balkans area and even Turkey,” Dumitrache argues.
www.business-review.eu Business Review | December 2020
COVER STORY 11
Romania’s e-commerce market to grow by a third in 2020 Fears surrounding the COVID-19 pandemic have led to numerous governmentmandated travel restrictions and non-essential business shutdowns. As a result, consumer spending underwent major channel shifts, with the digital channel turning into the default for many customers, giving way to what will likely be a permanent boost to e-commerce.
C
By Aurel Constantin
omparing the results of two
of survival, and one of the solutions
consumer surveys conducted
they found was a focus on omnichan-
by Euromonitor International
nel. The pandemic is accelerating
in 2020 regarding path to purchase
digitalization both online and offline,
habits provides insights into these
and three of the most important and
drastic shifts and the subsequent surge
visible retail trends in terms of digitali-
in e-commerce. Nearly every category
zation are augmented reality, contact-
showed a double-digit increase in the
less retail, and artificial intelligence.
share of consumers making digital
Euromonitor International estimates
purchases between the two fielding
that the Romanian e-commerce market
timeframes.
will grow by 32 percent in 2020, and
Besides shopping more often in
as a result, the share of e-commerce in
already-familiar categories, connected
total retail increased to 10 percent this
consumers have turned to e-commerce across a broader range of
year, from 7 percent in the previous year. Also in 2020, the value of
products and services. The share of minimal online shoppers – con-
cross-border online retail in Romania continued to grow, maintain-
sumers who did not use digital or only used digital to shop for one
ing its share of 8 percent of total e-commerce, even though there
category – dropped significantly between the surveying timeframes.
were issues with supply chains in the first months of the pandemic.
In early 2020, minimal online shoppers and heavy online shoppers
In Eastern Europe, cross-border shopping accounts for about 25
were evenly split at the purchase step at 36 and 37 percent, respec-
percent of total e-commerce sales. The category with the fastest
tively. But by March, there was a nearly 30-percentage point gap
growth in online sales in Romania in 2020 was by far that of food and
between minimal online shoppers (20 percent) and heavy online
beverages, with a 115 percent increase. In this context of growth, we
shoppers (49 percent).
should mention the base from which this product category grew, as in 2020 it had a share of 4 percent of the total e-commerce market in
ROMANIAN E-COMMERCE
Romania.
In 2020, the Eastern European retail industry has had to deal with several types of crises, from the pandemic lockdown to economic
WHAT'S NEXT FOR E-COMMERCE
problems or falling oil prices, which have led to declining sales for
The pandemic has generated changes in the behaviour of consum-
some retailers, but also to the growth of other sales channels such
ers, who have revised the value of purchases and shopping, and
as e-commerce, according to Euromonitor International consultant
many of these changes will become permanent in the coming years.
Cosmin Dan. Euromonitor International had estimated a 5.2 percent
55 percent of shoppers said that this increase in online shopping
increase for the Romanian retail industry in 2020, but the growth
would be a long-term trend, which confirms the predictions that,
dynamics were revised in the midst of the crisis, pointing to a de-
within the next 5 years, online shopping will have a higher share in
crease of -1.3 percent in June 2020. Since that time, companies have
total retail sales. According to Euromonitor International, in Eastern
managed to adapt quickly, demand has partially recovered, and as a
Europe, the Czech Republic and Poland will register the highest
result, the currently expected decline for the Romanian retail market
adoption rates for online retail, while Romania will have the fastest
in 2020 has come down to only -0.4 percent.
dynamics in this regard and Russia will generate the largest increase
While e-commerce managed to get through the crisis unharmed,
in absolute value of online trade, considering the size of this market.
while both hypermarkets and discounters remained stable, there was
For Eastern European retail in general, estimates show sales return-
a sharp decline for non-food retailers. For them, 2020 has been a year
ing to growth in 2021, with the increase continuing until 2025.
www.business-review.eu Business Review | December 2020
12 COVER STORY
Pandemic changing retailers’ approach to communication Retailers have had to update their strategies considering the unprecedented situation generated by the coronavirus pandemic, and since so many customers have now moved online, digital messaging is a crucial component of those strategies. But brands need to be conscious of what, where, and how content is distributed and positioned and make sure they are flexible enough to properly serve their customers, wherever they may be.
E
By Romanita Oprea
psilon has defined four
period, we started to promote the
messaging strategies for
idea of optimism, to imagine what
retailers to effectively and
we would do when the situation
consciously communicate during
would allow it: going out in nature,
the COVID-19 disruption: acknowl-
taking outdoor walks, cycling),”
edge the current environment
said Elena Claudia Gheorghita,
rather than gloss over or pretend;
marketing manager at HERVIS
create content to engage; create
Sports and Fashion. According to
communications that add to the
its representatives, HERVIS’s com-
conversation; and make your mes-
munication is all about a healthy
sage count. At the same time, McK-
lifestyle. “Our actions represent
insey points out that organisations
us, and this is the main message
that can quickly reimagine their
we communicate to each of our
omnichannel approach to create
customers. We offer them technical
a distinctive customer experience
support, the products they need
will recover faster from the pandemic. The pandemic has changed
for a healthy lifestyle – a constantly active one. And we come up with
consumer behaviours, some permanently, a study by the company
lots of contests, challenges, and rewards, to make it easier for them
finds, and in order to keep their position on the market and in the
to maintain this lifestyle. Last but not least, I’ll mention the specific
soul of consumers and even to grow, retailers need to make sure they
actions we engage in. Our clients have always recognised that our
take some important measures such as doubling their digital efforts,
actions are the most attractive and powerful. It is like a brand of
pushing more innovation into omnichannel, transforming store
its own, but this own brand is constantly being reinvented,” added
operations, reimagining physical networks, and embracing an agile operating model.
Gheorghita. For Answear.ro, the pandemic led to an increase in the number
“Just as this pandemic has
of online shoppers and orders and
changed all our lives and made us
its audience was much more open
change all our habits, including
to communication on digital chan-
consuming, we have also changed
nels, so the overall impact was pos-
as a company in terms of com-
itive. According to Raluca Radu,
munication, message, and mix.
country manager at Answear.ro,
As an immediate reaction to these
the company is mainly focusing on
changes, we adapted our market-
online marketing and digital chan-
ing and communication strategy.
nels in its communication because
We focused more on the chan-
these are the channels where the
nels where all of us are present at
audience has moved right now. “In
the moment: digital and TV; we
this mix of channels, the impor-
came up with new messages (for
tance of YouTube and Instagram
example, during the lockdown
has grown since the pandemic
www.business-review.eu Business Review | December 2020
COVER STORY 13
started and we are including these channels along with Facebook,
through tons of data and find valuable insights. But we won’t share
Google, and online publishing websites in our marketing mix. TV had
the recipe of how we do it,” Berza added.
always been an important channel for us, but its relevance has also
This year, the company also made its first TV commercial, created
grown, with the number of TRPs avail-
by Papaya Advertising, as the pandemic
able in Romania having almost doubled
led them to investing more in TV. And
since the beginning of the pandemic as
Berza says that Fashion Days will con-
people have definitely started spending
tinue to do so, driven by the belief that
more and more time watching TV, so it
customers are now rapidly changing
will be an important channel in our mix
their habits and they are open to try-
for future actions as well,” Raluca Radu
ing new experiences and brands. The
explained. The company’s communica-
company wants to be present, visible,
tion budget decreased by 20 percent
talking about its benefits and its values,
this year because of the absence of the
to capture people’s curiosity and hope-
events channel. They have reinvested
fully their willingness to try it or to stick
or reallocated part of that budget, but
to it. Video advertising (TV, YouTube,
not all of it, as they were able to achieve
etc.) is the most powerful medium for
sales targets with a lower investment.
pushing strong, emotional messages, as
“We’ve learned that simplicity in com-
well as rich visual ones, which are part
munication is the ultimate creativity.
of the Fashion Days DNA.
We focus on simple messages highlighting benefits for our users. Furthermore,
In the past, Fashion Days would put a lot of focus on communicating
our communication is more about the visuals and the fashion styling
rational benefits for its clients. Its mantra was “we have so many
featured in our photoshoots. It is not an easy task, but our visuals
(rational) advantages that we need to push them strongly, and as
and videos need to create that sense of style that makes users hit
a result customers will know why they should order from Fashion
the "buy now" button on an impulse,”
Days.” “But this chapter was (just) an
added the Answear representative.
important foundation of our market-
In the case of Fashion Days, mar-
ing strategy. Once we scored high on
keting budgets have doubled over the
these rational attributes, we under-
last two years and its representatives
stood that we had to move towards
are aiming to stay on the same track
more emotional ones. And that's where
in the coming years. In 2020, Fashion
creativity kicks in: when you talk about
Days’s spending in Romania will add
trust, innovation, good will, generosity,
up to around RON 40 million (digital,
caring, etc. I believe our fall campaign
non-digital, creative investment, etc.),
as well as our recent CSR & Black Friday
which reflects its goal of challenging In-
ones showed that we put a high value
ditex's leadership in local fashion retail
on creativity and having the courage to
within a couple of years (together with
stand out,” Robert Berza explained.
revenues made through eMAG Fash-
In turn, Hervis’s marketing strategy
ion). Robert Berza, general manager at
is just as important as other aspects of
Fashion Days, says that the app is a top
its business. “It is not enough to focus
channel: more than 50 percent of traffic
on a marketing strategy that makes us
and 70 percent of orders in Romania are
known enough to have traffic in stores
generated through the company’s iOS/
and online. We need a whole mix of
Android apps. They have invested in AI,
other functions: providing the right
harvesting lots of data to improve both
products for our customers, offering
user experience and the mix of brands
them things they are interested in,
and offers, and they’ve created lots of
having a well-prepared team to advise
in-house content to drive engagement and curiosity. “We have been
customers and provide all the necessary information during the ac-
an app-first (not just mobile-first) company for a couple of years now
quisition process, a well-performing flow of procedures, and the list
and we understand that this represents the spine of our business.
goes on. We believe that each Hervis employee represents a commu-
We obviously have a mix of tracking tools and digital platforms, but I
nication channel to the end customer, because each one contributes
believe these are common sense tools that every business should be
to the final result. And the sum of our individual actions defines us
using. In our case, being a purely online player pushes us to navigate
as a company,” Gheorghita added.
www.business-review.eu Business Review | December 2020
14 COVER STORY
Metro maps out long-term sustainable development in Romania Adrian Ariciu, CEO at Metro Cash&Carry Romania, tells Business Review about the ways in which the pandemic has changed the retail scene and how the company has adapted to the new normal, and talks about the challenges he has faced in his leading position during these difficult times. By Anda Sebesi How did Metro adapt to the pandemic and what measures did it take to ensure business continuity?
a more efficient deliv-
It’s safe to say that the
in our stores. At the same
pandemic has had an
time, we are focusing
effect on every sector
on digital transforma-
and that most – if not
tion to keep up with our
all – companies have
customers’ lifestyle, as
been forced to rethink
digital tools are becoming
their business models
indispensable. Despite the
and improve operations
difficult context, the num-
on all levels. For METRO
ber of hospitality custom-
Cash&Carry, ever since the
ers has remained constant,
state of emergency was
while our total number
instated, the safety of our
of customers is increas-
employees and customers
ing through more small
has been a top priority. We
proximity shops which are
observed and adopted all
supplying essential goods
the measures imposed by
to communities and have a
local and national authori-
good opportunity to be the
ties and made sure that
top choice of end custom-
our stakeholders were be-
ers.
ery system to maintain competitive prices for our customers, as well as to the distribution of goods
ing updated with the latest relevant information.
How does Metro support small businesses?
In terms of our business continuity plan, the
LaDoiPasi is our fran-
wholesale business model
chise model for small and
has proved to be a viable option for the communities in which
medium-sized traders. Through this model, local entrepreneurs get
we operate, as our main responsibility is to be a reliable source of
the opportunity to manage a professional format under a recognised
business for traders and hospitality business owners. We have had
brand, with the full support of our specialists. By affiliating with the
to secure competitive prices and the availability of a wide range of
LaDoiPasi franchise, store owners have access to consultancy on all
products, and we configured the supply chain in partnership with
areas of their business (branding, marketing campaigns, competi-
our suppliers to ensure flawless execution, with no interruptions.
tive pricing, etc.), at all times.
We did face some stock-related issues in the beginning, which
We understand the important role that independent businesses
showed us how important it was to set up solid partnerships with
play in the community and the fact that they are the main driving
our suppliers. Together, we found the best solutions for every
forces of the economy. As such, during these difficult times, METRO
business partner who has chosen METRO for the supply of food or
Cash&Carry has stayed true to its business principles of supporting
non-food products.
and promoting independent businesses. This year, for example,
We turned our attention to a centralised ordering system and
we organised the fifth edition of the Your Own Business Day event,
www.business-review.eu Business Review | December 2020
COVER STORY 15
aming to increase the visibility of different local businesses and give
What can you tell us about Metro’s strategic plans for 2021?
clients the opportunity to support their favourite restaurants or cof-
We will continue to follow our ambitious development plans. The
fee shops or discover new ones and enjoy their special offers.
expansion of the LaDoiPasi network is one of our growth pillars, and we aim to reach 1,500 stores nationwide in 2021 and 2,000 by 2023.
To what extent has the pandemic affected your business considering that you have high exposure on the hospitality sector, which has been hit hard by the restrictions?
Improving logistics and delivery services and digital transformation
The hospitality sector has been strongly affected by the crisis:
roof platform in Stefanesti, a class A Plus energy efficient location.
turnovers have decreased significantly and a full recovery will most
The platform was built using the latest technologies and it helps us
likely take about two years. However, the number of customers in
streamline operations and ensure the continuous flow of goods.
this sector has remained constant for us. We support our partners by providing our expertise as well as
are the other pillars. The most important investment we made in this direction this year, amounting to EUR 40 million, was the one-
Last but not least, we will continue to invest in training for our employees as the evolution of every team member is essential in
training courses in hospitality,
building a thriving company
considering that hotels and res-
culture.
taurants have been struggling with labour shortages. We also focus on
stores have so far mostly benefit-
You were appointed Chief Executive Officer in the middle of the pandemic. What are the top issues you need to address during these difficult times as a CEO and as a leader in order to ensure the sustainable development of Metro’s business as well as permanent engagement from employees?
ted from the changing retail envi-
I set very clear short- and long-
ronment, as consumption habits
term objectives from the very
have changed and people have
beginning, but the pandemic has
been shopping closer to home. We
indeed changed some of the priori-
now have about 60,000 resellers,
ties. The main challenge was and
the continuous development of our own labels dedicated to hospitality customers, such as the Metro Chef range, which was created precisely to make such businesses more efficient and optimise costs with higher quality products. On the other hand, convenience
and the number continues to grow.
continues to be ensuring the safety of our clients and employees, so we rigorously check that all the anti-COVID measures are being
How has the coronavirus pandemic changed your company’s approach to its customers?
implemented and followed at all levels.
First of all, we have taken all the essential safety measures to make
making sure that we maintain a normal, efficient workflow and that
sure that the virus is prevented from spreading around our shops
our employees remain engaged. In this regard, we do our best to
and storage areas, but also inside our headquarters. We have also
communicate as often as possible, keeping everyone up to date. We
obtained the DEKRA certification, the standard for reliable loca-
have also been organising a series of interactive online teambuilding
tions, which testifies that our measures are in line with recommen-
exercises so that people can still connect to each other. Of course,
dations from the World Health Organization and local authorities. At
supporting our partners has also been both a challenge and prior-
the same time, we have made every effort to eliminate any bottle-
ity. During these times, it is important for us to use all the tools and
necks in the supply chain and to be as efficient as possible in terms
know-how at our disposal to help local businesses adapt and survive
of logistics.
in the new normal.
Another challenge was switching to working from home and
As for the ways in which we support our partners, we communicate with them as often as needed to confirm that we are in this together, that we are fully committed. We have put a lot of focus
You have extensive professional expertise both in the retail sector and abroad. How will you make use of it at Metro Romania?
on digitalization and on giving them access to digital tools that can
I’ve been with the company for over 20 years now. I started my
really help their activity, such as Mshop. The platform, which has
career here and during this time I’ve had the opportunity to learn
been accessed by several thousand customers, allows them to place
how different layers of our business work. I’ve also had the chance
online orders and have them delivered within 24 hours from any
to contribute to the business development of METRO Cash & Carry
METRO store. For restaurants specifically, we have also provided
Ukraine. So now I can use all that experience and in-depth under-
an online booking solution, as well as useful information on how to
standing of our company to further consolidate our position on the
easily and efficiently transition to home deliveries.
retail market, together with a great team.
www.business-review.eu Business Review | December 2020
16
OPINION Rowan Dias Högman, Ericsson
The future of logistics is predictive. Here’s how. ies at some point, probably for less trivial things
many value chains, regardless of whether
than coffee.
we’re talking about a single consumer’s cof-
Online shopping has boomed in the past de-
fee supply (and their subsequent loss of work
cade by more than 150 percent between 2014 to
concentration), or the logistics that surround
2019 [1]. Of course, with the arrival of Covid-19,
a large hospital.
online sales have accelerated further. Although
Consider the latter – how building mate-
I’m not a die-hard Amazon Prime customer, and
rial must arrive on site in the right order
accustomed to same day delivery, I have, what I
to enable progress, limit storage, avoid
think, is a fairly reasonable demand on logistics
deterioration and avoid eventually becoming
deliveries, like being able to understand where
scrap. Knowing when things will arrive or
my package is, and the day and time frame in
understanding if unplanned incidents occur
which it will arrive.
could cater for so much more efficiency, cost avoidance, better customer experience and
> ABOUT THE AUTHOR <
AN INDUSTRY WHERE DIGITALIZATION IS OVER-
even incur higher revenues for anyone offer-
DUE
ing certainty. The costs and savings multiply
On the contrary to the average consumer, I’ve
as the effects ripple downstream along the
had the luxury of understanding why logistics
value chain – and the end user will often be
companies fail to give me these simple answers.
affected too.
Recently, I had the privilege of studying the Rowan Dias Högman, Research Leader & Head of 5G Industry Collaborations at Ericsson
logistics industry, and I have come to under-
HOW LOGISTICS IS SET TO CHANGE
stand some of its fundamental problems, which
How can such a situation be reversed? How
I, together with my colleague Anders Erlandsson,
could logistics companies get better control
captured in the Pre-Emptive Logistics report.
over their own fleets, their outgoing goods,
It includes things like the plethora of players
and even incoming goods from suppliers?
Ever wondered why it’s not possible to see
involved in logistics, combined with the lack of
Surely, one way to go about it is to integrate
exactly where that delivery you ordered is
poor collaboration incentives.
vertically in the way Amazon is doing, by
right now, and when it will be delivered? The
Consider that the International Road Trans-
leasing their own planes (at least 80 now)
logistics of the future will not only solve that,
port Union (IRU) has a staggering one million
and procuring their own trucks [2]. If you’re
but could allow your parcel to be close to
members, with fierce competition among them.
handling every step of the process, you
your front door before you’ve ordered it. We
On top of that, they’re all at different stages of
have control. The world could end up with
discuss an industry where digitalization is
technological advancement. There are old and
a couple of competing A-Z logistic silos like
overdue.
silo-based technology approaches in combina-
Amazon’s. But with increasing digitalization,
tion with the use of paper, pen and phone calls.
improved data analysis methods, experience,
everyday life, but a small portion of that
This all results in a lack of transparency across
and increased knowledge in how to benefit
might be coming our way very soon. Let
the whole value chain. I could mention more
from AI, there will be ways to collaborate and
me explain. Last week I was to receive new
problems like the complexity of ‘nested items’,
coordinate between the different roles and
coffee capsules after I made an online order.
meaning, which package is located on what pal-
all the players involved in each role across
Unfortunately, the delivery time turned out to
let, on what truck, on what ship – but I think you
the global logistics chain.
be longer than expected and left me without
have got the broad picture of the chaos already.
It’s very rare to experience magic in
ENABLING VISIBILITY IN ONE’S OWN LOGIS-
coffee. In addition, I couldn’t get an answer as to where the package was, other than that it
LOGISTICS IS CENTRAL TO MANY VALUE CHAINS
had left the vendor’s premises. I’m sure you’ve
What’s so unfortunate with this picture is that
had a similar experience with missing deliver-
logistics is such a central piece of the flow in
TICS OPERATIONS Fundamentally, the first step for logistic companies is understanding more about
www.business-review.eu Business Review | December May 2016 2020
COVER STORY 17 14
their own assets in terms of the condition
standards and instances Ericsson has developed
and as they increase predicting this demand –
and whereabouts of packages, pallets, and if
together with the International Air Transport As-
they can also start shipping goods in advance,
applicable, in what truck, vessel or location
sociation (IATA) and is a good example of how to
pre-emptively, towards their destination.
of fulfillment center and so on. Here, a range
implement a system that could work worldwide,
What would this mean for you and me
of technologies, ranging from basic cellular
across all logistics operations.
as consumers? First and foremost, with connected packages and transportation, there
coverage to video recognition, could help companies get a real-time understanding of
OPTIMIZING LOGISTICS OPERATIONS
would be visibility throughout the system. As
where and in what condition the merchandise
As logistics entities or companies now have
a consumer waiting for my coffee capsules,
is in. Connecting assets would be a great leap
both the information about their own assets
I would be able to know exactly where they
forward, as many companies mainly rely on
and incoming shipments, they can thoroughly
were, and when to expect them. But on top of
inefficient analogue methods to keep some
optimize operations. Both suppliers, logistic
this, once I’ve received the capsules, it would
sort of track of their fleets and operations.
companies and consumers are now empowered
also be possible for both me and the vendor
with a range of new opportunities. The fact
to ensure that they had been properly treated
Forager Logistics in the USA, which handles a
that goods, pallets and other logistic assets are
throughout the delivery. A sensor could report
lot of cross-border traffic into Mexico. Silver
connected now means they also could convey
that the temperature, or other variables af-
put it well in an interview he took part in for
information about themselves, their condition,
fecting their quality and function, have been
Matt Silver is co-founder and CEO of
the Pre-emptive logistics report:
kept within reasonable limits (in
“Where is my truck?” is the num-
fact, if they were spoiled they
ber one question, all the time… I
probably would be automatically
get phone calls and emails at 11
rerouted back to vendor, or they
o’clock at night and 5 o’clock in
would be scrapped). Furthermore, and this is
the morning asking, “where’s my
where the magic I mentioned
truck?”.
earlier comes in, wouldn’t it TRANSPARENCY TO SEE
feel like magic if you ordered
INCOMING DELIVERIES
something that arrived instantly,
To understand incoming ship-
or within hours, rather than days after you pressed the purchase
ments, companies would need to share information about their outgoing
their destination, their needs and other factors
button? Slow and sustainable transport of cof-
shipments with others. Henrik Zsigo, Project
that affect the logistics handling.
fee capsules to neighborhood ahead of time
Forwarder at industrial equipment manufac-
Besides ensuring timely delivery, suppliers
would enable ‘just in time’ delivery. This will
turer, Valmet, once explained to me: “Commu-
can ensure that goods arrive in the condition
be possible in the near future – 64 percent of
nication during transportation usually works
that is satisfactory to consumers. Packing and
the companies studied in the pre-emptive lo-
well, but you always have to call and ask
route planning will automatically become
gistics report say they will ship pre-emptively
people, and follow up, to get status updates.
smarter and more optimized because the desti-
in the next three to five years.
I have no other way of knowing where the
nation of each package is now known, ensuring
cargo is right now.”
And connected packages are just the start.
pallets, trucks even ships and planes will be
As the items you order become increasingly
Here, the internet – which has been the
packed smarter. With the compliment of electric
connected in your home, they’ll be able to
most successful collaboration platform in
and even new types of self-driving vehicles (size
communicate and give you instructions how
human history – could play a decisive role. All
and speed optimized for energy usage per load
to assemble the products you order, how to
logistics objects could be represented by a
carried), suppliers can assure customers that
use them and how to service them. As your
URL, where it’s either:
their transportation systems have a minimal en-
whole household starts getting connected,
1) A digital twin of a physical object, such
vironmental footprint. In the unfortunate event
your appliances will be able to order their
as a vehicle, container, pallet, transport
of goods becoming damaged during transporta-
own refills or carry out maintenance for that
unit, product package or individual item
tion, they can ensure they’re rerouted and either
matter. Consider vacuum cleaners ordering
2) A digital document, such as an Air Way-
returned or repaired, for instance.
new bags, washing machines ordering salt, or even fridges ordering a constant availability
bill (AWB), Bill of Lading (BOL), and so on. PREDICTIVE LOGISTICS: THE MAGIC OF PRE-
of dairy products. The future of logistics is
authorized partners to not only retrieve
EMPTIVE SHIPPING
connected, and if you ask me, it’s like a little
information, but to update event information
Finally, as vendors with products delivered
bit of magic wrapped in a box, coming our
that occurs during the lifecycle of a logistics
to customers start understanding the kind of
way.
object. This One Record, internet of logistics
demands that are expected where and when –
[1] eMarketer (March 2019)
The URL could also be used to allow
www.business-review.eu Business Review | December 2020
18 TECHNOLOGY
Benefits of 5G to significantly outweigh its costs The implementation of 5G technology will deliver an additional EUR 210 billion across Europe, according to a study by Analysys Mason. The 5G-driven transformation of factories, agriculture, and suburban and rural areas will have the largest impact on GDP. More than EUR 50 billion in 5G-related benefit can be delivered for less than EUR 20 billion in public funding. By Aurel Constantin At the use case level, the largest economic benefits in terms of European GDP impact come from smart factories, agriculture and FWA (suburban and rural areas), providing net benefits of EUR 58 billion, EUR 37 billion, and EUR 18 billion respectively. “As an open innovation platform, 5G provides the critical infrastructure needed to help Europe achieve a sustainable, resilient, and inclusive economic recovery. While the EU sets out its ambition for the Digital Decade and implements the Green Deal, it should ensure 5G plays a leading role in driving the digital transformation and decarbonisation of its economy. Ericsson is a technology leader in 5G and it is committed to bringing the next generation of connectivity to every part of society,” said Gabriel Solomon, Head of Gov5G will become one of the technological foundations on which economies and societies will be built
T
ernment and Industry Relations at Ericsson Europe and Latin America.
he potential economic value of full
see the highest overall net benefit of EUR 38.5
SMART RURAL
5G as an “open innovation platform”
billion, with an investment of EUR 6 billion
The study clusters market segments within
could bring EUR 210 billion worth of
giving a cost-benefit-ratio (CBR) of 7.5. Swit-
four key areas: Smart Production and Logis-
benefits to Europe. The study “5G action plan
zerland is set to see the highest CBR of 14.7,
tics, Smart Rural, Smart Urban, and Smart
review for Europe” conducted by Analysys
with roughly a EUR 10 billion net benefit on
Public Services. The Smart Production and
Mason with input and funding from Qual-
just a EUR 700 million investment.
Smart Rural clusters have the largest net
comm Technologies and Ericsson provides a
“5G can provide the economic stimulus
benefit of EUR 70 billion and EUR 55 billion
cost-benefit analysis by region and by market
Europe needs,” said Wassim Chourbaji,
respectively, although their CBRs are lower
segment, and recommends targeted public
Senior Vice President for Government Af-
than those of the Smart Urban and Smart
sector investment and policy change to drive
fairs at Qualcomm Communications SARL.
Public Services clusters.
the most value.
“5G connectivity extends so much further
In Romania, the Smart Rural and Smart
than the smartphone and has the potential
Production and Logistics clusters are also
sively enabled by 5G across multiple sectors
to transform entire industries at the macro
associated with the largest net benefit of EUR
is expected to have present value economic
level. Qualcomm is committed to work with
2 billion and EUR 1.5 billion respectively,
benefits of EUR 6.8 billion and costs of EUR
businesses, organisations, and governments
although their CBRs are lower than that of the
1.9 billion, resulting in a cost-benefit ratio of
across Europe to seize the potential growth
Smart Urban cluster (6.7).
3.6, with a net benefit of EUR 4.9 billion. The
and innovation opportunity this technology
report also finds that Germany is forecast to
presents.”
In Romania, a digital transformation exclu-
The study also identifies key areas that would require partial or full public funding
www.business-review.eu Business Review | December May 2016 2020
COVER TECHNOLOGY STORY 19 14
in order to harness the benefits. These span
competition between service providers, as
a specified time duration, will be introduced
across healthcare and hospitals, municipal
well as increasingly affordable 5G smart-
in 5G networks. This will enable a wide range
buildings, education, tourism, agricul-
phones from several vendors.
of time-critical services for consumers,
ture, and urban hotspots, including public
North America is expected to end the year
enterprises, and public institutions across
transport. Over EUR 50 billion of benefit can
with about 4 percent of its mobile subscrip-
various sectors, with 5G public and dedicated
be delivered for less than EUR 20 billion of
tions being 5G. Commercialisation is now
networks.
public funding, according to the study.
moving at a rapid pace and by 2026, Ericsson
Cloud gaming is another emerging catego-
Besides the economic benefits gener-
forecasts that 80 percent of North American
ry of applications. The combined capabilities
ated by investments, the study also outlines
mobile subscriptions will be 5G, the highest
provided by 5G networks and edge comput-
many important environmental and social
level of any region in the world.
ing technologies will enable game streaming
benefits of 5G connectivity. Worker safety, upskilled workforces, reduced carbon emissions and energy usage, less resource-intensive production, social inclusivity, and even import/ export security are all highlighted as supplementary benefits. “It is clear that 5G will become one of the core technological foundations on which our economies and societies will be built,” Chourbaji continued. “The benefits and returns are now evident, and we must rise to meet the challenges and opportunities ahead of us. Only together, through strategic collaboration and consultation, will these benefits be fully
Europe will end the year with about 1
services on smartphones to compete with a
percent 5G subscriptions. During the year,
quality of experience (QoE) on par with PC or
some countries delayed their radio spectrum
console counterparts, making room for inno-
COVERAGE TO GROW EXPONENTIALLY
auctions, which are needed to support 5G
vative, immersive games based on mobility.
Ericsson (NASDAQ: ERIC) projects that four
deployment.
realised.”
out of every ten mobile subscriptions in 2026
“This year has seen society take a big leap
will be 5G. This forecast is included in the
towards digitalization. The pandemic has
5G FUNCTIONALITY GROWING FOR BOTH NETWORKS AND DEVICES
latest edition of the Ericsson Mobility Report.
highlighted the impact connectivity has on
The introduction rate of 5G New Radio (NR)
Current 5G uptake in subscriptions and popu-
our lives and has acted as a catalyst for rapid
functionality is increasing, with more than
lation coverage confirms the technology as
change, which is also clearly visible in this lat-
150 5G device models launched commercially
having the fastest deployment of any genera-
est edition of the Ericsson Mobility Report. 5G
so far. Many devices support 5G Frequency
tion of mobile connectivity so far.
is entering the next phase, when new devices
Division Duplex (FDD) and dynamic spectrum
and applications make the most out of the
sharing (DSS). The first 5G standalone (SA)
Report estimates that by the end of this year,
benefits it provides, while service providers
networks have been launched in Asia and
more than 1 billion people – 15 percent of
continue to build out 5G. Mobile networks
North America, together with the first devices
the world’s population – will live in an area
are a critical infrastructure for many aspects
capable of NR carrier aggregation.
that has rolled out 5G coverage. In 2026, 60
of everyday life and 5G will be key to future
percent of the world’s population will have
economic prosperity,” said Fredrik Jejdling,
ing digitalization as well as increasing the
access to 5G coverage, with 5G subscriptions
Executive Vice President and Head of Net-
importance and need for fast and reliable
forecast to reach 3.5 billion.
works at Ericsson.
home broadband connectivity, the number of
The November 2020 Ericsson Mobility
Ericsson has raised its year-end 2020
The report also highlights why 5G success
With the COVID-19 pandemic accelerat-
service providers offering fixed wireless ac-
estimate for global 5G subscriptions to 220
will not be limited to coverage or subscription
cess (FWA) is on the rise. Almost two-thirds of
million, as service providers continue to build
numbers. Its value will also be determined by
service providers now have an FWA offering.
out their networks. The increase is largely
new use cases and applications, the first of
These types of connections are forecast to
due to rapid uptake in China, reaching 11
which have already started to emerge.
grow more than threefold and exceed 180 mil-
percent of its mobile subscription base. This is driven by a national strategic focus, intense
Critical IoT, intended for time-critical ap-
lion by the end of 2026, accounting for about
plications that demand data delivery within
a quarter of total mobile network data traffic.
www.business-review.eu Business Review | December 2020
20 ENTREPRENEURSHIP
Promoting startup culture in times of remote work: a challenge for founders While some 50 percent of employees in large companies are expected to return to their offices by mid-2021, founders of startups are dealing with a myriad of challenges while trying to grow their operations. Fully remote work is proving more efficient from a cost perspective, but building a company culture and integrating new people into the team to support development is proving tricky for many startup owners. By Ovidiu Posirca
The move to remote work posed no technical challenges for most startups
R
emote work is embedded in the cul-
easier for them. Some have continued to
to new team members. Transmitting these
ture of tech startups, and some are
attract new funding rounds during the pan-
values solely through screens may turn out to
looking at creative ways to harness
demic.
have a limited impact in the long run.
team spirit while keeping everyone safe. Ever
“We’ve been seeing teams in our portfolio
“A strong startup has a strong team, and
since the first restrictions aimed at contain-
working fully remote and generating good
its members have complementary skills but
ing the pandemic were imposed in March,
synergies. For the time being, we are happy
share the same vision and values,” Rosca
companies of all sizes have had to accelerate
because the companies are growing and gen-
adds.
the digitalization of their processes, and that
erating visible results, including raising more
has resulted in working from home becoming
money at bigger valuations,” Sergiu Rosca,
mainstream.
founding partner of GapMinder VC, tells BR.
Startups are more flexible and agile, so jumping on the remote work boat has been
However, the leadership test for founders will be to pass the culture of their startup
LESSONS FROM LOCAL STARTUPS ON GOING FULLY REMOTE BR spoke to several founders about their experience in managing their startups since
www.business-review.eu Business Review | December May 2016 2020
March. They talked about the accelerated
ENTREPRENEURSHIP COVER STORY 14 21
In early November, the startup behind the
by remote work. Then there was the chal-
shift to remote work and some of the chal-
VoxiKids virtual clinic was on track to raise
lenge of recruiting the right people in line
lenges they faced in promoting the company
EUR 290,000 in fresh funding through Seed-
with the startup’s vision.
culture and sustaining its growth path. Work-
Blink, the equity crowdfunding platform.
ing from a remote location was nothing new
The startup quickly adapted to coronavirus
we miss socialising and team buildings, but
for IT professionals, but developing a startup
restrictions as the team was already using
we do manage to have some interactive and
with team members who are scattered across
management tools to improve daily work-
fun moments online from time to time. The
the city or country was unexpected for many
flows.
main challenge in recruiting during this pe-
founders.
“Basically, we have moved everything
“We are a friendly and united team and
riod has been finding good professionals who
online: scrum meetings, brainstorming,
also resonated with our project. Fortunately,
was the hardest to overcome. We started the
giving and receiving feedback – everything
we have good connections in the IT field –
year with lots of plans and we got to March
turned into a better and more agile process,”
we’ve stayed connected to former colleagues
and realised that everything we had been
AnaMaria Onica, CEO and co-founder of
or collaborators – and that helped us find the
hoping to achieve and work on in 2020 would
Speakquest, tells BR.
people we needed,” says Onica. Going for-
“I think the beginning of the pandemic
have to change,” says Andrei Avadanei, CEO
She says that one of the biggest challenges
ward, the CEO suggested that remote work
of Bit Sentinel, a cybersecurity startup. As
was to keep everybody focused and engaged.
could become challenging to manage as the
the health crisis hit, the startup was hiring
As CEO, Onica had to understand the needs
team grows. She adds that new ways must
new people and looking to move into a big-
of each team member and help them even in
be found to keep team members connected
ger office. The first month was the hardest
a digital environment.
to each other without losing sight of the com-
because the company had to add a new layer
“But the most challenging thing was to
pany’s mission and vision. Bogdan Iordache, founder and CEO of
of communication, while employees were
make smart business decisions and align the
also adjusting to their new home offices. Fast
company's vision to the new social context.
Apiary Book, a provider of SaaS solutions
forward to November, Bit Sentinel got its new
We can say that we have managed to pivot
for beekeepers, says that video conferencing
office space, beta launched a new product
successfully during this period and even to
helped him communicate more easily with
and founded a new division supporting small
update our mission and vision,” says the CEO.
the startup’s customers and partners and
and medium-sized enterprises. “The downside is that it gets a little
In the early days of the pandemic, the team behind VoxiKids worked even harder
take part in events around the world. Apiary Book stuck to its 2020 roadmap
complicated to connect with the team. You
and progressed faster in certain areas. Onica
despite the health crisis, and the startup was
can use all kinds of online channels, but it
says this was happening in the beginning be-
able to increase its user base, launch new
doesn’t feel very ‘human’ and furthermore,
cause they feared that working online would
products, and close a new funding round.
when hiring a new employee, it takes more
impact deadlines. Since then, the startup has
“Remote work brings an increase in pro-
time to train and align them within the team.
adopted a work style that doesn’t impact the
ductivity and a reduction of costs, things that
We’ve hired people at Bit Sentinel during
quality of its product.
are very important for a startup like Apiary
this period and we saw first-hand how things changed,” he adds.
The co-founder says that the social aspect of the company was the first to be impacted
Book,” Iordache tells BR. The startup aims to raise EUR 150,000 through SeedBlink and
www.business-review.eu Business Review | December 2020
22 ENTREPRENEURSHIP
expand on the European and North American
“Commuting times are eliminated,
quite a big hit on the human side. Sharing
expenses are lowered, and there’s also im-
friendly moments together – inside and out-
For Cassa Software, the startup using
proved personnel satisfaction and retention.
side the office – is a big part of our company
Artificial Intelligence and Machine Learning
But we are not living in normal times; we are
culture, and company culture is a big part of
for online accounting operations, the move
in a crisis. The pandemic is putting a lot of
our success. Remote work did disable some
tremendous results,” he adds. His startup
pressure on employees and social distancing
important fun elements, such as being able to
is looking to raise EUR 100,000 through
measures are not supporting their mental
share a beer after work, spontaneous jokes,
SeedBlink.
health either. We need to address that first,”
being able to spend a casual break together
markets in 2021.
to remote work was no challenge. “The beginning of the pandemic and the quarantine measures from March until today have challenged us to work harder, develop along with our clients, introduce new functions, and improve the app to make the service more efficient. It may sound strange, but I am convinced that the pandemic has motivated many people to work harder to keep their businesses, workplaces, clients, and employees,” Cornel Fugaru, the startup’s co-founder and CEO, told BR. However, Fugaru suggested that remote work doesn’t bring substantial benefits for startups. He says that in-person interaction is required for startup teams that can be young and inexperienced. “The beginning of each startup has to mean communication, exchange of ideas, quick suggestions, and active involvement in different business processes, especially when we’re talking about building a sales department, for instance,” he explains. “When people don’t know each other well, the team's remote collaboration cannot bring
the Ascendia co-founder argues. Currently,
and have a nice, natural conversation,” says
founder and CMO of Ascendia, and ed-tech
the company is looking to attract a EUR 1 mil-
Litescu.
company, had to talk to his team about the
lion investment to take its teaching platform
emerging health crisis.
global.
In early spring, Alex Malureanu, co-
“We got everyone together and told them
The startup Plant an App had digitalized
The startup CEO thinks that companies are now more aware of the fact that there are plenty of tools that can help them automate
that a lockdown was coming and that it
its internal processes way before the pan-
and scale processes faster. However, he sug-
would take a lot of time to recover. Fear took
demic hit, as most of its employees are tech-
gested that the biggest challenge of remote
over of course, but as I said, it was early, and
nical people, including engineers and sales
work was not losing the sight of our human-
we bounced back. Around that time, we also
specialists with strong digital backgrounds.
ity. “We must admit that we are social beings
started developing an e-learning course on
“If anything, the pandemic actually
COVID-19 and then offered it for free to all
pushed us to optimise our digital solution
and work is a big part of our social life. For
our client companies,” Malureanu told BR.
stack, gain more insight into how the busi-
every business process, whether it’s status
The company has developed a digital plat-
ness was running, and be more cohesive as
meetings or recruiting, onboarding, training,
form that can help teachers create interactive
a technology company, both internally and
I think HR and Management are faced with
lessons. He says that some 2,100 new teach-
externally,” Bogdan Litescu, the CEO of Plant
the big challenge of helping employees avoid
ers have been signing up monthly to create
an App, told BR. The startup has listed on
the feeling they are alone in a room with just
lessons with Ascendia’s LIVRESQ platform.
equity crowdfunding platform Republic.co,
a computer next to them,” Litescu concluded.
aiming to raise up to USD 1 million in fund-
For e-commerce startup Cartloop, one of
under normal market conditions this comes
ing. “Even though we have the technology
the biggest challenges has been hiring staff.
naturally for an e-learning firm.
side covered, we must admit that we took
Regarding remote work, he says that even
“There are different time zones we need
www.business-review.eu Business Review | December May 2016 2020
ENTREPRENEURSHIP COVER STORY 14 23
to take into account, sometimes the logistics
surveyed expect over 50 percent of their
more pressure to balance their personal and
of virtual interviews pose a challenge, or, we
employees to return to offices starting with
professional lives, according to a McKinsey
get a very large number of remote applicants
the middle of 2021 through to the end of next
report. Managers must set clear objectives
that take a long time to go through - which
year. Big companies that have leased large
and KPIs, while defining new routines and
slows down our hiring process,” Lisa Popovi-
office spaces are looking at ways to rent the
rules to tackle disturbed office-based flows
ci, co-founder and COO of Cartloop, tells BR. The startup adapted quickly and handled employee onboarding efficiently in a digital environment. “Judging from
extra space to smaller firms. At least for now, it is quite certain that future demand for office spaces will
and rhythms. “Hiring was difficult even in good times. The pandemic disrupted the labor market, forced some people to look for a new job while scared others, and deter-
be reduced, which
mined them to stay put. But overall, I would
in turn will see
say that it will be difficult to hire good people
development
for startups, maybe more difficult than last
the feedback
pipelines
year,” Cristian Munteanu, managing partner
we get from
shrinking and
of Early Game Ventures (EGV), a startup
the team every
projects being
investment fund, tells BR.
day, it was the
sent back to
right decision
the drawing
Digital communication tools must be used efficiently as well. For instance, complex
to go remote,”
board and
topics can be discussed in video calls, while
Popovici adds.
transformed
quick catchups can be carried out via chat.
into other prop-
RETURNING TO THE OFFICE IS “WORK IN PROGRESS” Companies occupying offices spaces in Romania expect rents to fall by
erty assets, such as
Research by McKinsey shows that smaller organisations are often more successful at
apartments.
reskilling their workforces because they fol-
Both startups and
low agile principles.
more established companies have discovered the benefits of remote
“The act of testing and iterating in itself builds resilience—and is thus preferable to
the end of 2021, according to a survey by real
work, but company leaders must deal with
waiting,” according to the report. This is
estate consultancy Colliers International.
its challenges, too. For many people, remote
something that startups do naturally, right
Furthermore, a large share of companies
work can lead to feelings of isolation and
from their founding moment.
www.business-review.eu Business Review | December 2020
24 MACROECONOMY
How Romania’s big cities can boost competitiveness The local elections held in Romania in September highlighted a new electoral approach in Romania’s biggest cities: a large share of urbanites acknowledging the fact that their cities should be more competitive at both the local and European level. By Sorin Melenciuc According to the World Bank’s latest thresholds, published in July 2020, lowincome economies (a politically correct name for “the third world”) are defined as those with a GNI per capita, calculated using the World Bank Atlas method, of USD 1,035 or less in 2019. Lower middle-income economies have a GNI per capita between USD 1,036 and USD 4,045, upper middle-income economies fall between USD 4,046 and USD 12,535, while high-income economies are those with USD 12,536 per capita or more. In 2019, Romania’s GNI per capita of USD 12,630 allowed it to advance to the “highincome economy” classification for the first time in its history, after having been part of the “upper middle-income” group for the last few decades. According to the latest World Bank report, Brasov is one of the engines behind Romania’s development
M
82 countries and territories are currently considered to be “high income economies,” including 27 out of the 28 European Union
any people currently living in
improving public services – from healthcare
member states, with Bulgaria being the only
Timisoara envy those living in
or education to public transportation and
exception.
Cluj, while people in Arad envy
tax bureaucracy –, reducing pollution, and
the inhabitants of Oradea due to the faster
building new parks, modern public spaces or
SETTING NEW GOALS
development they have experienced during
entertainment facilities.
This achievement was mainly the result of
the last decade. But other cities, like Brasov
Many of these topics are quite new on the
the impressive economic development of
or Iasi, are also preparing to launch new proj-
public agenda as new generations of middle-
Romania’s largest cities over the last couple
ects with the aim of becoming much more
class urbanites have emerged in big cities.
of decades. “The main cities in Romania are
competitive and attracting more people and
These people usually spend their holidays in
the engines behind this development. One of
businesses.
city-breaks in western Europe and are now
these engines is the city of Brasov. If we look
demanding that their home cities look more
at its growth rate, we can see that it has been
GREATER EXPECTATIONS
like those in France, Germany or Spain. It
growing faster than Singapore did in its pe-
This year’s local elections saw Romanian vot-
may not be surprising that this more mature
riod of economic boom,” says Marcel Heroiu,
ers adopting a more mature approach to the
approach emerged just as Romania was of-
a World Bank adviser.
future of their communities. In larger cities,
ficially named a “high-income country,” with
where the population is wealthier, more in-
its gross national income (GNI) per capita in
ies that voted in a new mayor this fall – and
terested in politics, and more educated, these
2019 slightly rising above the threshold set by
not because it hasn’t developed quickly, but
elections generated fierce debates around
the Word Bank for this category.
because it hasn’t happened quickly enough
Nevertheless, Brasov was one of the cit-
www.business-review.eu Business Review | December May 2016 2020
MACROECONOMY COVER STORY 25 14
identified projects as the EU’s priorities do
“Amid the rapid development of new
already well-developed, made an even more
not cover the whole palette of needs in Ro-
settlements in the suburbs and peri-urban
radical political change. The rich and sophis-
manian cities. While western European cities
areas of dynamic cities in Romania, critical
ticated city of Timisoara now has a foreign
have a more elevated set of needs (e.g. focus
public infrastructure has been slow to follow.
mayor: Dominic Fritz, born in the Schwarz-
on innovation and entrepreneurship, sustain-
Therefore, there are communities with sev-
wald region of Germany, with no family roots
ability, climate change), Romanian cities
eral thousand new residents, but with no new
in Romania and not even holding Romanian
continue to have significant basic infrastruc-
schools, kindergartens or nurseries, adding
citizenship. Along similar lines, Bucharest’s
ture gaps,” the World Bank’s recent report
pressure to the existing social and transport
Sector 1, the wealthiest part of the city,
“Romania: Catching-Up Regions” points out.
infrastructure,” World Bank experts say.
for its exigent electorate. Other cities, though
elected a French national (but with Romanian
Experts recommend reconciling the needs
citizenship): Clotilde Armand. These cities
of Romanian cities with EU priorities, a
BIG CITIES’ DOMINANCE
have developed at a rapid pace over the last
process that requires an open dialogue and a
The last couple of decades have been associ-
couple of decades and they also have strong
clear understanding of the multitude of needs
ated with rapid development, but also with
private sectors – and this tends to have a
seen in European cities, and ways in which
larger gaps between rich and poor communi-
political impact.
the EU could respond to those needs. “Obvi-
ties.
“More often than not, a city with a strong
ously, the needs of Bordeaux are likely to be
The Bucharest region and the counties of
and dynamic private sector tends to also be
quite different to the needs of Iasi. Moreover,
Cluj and Timis, the most developed in the
a city with a good administration, a city with
Bordeaux has more advanced and complex
country, already generate a third of Romania’s gross domestic product (GDP). In some cases, some business clusters in big cities have more impact on the economy than do entire regions. For example, according to World Bank experts, the Pipera Office Park in northern Bucharest generates 2 percent of the country’s GDP, more than certain counties are able to contribute. These differences also translate into huge wage disparities between rich and poor regions and, especially during the last decade, a larger gap in the quality of life. Rich cities tend to invest more than poorer communities in improving quality of life, and this can be easily observed in the quality of roads, public transportation, and public parks. In the city of Cluj-Napoca, the amount of green space per capita rose from 10 to 25 square meters from 2000 to 2015, while in Galati, a declining heavy industry-based large city, the same
better and improving public infrastructure,
means to spell out its needs, yet even in Ro-
indicator decreased from 30 to 18 sqm per
a city with a bustling culture and art scene,
mania there is demand for interjurisdictional
capita in the same period.
and a city with a good quality of life. Unfortu-
programmes and project implementation,”
nately, when it comes to encouraging private
the report indicates.
sector development, local administrations
In Romania, residents of large cities tend
In fact, only nine out of the 41 county seats in Romania meet the European Commission’s minimum requirement of 26 square meters of
seem to be at a loss for ideas,” a recent World
to have other types of expectations from
green space per capita for cities. This explains
Bank report reads. And running out of ideas is
politicians than their rural counterparts as
why the subject was high on the agenda dur-
often associated with losing political power in
they move more often around the country
ing the campaign ahead of this year’s local
Romania, as it is in many other countries.
and abroad – and the quality of roads and
elections, with many candidates promising
public transportation currently ranks among
more parks and lower pollution levels.
Experts warn that Romania’s urban policies need a major shift as they have been
their top priorities. The low quality of educa-
excessively driven by EU funds.
tion and healthcare are also huge problems as
emerged in Romania will have to address
The new generation of mayors which has
these public services have not kept up with
these challenges in order to improve the qual-
in response to the requirements of EU-funded
the demographic expansion of functional
ity of life of millions of people – and gain (or
programs. This has limited the scope of the
urban areas in Romania.
lose) traction across the country.
“Urban priorities have often been defined
www.business-review.eu Business Review | December 2020
26 MACROECONOMY
Long way to recovery from pandemic’s economic damage The COVID-19 pandemic took a painful toll on Romania’s economy in the second quarter of this year, when gross domestic product (GDP) plunged by 12.2 percent compared to the previous quarter. But despite the fact that most restrictions were lifted during the summer, the economy has struggled to recover amid weak external demand, poor agricultural output, and lower consumer sentiment, all of which have decreased the probability of a quick rebound. By Sorin Melenciuc WEAK POINTS The main cause of the sharp economic drop in Q2 2020 and the slow recovery in Q3 was, of course, the COVID-19 pandemic. But its effects were different from sector to sector, with a broader impact in Q2 and a more limited – but still significant – effect in Q3. In the second quarter, there was strong impact on industry, exports, and services, sectors that were severely hit by both the restrictions imposed by authorities as well as by the lower demand. While some of the impact dissipated during the third quarter, some sectors remained largely devastated by the pandemic. Tourism, a flourishing industry before the pandemic, took the biggest hit. Official data show that, during the first ten months of 2020, the number of tourists in Romania declined by 51 The EU has prepared a EUR 1.8 trillion package for its 27 member states
percent year-on-year, plagued by the sharp drop in the number of foreign tourists (-82
n the third quarter, Romania’s GDP rose
I
“The Romanian economy only partially
by 5.6 percent quarter-on-quarter, well
recovered after the sharp fall in Q2 2020. (…)
the activity of hospitality businesses as well
below the 7.2 percent figure the market
Economic performance in the third quarter
as that of some retail subsectors. At the same
was expecting, and declined by 6 percent
was below our expectations of -4.9 percent
time, the performance of the agricultural
year-on-year. This means that the economy
y/y and the Bloomberg/Reuters median
sector was poor this year too, as yields for
managed to recover less than half of the
of -4.4/-4.0 percent y/y. We believe that a
major crops like maize, wheat, barley, and
loss it took in the second quarter, when the
weaker-than-expected agricultural output is
sunflower declined compared to the previous
economy was partially shut down due to a na-
to blame for most of the forecast error on our
agricultural season, due to severe drought.
tional lockdown imposed over a two month-
side,” Erste Bank Group economists wrote in
period (March 16 – May 15).
a research note.
percent). This decline is associated with a slump in
STRONG POINTS
In the January-September 2020 period, the
According to most specialists, these num-
Other sectors have recovered quite quickly
economy contracted by 5.1 percent relative to
bers suggest that the long-awaited V-shaped
and offered some hopes of a faster rebound
the same period of the previous year. Econo-
recovery pattern will turn out a lot flatter
in 2021. Following a sharp contraction during
mists warn that these numbers are indicating
than everyone had hoped, meaning that the
the two-month lockdown, retail sales have
a slower recovery than had been expected.
recovery path will be slower and last longer.
been growing ever since, having registered a
www.business-review.eu Business Review | December May 2016 2020
MACROECONOMY COVER STORY 27 14
2 percent increase in January-October 2020
the usual 3 percent of GDP deficit threshold.
is also supported by some optimism coming
year-on-year. In October, retail sales acceler-
At the same time, the EU has prepared a EUR
from last month’s agreement on the EU re-
ated to a 5.7 percent year-on-year growth
1.8 trillion package for its 27 member states,
covery fund,” ING senior economist Valentin
from 4.7 percent in September, edging closer
including the regular EU funds for the next
Tataru wrote in a recent report.
to the cruising speed of 7.1 percent seen in
7-year budgetary period (2021-2027) as well as
2019. “Consumers quickly shrugged off the
a special Recovery and Resilience Facility.The
2021: LOOKING INTO THE UNKNOWN
crisis given the tight pre-crisis labour market
facility will make EUR 672.5 billion in loans
In 2021, the new government’s main objective
conditions and likely supported by the gov-
and grants available to support reforms and
will be to ensure economic recovery while re-
ernment’s job scheme,” ING economists said
investments undertaken by member states.
ducing the fiscal gap, a task that might prove
in a research note.
The aim of these funds is to mitigate the
easier in a post-electoral context. Even so, a
economic and social impact of the coronavi-
reduction of the budget deficit by at least 3
tor, driven by government spending. In the
rus pandemic and make European economies
percentage points, as expected by the market,
third quarter, it had a marginal advance of 1.9
and societies more sustainable, resilient, and
could be difficult to implement.
Construction has been another strong sec-
percent q/q vs -4.1 percent in the second quarter, “though the sector proved to be more resilient to the pandemicinduced economic crisis, backed by higher government investment spending,” according to Erste Group analysts.
HUGE BUDGET DEFICIT During the first ten months of this year, the budget deficit was 2.6 times higher than the one recorded in the same period of 2019, going up to RON 74.04
better prepared for the challenges and oppor-
billion (EUR 15.3 billion) or 7.05 percent of
tunities of the green and digital transitions
(from 9.3 percent in 2020 to 6.3 percent in
projected GDP. Romania’s Finance Ministry
– official targets of the bloc for the coming de-
2021) is – in our view – striking a reasonable
recently revised upwards its expectation for
cades. Access to sizeable EU funds to support
balance between the need for fiscal consoli-
this year’s fiscal deficit, from 8.6 percent to
a green transition in the early 2020s could be
dation and not damaging economic growth.
9.1 percent of GDP, following a deterioration
a game-changer for Romania. Total EU grant
Attempting to reduce the deficit by more than
of the economic forecast for 2020.
funding available for Romania amounts EUR
that next year could have contractionary ef-
80 billion in 2021-27, or around 36 percent of
fects for the economy, which any government
its current GDP.
will likely try to avoid,” Valentin Tataru notes.
This deficit is considerably larger than the level registered in 2009 (7.4 percent of GDP in cash or 8.3 percent in the EU’s ESA standard).
In this favourable context, Romania has so
“A 3-point budget deficit reduction pace
“In any case, we believe that the risk of
At that time, Romania was downgraded to
far managed to keep its rating in the “invest-
downgrades will remain a constant threat, at
“junk” by two major rating agencies and
ment grade” zone despite its huge fiscal gap.
least through 2021,” he added. The deficit cut
signed a EUR 20 billion rescue package with
However, experts warn that the next
several international financial institutions,
government, formed after the December 6
economy, as the uncertainties remain high.
including the IMF and the European Com-
Parliamentary elections, will need to imple-
During the last month, newly-enacted restric-
mission.
ment fiscal and budgetary reforms in order
tive measures after a resurgence of COVID-19
to convince major agencies to maintain the
infections in Romania has led many analysts
current rating.
to reducing their GDP growth forecasts.
Despite the stimulus, the government was finally forced to cut wages in the public sector by 25 percent in 2010 in order to keep
“Our view that rating agencies are willing
will certainly depend on the evolution of the
Erste Group analysts are now betting on
its finances afloat – a decision with huge
to look beyond the current electoral context
a GDP growth rate of 2.7 percent in 2021, fol-
political repercussions for the ruling party of
and wait for a new government to take over
lowing a 4.7 percent decline in 2020, while
that time. But things seem different during
and embark on a more serious fiscal consoli-
ING estimates a 4.1 percent rate for next year.
this new crisis, as the European Union has al-
dation path is contingent on such a reduction
This means that Romania will need at least
lowed its member states to spend more mon-
(increasing pensions by 14 instead of 40 per-
two years to recover the losses caused by the
ey to tackle the health crisis and to exceed
cent). We maintain this view for now, which
pandemic in terms of economic output.
www.business-review.eu Business Review | December 2020
28 TECH COMPANIES
Three Romanian tech scaleups that stood out in 2020 Despite the global pandemic, it’s getting easier for Romanian startups to scale up — there’s more money in early stage rounds and more companies are securing the investments they need to grow. Here are three tech firms that saw considerable growth in 2020 based on the financing rounds they raised in the last 12 months. By Claudiu Vrinceanu the partnership with Microelectronic Group, a leading provider of software solutions, services, and equipment for the financial and government sectors, Druid expanded to markets such as Australia, New Zealand, and the South Pacific Islands, where its technolMany tech firms saw significant development in 2020
ogy will be integrated into conversational automation processes for companies across the Australasia region.
TYPINGDNA
typing patterns for each user based on the
Behavioural biometrics company TypingDNA
time and duration of various keypress events.
SOLEADIFY
raised EUR 6.2 million in a Series A round led
This behaviour is collected, analysed and
Soleadify, a Bucharest-born startup that uses
by Gradient Ventures, Google’s AI-focused
used to verify the user’s identity.
machine learning to create profiles for busi-
venture fund, which also included partici-
nesses in any industry, raised USD 1.5 million
pants such as GapMinder, Credo Ventures,
DRUID
in seed-round funding from European ven-
Techstars Ventures, as well as returning
Druid, a startup that develops chatbot tech-
ture firms GapMinder Venture Partners and
private investors. The funding allowed the
nology for large companies, founded and led
DayOne Capital. Some business angels also
Romanian firm to advance the research and
by Romanian entrepreneur Liviu Dragan, was
participated at this round, through Seedblink,
development of innovative typing biometrics
valued at over EUR 8 million in a round led
an equity crowdfunding platform based out of
technology and carry out its strategic plans.
by Early Game Ventures. Angel investors also
Bucharest, Romania. The first of the com-
participated in the round. The company used
pany’s products is a business search engine
dated its Authentication API to significantly
the funds to expand rapidly on several inter-
that keeps over 40 million business profiles
reduce complexity for developers integrating
national markets. One example is its partner-
updated, currently being used by hundreds
typing biometrics with a single API call, while
ship with Ashling Partners, one of the largest
of companies in the US, Europe, and Asia for
maintaining full functionality. It has also
service providers in North America, which
sales and marketing purposes. The company
released a new free developer plan to provide
has a laser focus on hyper-automation. The
will use the financing round to continue to
unlimited API calls and users to software
partnership formalises a relationship aimed
improve its technology and build distribu-
developers. TypingDNA’s software utilises
at expanding the offering of conversational
tion partnerships, as well as to continue its
a proprietary AI algorithm to authenticate
RPA services and solutions to Ashling clients
global growth by building marketing and sales
users, customers, and employees by learning
across North America. Moreover, based on
teams.
For example, TypingDNA has recently up-
www.business-review.eu Business Review | December 2020
ADVERTORIAL 29
Urban development engines. Case study – Iași
T
he first shopping malls in Romania
business complex, the retail and entertainment
in this respect. Palas Campus addresses an
were opening in the early 2000s, in
component, with countless modern leisure solu-
actual demand from the market and is a
Bucharest and Iași. This marked an
tions, as well as an impressive park that quickly
natural extension to the business center,
became one of the attractions in the city.
because if have nothing to give to the com-
innovative, vibrant and modern shopping concept that embellished the life of com-
panies who wish to grow locally, we run the
munities. The years have passed, Romania
IN SEARCH OF WELLBEING
risk of them choosing a different country.
developed, and the mall became too small of
“Palas brought the concept of wellbeing,
The Campus is an exciting project for us, as
a concept for a world with big dreams and
because the world has evolved to such an
well as a major responsibility. This building
development plans to match. That is how
extent that people no longer settle in one city
will be integrated in the city infrastructure,
mixed-use projects came about, revitalizing
or another strictly based on the potential wages
embedded in the urban fabric and which we
obscure areas in big cities and promoting the
they may earn, but rather want the full package,
are confident will become a development
live-work-play concept via the mix of office,
looking at the quality of life they can have in a
engine just like Palas did,” added Raluca
retail and entertainment uses, a concept
specific city and what it offers in terms of life-
Munteanu. The total 60,000 sqm of leasable
that is a hit to this day.
style. Palas does just this, providing a synergy of
premises to be comprised in the largest
office spaces, retail area and entertainment, as
office building in Romania will lead to the
terms of real-estate developments, provid-
well as a remarkable green feature,” said Raluca
organic expansion of the regional business
ing the scene for spectacular investments
Munteanu, Business Development Manager
center consolidated in the city center in the
over the last decade, investments that have
IULIUS.
years since Palas Iași opened. The project
Iași is one of the most dynamic cities in
transformed the city, making it one of the
Over these years, Palas has attracted more
will also include medical components,
most appealing for major companies, and
than 50 companies via the United Business
services area, a new food market concept,
have showcased the extraordinary historical
Center business district that is now comprised of
park and outdoor coworking spaces. These
features.
7 class A office buildings, which made the need
will service more than 5,000 new employees,
to expand the business center apparent. That is
as well as the residents in the area. Given
Before the year 2000, the downtown area
how the Palas Campus came about, a mixed-use
that wellbeing also refers to accessibility
was dominated by the Palace of Culture, but
urban regeneration project adding up to 120
and connectivity, with impact on saving time
its immediate surroundings were basically
million Euro that IULIUS is currently building in
and on urban mobility, the project currently
an abandoned area. Nowadays the Palace of
the Sf. Andrei area, a central, yet underdeveloped
pending development also includes the cre-
Culture is embraced and showcased by Palas,
area.
ation of a new arterial road, widening nearby
Iași has a very straightforward evolution.
a mixed-use urban regeneration project that includes the United Business Center
“We are not speculative developers and we do not lay a single brick if there is no clear demand
streets, pedestrian connections, bike lanes, parking spaces and a public transit station.
www.business-review.eu Business Review | December 2020
30 FDI
An overview of Romania’s 2020 FDI performance The COVID-19 crisis brought unprecedented changes to the economy, largely due to the strict social distancing measures adopted by governments to limit the spread of the virus. Investment flows across Romania are expected to decline, but there is still room for optimism: foreign direct investment (FDI) could represent a central driving force for post-pandemic economic growth. By Claudiu Vrinceanu A POSSIBLE SOLUTION FROM INVEST ROMANIA The role of investment promotion agencies is becoming more important right now, and Romania could learn a lot from other countries’ governmental agencies focused on attracting new FDI. A recent UNCTAD study of 174 national IPA websites found that 64 percent of these agencies had a rapid online response to the COVID-19 pandemic, with 40 percent of IPA websites providing at least some information related to COVID-19, while 24 percent only displayed a notification informing In Romania, 46% of investors have cancelled, reduced or paused their planned investments
B
visitors whether the IPA was still operating. Investment promotion agencies are eager
ut for this to happen, Romania will
investments are important because such
to promote renewables and are increasingly
have to reshape its approach towards
projects are developed by companies build-
inclined to digitalize their methods, accord-
attracting FDI in order to increase its
ing their business from the ground up on a
ing to a joint survey by the World Association
attractiveness for foreign investors. This will
new market, indicating that they are there to
of Investment Promotion Agencies (WAIPA)
be a complex process considering the fact
stay.
and the World Bank. Sector targeting is an important element of investment promotion
that the intense competition among countries
and should be considered by the Romanian
tant challenge currently faced by Interna-
INVESTORS ARE CAUTIOUS, BUT NOT FULLY RETREATING
tional Promotion Agencies (IPAs) like Invest
In Romania, 46 percent of investors have can-
governmental body responsible for promot-
Romania. The COVID-19 pandemic has led to
celled, reduced or paused their planned in-
ing foreign direct investment in the country.
major economic disruptions across the globe.
vestments, while 51 percent made no changes
Without targeting, the government’s efforts
Nevertheless, it is still relevant to understand
to their investment plans, according to the
are likely to be inefficient and unsuccessful.
Romania’s pre-crisis FDI dynamics in order to
EY Attractiveness Survey on Romania. Look-
However, governmental promotion agen-
fully grasp current and future trends.
ing to the future, investors are still optimistic
cies tend to have multiple priority sectors:
to attract and retain FDI is the most impor-
government through Invest Romania, the
and believe that Romania will become more
according to the survey findings, IPAs have 11
THE GREENFIELD INVESTMENT INDICATOR
attractive after the COVID-19 pandemic ends.
priority sectors on average. The most popular
The value of greenfield investment project
Supply chain (35 percent) and manufacturing
sectors they target are renewable energy and
announcements – an indicator of future FDI
operations (36 percent) are regarded as the
information technology (IT) services.
trends – recorded a bigger fall (-49 percent)
country’s main investment attractions. To
How can Romania retain its attractiveness
in developing economies like Romania than
increase its competitiveness, most foreign
post-COVID-19? In terms of sectors that could
it did in developed economies (-17 percent),
investors believe that Romania should high-
accelerate Romania's development, accord-
reflecting developing countries’ more limited
light its agriculture and IT assets. Romania
ing to EY, a majority of foreign investors
capacity to roll out economic support pack-
should focus its efforts on funding key issues
mentioned agriculture (35 percent), the IT
ages, according to UNCTAD’s latest Global
like education, technological transformation,
sector (29 percent), and transport and motor
Investment Trends Monitor. Greenfield
and infrastructure.
vehicles (21 percent).
www.business-review.eu Business Review | December May 2016 2020
COVER MARKETING STORY 31 14
How brands can take advantage of the TikTok phenomenon According to data gathered by Learnbonds.com, as of January 2020, video-based social network TikTok had surpassed the mark of 40 million daily active users worldwide, on both iOS and Android devices. By Romanita Oprea
Raluca Colac, McDonald's
T
Alexandra Ion, Golin
ikTok is a mobile app where users post
began with an honest discussion about the
short videos, usually around 15 sec-
app and the brand. We talked about the pres-
onds long, producing what is known
Laura Savu, TikTok
and it breaks geographical borders. “When we think about social media, we
ent, about challenges, but most importantly
immediately think about things going viral,
as fast entertainment. The app is extremely
about the future, and that led us to our first
which is something we cannot find in other
popular among teenagers of all genders, with
TikTok brief. The one thing we can disclose is
communication disciplines. Almost every
a presence in 155 countries and 75 languages.
that this won’t be a launching campaign, but
new thing in our field can quickly become
Still according to Learnbonds.com, as of
rather a positioning one. We came to the con-
a phenomenon. Tik Tok is very easy to use
January 2020, a majority of TikTok’s users
clusion that even those who don’t have Tik-
and this is an advantage, but more than that,
were on Android, with the app reaching 33.01
Tok are at least aware of it, so it’s not a matter
the content we can find there is extremely
million active users representing a growth of
of awareness, but rather one of bias, and in
diversified, and it really is for everyone. We
about 2.8 percent from December 2019’s 32.07
the end, that’s what we need to change,” said
can all find interesting and useful information
million users. By 12 October 2020, the app
Miruna Dumitrescu, group creative director
there: from funny videos and challenges to
has been downloaded more than half a billion
at Publicis.
dog training lessons and even tips and tricks
times from the Google Play store. Daily active
But why is Tik Tok such a huge phenom-
about legislation,” said Alexandra Ion, digital
users on iOS devices reached 8.26 million in
enon and how did it manage to overtake other
January, 11.7 percent above December 2019
apps? According to Laura Savu, global com-
figures.
munity manager at TikTok, there are several
Tok is 33 percent music, 33 percent trending,
In November, Publicis Romania signed
manager at Golin Romania. “It’s very simple and super effective: Tik-
reasons for this: it’s based on a very powerful
33 percent simple customisation. But it’s also
a partnership with the TikTok platform to
consumption trend; it’s short and still very
about that remaining 1 percent: the mysteri-
provide ATL creative and strategic services.
simple; it brings video editing into everyone’s
ous fact that you can become viral for no ap-
The next step is to develop the brand’s first
the hands. Additionally, it enables content
parent reason. This is the most desirable and
campaign in Romania. “Our collaboration
discovery beyond the accounts a user follows
catchy ‘feature’ of this boom-channel,” said
www.business-review.eu Business Review | December 2020
32 MARKETING
Arnold Vieriu, head of social media at Tribal
that’s the place where they will also engage
communication approach. Even though Tik-
Worldwide Romania. A TikTok for Business
with the right message. According to recent
Tok is a platform for everybody, it is not right
hub opened this summer, and pro accounts
research, young people between 16-20 years
for any type of brand, nor should it be. “When
were rolled out in October for businesses and
old are spending a lot of time on TikTok and
a brand uses TikTok as part of its communica-
creators. With a business account, users can
WhatsApp, so, yes – any brand that targets
tion strategy, then it must be ready to adapt
add more information to their profile and ac-
this age group should be on TikTok,” added
to its specifics and be aware that a 30-second
cess real-time metrics and audience insights.
Tribal Worldwide Romania’s representative.
video must include the brand message and
So when it comes to creating a successful
However, Laura Savu contradicts him and
also stand out from the millions of videos
brand on the app, Raluca Colac, communica-
argues that TikTok applies to any type of
uploaded daily and the billion videos being
tions coordinator at McDonald’s, believes that
brand. “We’re talking about a mass market
viewed every day. Furthermore, brands that
the brand has to create dynamic and original
platform, populated by a diversity of users
are considering TikTok should think care-
videos that will attract the general interest
with millions of interests. Regardless of how
fully about the target audience they want to
because TikTok users are drawn to brand con-
niche your brand is, TikTok is another tool at
reach,” she argued. What are the biggest trends on Romanian TikTok in terms of brand communication? While at a global level we’re seeing it used for employer branding, Vieriu says that locally, there have been a lot of engagement activations recently. Some challenge-type campaigns were effective and visible, but for a very limited time. “I haven’t always seen it being used for communication by big Romanian brands, but I think 2021 will start with fresh content strategies. We are also always working on strategies for TikTok for some of our clients where it is in line with their target,” said Tribal’s representative. According to Alexandra Ion, among the fastest growing global trends right now on TikTok are meme compilations, because memes are the art of the social media culture, they are funny, catchy, and easy to relate to. Remixing is also a new trend that will con-
tent as long as it is entertaining. “This is the
your disposal to help you reach those poten-
tinue to grow next year. This is about mixing
first thing to do when we want to amplify a
tial consumers.” Moreover, Savu points out
ideas, formats, and edits in order to match
campaign on TikTok: find a very creative way
that any brand should have started using the
and better express a creative idea on the plat-
to present the products and integrate them
app in its digital mix months ago. Why? Be-
form. For 2021, social commerce will be one
in a way that doesn’t make users skip your
cause it’s the top trending online communi-
of the fastest-rising trends on TikTok, consid-
content. TikTokers are looking for realness
cation channel at the moment and not using
ering its newly announced partnership with
in the content and we think they can become
it would be a wasted opportunity, as it gives
Shopify. Finally, branded hashtag challenges
natural brand ambassadors. We are therefore
brands a great reach. On Miruna Dumitrescu’s
are still rising as more brands are starting to
open to collaborating with content creators
opinion, TikTok can work for any brand, but
communicate through the platform.
who are able to tell a story to their fans from
not any brand could work on TikTok. “Every
“I don’t consider brands to be trendset-
their own perspective. We think that music is
platform that we know today had its peak, its
ters on Romanian TikTok. They are still at the
an important trigger for the TikTok target”.”
moment of glory, but sooner or later people
very beginning. However, I have noticed a
got bored and started looking for something
few patterns: FMCG, Beauty & Fashion, Tech,
IS IT RIGHT FOR ANY BRAND?
new, something that they felt represented
and e-commerce brands were the brave ones
According to Arnold Vieriu, TikTok is not for
them more. Today that platform is TikTok
who first started to test the app. Most of them
everybody. TikTok is mandatory for early-
and it seems to us they learned everything
are jumping on influencers and celebrities
adopter brands and it’s at the beginning of
they needed to know to make sure people
for content. They are focusing too much on
its “media age,” meaning that ads are not as
won’t get bored too soon. And that includes
the types of content they think is ‘working’
annoying and repetitive for the audience.
advertisers,” explained Dumitrescu. Golin’s
on the app, rather than on developing their
“It’s very important to know where your
Alexandra Ion thinks that brands should be
own brand DNA and creativity,” Laura Savu
target spends the most time online because
present on TikTok if their DNA allows for this
argued.
www.business-review.eu Business Review | December May 2016 2020
COVER MUSIC STORY 33 14
Trends that will reshape the music industry A third of musicians could leave the industry due to the financial losses brought on by the coronavirus pandemic, a report cited by NME says. The research was carried out by the Musicians’ Union, who are calling on the UK government to provide greater assistance to those affected in the industry. By Romanita Oprea music and get support from fans, as well as live streaming concerts where fans can contribute by buying tickets or simply donating a sum of money of their choice. Both indies and major label artists know that they can’t continue to count on the same old revenue streams. Instead, they’ll have to focus on things like touring, merch sales, licensing, and even more out-of-the-box options to suit their brand. For example, Verzuz, also known as Verzuz TV, is an American webcast series created by producers Timbaland and Swizz Beatz. Verzuz was introduced during the COVID-19 pandemic as a virtual DJ battle, with Timbaland and Swizz Beatz facing off in its first iteration through an Instagram Live broadcast in March 2020. The series invites Shortening the tracks might be the smartest compromise a musician can make today
B
two music icons, predominantly from R&B and hip-hop, to highlight their discographies in two 10-song rounds during a three-hour
ut will this terrible situation also
tion on OnlyFans where she intends to offer
session. According to Wikipedia, in August
bring along opportunities and new
a menu of behind-the-scenes footage from
2020, after a bidding war, the series began
trends in the industry? We tend to
video shoots and other “straight up, real-
a partnership with streaming service Apple
think it will, as every major crisis in the past
life” content. OnlyFans claims that “many
Music and social media platform Twitter,
has given rise to some good ideas, as well as
musicians are finding success and artistic
integrating Apple's audiovisual capabilities
to people who knew how to innovate and ride
freedom” on its platform, while the com-
with Twitter's social-engagement aspect, a
the wave in order to thrive and succeed. One
pany’s entire publicly-stated USP concerns
first for the former.
of the new trends comes from the manner in
the monetisation of superfans. “The music
which artists are reconsidering the way they
industry is waking up to the value of super-
increasingly saturated and commercialised,
launch an album, create a show, and even
fans – a core group of dedicated fans who are
content creators thirst to connect with their
how they can monetise their products. For
willing to give more for a closer relationship
fans on a more personal level. That’s where
example, Neil Young found success with his
with their favourite artist,” OnlyFans writes
live streaming sites like Twitch and Mixer
project Archive – a direct subscription service
on its website.
come into play. Twitch is home to musicians
At the same time, as YouTube becomes
and artists of all sizes, allowing them to
offering digitised content from the past, plus
connect with fans who are engaged and sup-
as he earns an estimated USD 600,000 per
LIVESTREAMING PLATFORMS AND ONLINE CONCERTS
year directly from his fanbase.
At the same time, artists need other ways of
super fans and stick by the artists in the
According to Rolling Stone magazine, sing-
getting paid in order to survive in these harsh
following years as well. There is also a clear
er Cardi B announced on Instagram that she’d
times. Some of these alternative ways may be
trend of increased online streaming, on all
launched a USD 4.99-per-month subscrip-
online platforms where they can upload their
available platforms. And the pandemic only
live streams and hi-res audio of his catalog,
portive of their work. Viewers often become
www.business-review.eu Business Review | December 2020
34 MUSIC
boosted this further, as people were forced to
try, and not only will indies become more
business standpoint, shortening your tracks
stay at home and unable to attend concerts.
desirable than majors, but major labels will
might be the smartest compromise you can
According to toptal.com, Spotify’s Q2 2020
begin taking on some of the tactics of indie
make. Unless you’re TOOL, who had the third
Monthly Active Users (MAU) and paid stream-
labels. For instance, there will be more power
most-searched album of 2019, fans are not
ing subscribers increased by 29 percent and
shifting to the artist, more progressive splits,
sticking around for a long joyride of a song,”
27 percent year-on-year, respectively. As a
etc. According to a new report released by
DIY Musician added.
result, Spotify’s Q2 2020 premium revenue
Deloitte Access Economics Independent,
increased by 17 percent year-on-year. A situ-
record labels in Australia grew in revenue by
ation which will benefit small, independent
18 percent over the past four financial years.
VIRTUAL REALITY MAKING ITS PRESENCE FELT
artists, but even more so the major labels.
The report from the Australian independent
Technology is influencing us more than ever
As the revenues of streaming services grow,
music market was commissioned by the
and changing the way we consume and relate
so should the majors’ income. Furthermore,
Australian Independent Records Association
to everything around us, including music.
streaming and digital download margins are
and researchers collected survey data from
As virtual reality has made its way into our
roughly 50-60 percent, compared to physical
34 labels and distributors. As NME states,
everyday lives and in how we like to enjoy
margins of 40-50 percent, which are lower
last financial year, it is estimated that the
entertainment, it shouldn’t surprise anyone if
due to manufacturing and distribution costs.
independent recording sector made USD 183
it ends up gaining major traction in the music
million in revenue, an 18 percent increase
industry. Facebook's 360 photos can be seen
from Deloitte’s previous estimate of USD 155
as a step in that direction, while major artists
platforms to reach more people and to raise
million in 2014-2015. According to Deloitte,
like Gorillaz, Daft Punk, One Republic, Muse,
awareness and funds for some special causes
“the typical independent record label in
Avicii, The Weeknd, Bjorg, Foals, and more
they are supporting. As Music Promo Today
Australia represented 24 artists and sold over
have already done VR and 360 music videos.
pointed out, on August 7, 2020, the Weeknd
2.5 million albums in 2018-19.” Seventy-three
Moreover, Wave already enables artists
raised $350,000 for the Equal Justice Initia-
percent of these album sales were digital,
to hold live virtual concerts for thousands of
tive by selling new and limited Weekend x
compared to 2014-15 where physical sales
fans who appear as avatars on screen and can
TikTok merchandise through a live concert. 2
held the majority at 68 percent.
directly message the artist (who can respond
“I predict individual concert livestreams to blossom into a popular method this year for artists showcasing their music to a larger audience who otherwise wouldn’t be able to attend. According to Vimeo, 67 percent of viewers are more likely to buy a ticket to a concert after watching a live video of that event or a similar one, further highlighting the valuable opportunities this practice could present in 2020 and beyond,” said Austen Browne for musicmeetfans.com. At the same time, musicians can use the
million people tuned into the show streamed
in real time). “Over 400,000 attended Lind-
live on TikTok. In April, Travis Scott hosted
SHORTER AND SHORTER
sey Stirling’s virtual performance last year.
a psychedelic live concert on Fortnite that
Not only are people reading less and paying
Social music experience platform Redpill VR
drew 12.3 million recurring players to tune in
less attention to longer messages, but it has
takes things even further by leveraging the
live to watch the show.
been proven that they also prefer shorter
power of virtual reality (VR) to enable you to
songs. According to DIY Musician, in 2019,
dance with your friends right next to Diplo
THE RISE OF INDIE LABELS
the average track length of the Top 40 was
– and they may all be thousands of miles
As major record labels are not investing as
three minutes and seven seconds, 30 seconds
away,” Forbes wrote. VR, AR, and hologram
much as they used to in their artists, musi-
shorter than the year before. “This is largely
shows, such as the one for Roy Orbison,
cians are finding alternative ways of launch-
a byproduct of streaming and discovery
could reach much wider audiences with 5G
ing and promoting their music. The social
through playlists. Consequently, traditional
while allowing for further innovations in the
media boom is helping a lot, but alongside
pop song structures have been thrown out
delivery of data-rich content in the context of
that, experts are saying that major labels will
the window to reduce the chances of being
live concerts and other high-tech experiences
continue to lose their hold on the indus-
skipped in a deck of 52 other artists. From a
to our personal devices.
www.business-review.eu Business Review | December 2020
SOCIAL ENTREPRENEURSHIP 35
High hopes: Local social entrepreneurship offering real-time solutions We’re living in a time when world-changing ideas are moving as quickly as possible, with some of them coming from organisations which are able to disrupt the status quo and drive sustainable, large-scale change. Every idea starts with someone trying to solve a problem, and new social entrepreneurs and new ideas on how to impact the world using our consumer power are gaining more visibility. Romania is following this trend too, with organisations like Ashoka Romania and Social Innovation Solutions taking the lead and helping local ideas turn into social businesses. By Oana Vasiliu civic world, social innovation can also happen at a public level – from changing environmental regulations to introducing a new method of teaching in schools – possibly (and ideally) in collaboration with the business community.”
HIGH HOPES FOR ROMANIA Programmes that can help you understand how you can become a social entrepreneur or change-maker are increasingly popular. When Ashoka opened their office in Romania in 2017, they mapped 962 change-makers and their supporters using a Network Map. “But since then, we’ve organised several long-term programmes to identify and support social entrepreneurs and I think we are now serving a community of over 3,000 social entrepreneurs in Romania through our programmes,” How much do you know about local social entrepreneurship?
Corina Murafa adds. Talking about the events hosted by Social Innovation Solutions, Ciprian Stanescu said:
SOCIAL INNOVATION VS SOCIAL ENTREPRENEURSHIP
characterise the countless people out there
“From our high school participants in the
who were relentlessly working to solve social
Social Impact Award to our Future Makers,
To better understand this relatively new
issues they were concerned about – from
there is a new generation across the country
entrepreneurial phenomenon taking place
children’s rights to environmental degrada-
that has the desire and determination to
in Romania, we asked Ashoka’s co-director
tion – using typical entrepreneurial skills to
find solutions to the challenges of both the
Corina Murafa about the difference between
attain social impact.”
present and the future. What is a change-
Ciprian Stanescu from Social Innovation
maker, in the end? It’s someone who makes
entrepreneurship”: “To make sure that social
Solutions argues that “social innovation is,
a change happen – but how to quantify and
change is systemic and permanent, we must
by itself, a type of innovation. It focuses on
measure this action and what ‘change’ really
make sure that all people can be contribu-
an idea that can create change; ideally, we’re
represents can be rather subjective. Raluca &
tors, that they can all be change-makers
talking about systemic and long-term change.
Adrian Stratulat won the Social Impact Award
– whether they describe themselves social
I would argue that social innovators are
with iziBAC, a solution tackling the problem
entrepreneurs, social innovators or intrapre-
sometimes like inventors and scientists, while
of baccalaureate results in Romania. They
neurs. Social entrepreneurship is a concept
social entrepreneurs are more about making
have a functional business model, it is inno-
that Ashoka coined at a global level several
the idea happen. (…) While social entrepre-
vative, and it actually works in practice. Are
decades ago, when there was no word to
neurship is mostly related to the business and
they change-makers? I would say yes, others
the terms “social innovation” and “social
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36 SOCIAL Business ReviewENTREPRENEURSHIP | May 2016
COVER STORY 14
might say no. Change-making is also related to the ways in which we look at solutions – for some, what Teach for Romania does is amazing, while others might say it is no more than a drop in a very large ocean.” Moreover, a Romanian team was recently named the winner of the 2020 European Social Innovation Competition. The WhyWeCraft project is a legal support mechanism for craftspeople and designers, designed to be a worldwide movement supporting the recognition of cultural IP rights for craftspeople who are custodians and promoters of traditional garments, traditional designs, and traditional manufacturing techniques. The team was helped out by the Ashoka organisation to pitch their social innovation idea. In terms of challenges, everyone agrees that changing behaviours and mentalities is still an important goal in Romania, while financing instruments, legal and regulatory obstacles, the lack of cross-sector collaboration, and most importantly the lack of open-
Globally recognised social innovators in Romania* Paul Radu, a Romanian who founded the largest global network of investigative journalists. Their investigations led to EUR 7.2 billion in fines levied and money sized, 168 civic actions, 403 government actions, 53 resignations and sackings, and 495 official arrests, indictments, sentences.
“WE ARE ALL ABLE – AND I WOULD ARGUE THAT WE ALL HAVE THE DUTY – TO CONTRIBUTE. TO MOVE THE NEEDLE, EVEN BY A LITTLE, TO CREATE BETTER SOCIETIES AND COMMUNITIES. SO FROM THIS POINT OF VIEW, WE ARE ALL CHANGE-MAKERS. WHETHER WE VOLUNTEER, PETITION OUR REPRESENTATIVES, SET UP AN NGO, RUN FOR OFFICE OR HAVE THE GREATER GOOD IN MIND WHEN WE DO OUR JOBS IN CORPORATIONS – WE ARE ALL CHANGE-MAKERS,” CORINA MURAFA, CO-DIRECTOR OF ASHOKA ROMANIA ness from the public sector to embrace social
authoritative, hierarchical approach to leader-
innovation and make it systemic by anchoring
ship and instead pave the way for everyone to
it into policy are also among the biggest local
participate as change-makers. They’ll create
Dorica Dan, the founder of Europe’s only excellence centre for rare diseases ran by patients – a landmark institution located in Zalau, a small community in northwest Romania that has the ability to positively influence policy-making on rare diseases at the European level.
problems.
new roles for people, purposes for institu-
*both are Ashoka fellows
tions, and relationships between stakehold-
FUTURE LOOKS BRIGHT
ers.”
After such an intense year for people across
Ciprian Stanescu adds that “A future
the world, every discussion about the future
entrepreneur or a future-maker is a person
feels like it’s too much to handle. Yet every-
who understands the challenges of the future
one is talking about the entrepreneur of the
and builds solutions for tomorrow, today. At
future and how they will look like. Asked
the same time, they combine the experiences
by BR, Ana Murray, co-director of Ashoka
of the past with the needs of the present and
Romania, answered “I think they will be shift-
act for a better future. We live in an economic,
ing mentalities; they will be more empathic,
social, and health context in which we, as
and well-being is going to be a core value in
entrepreneurs, need even more creativity and
change-making. They will break from the
courage than we did before.”
www.business-review.eu Business Review | December 2020
CHRISTMAS 37
It’s the most wonderful time of the year: pandemic Christmas shopping With some cities in lockdown amid a continuing pandemic crisis, with the number of cases still increasing every day, the Christmas holiday will be a bit of a challenge for us all. As of now, small gatherings are still allowed, so maybe you should plan this vacation with only your close family. But Santa will have no problem finding everyone, so we have compiled a list of holiday shopping ideas for our readers. By Oana Vasiliu
his year, the COVID-19 pandemic
pendent businesses is on average 48 percent
has disrupted many lives and many
of their total revenue. Chain retailers, by
businesses, and local entrepreneurs
contrast, only recirculate 13.6 percent of their
including farmers or goodies designers may
revenues within the communities in which
have been among the hardest hit. On top of
they do business. When you factor in buying
these challenges, when the pandemic closed
local products at a local independent store,
down schools and restaurants and even dis-
that share is even higher.
Photo: Wagner
T
Check out BR's Christmas Shopping List on www.business-review.eu
mantled farmers’ markets, local farmers and small producers of foodstuffs suddenly had
FOOD AND OTHER GOODS
fewer places to sell their products, and the
Restaurants are among the most affected
internet wasn’t really a solution for them.
industries, having had their revenues signifi-
Studies show that buying food which is lo-
Wagner's porcelain piece of art
cantly diminished by the safety measures in
Moreover, ialoc is offering more than 600
cally grown or made helps keep local farmers
place, which only allow outdoor seating. One
ways to support local businesses by buying a
and vendors in business. Buying locally also
helpful initiative is the gift card offered by
virtual card that can be spent in-store. Some
keeps money circulating in the community,
ialoc, which can be given out as a Christmas
restaurants have already announced different
while the local economic return from inde-
present to those who enjoy gourmet eating.
packages of Christmas goodies which can be
www.business-review.eu Business Review | December 2020
www.business-review.eu
38 CHRISTMAS Business Review | May 2016
Photo: Le manoir
Photo: Cup and candles
COVER STORY 14
Buy a goodie bag from Le Manoir
Buy homemade candles from Cup and Candles
ordered in advance – more information can be
furniture. Take a look at designs by Kenosis,
found on their Facebook pages.
Bucin Mob, Lemnivor or Urban Woods and
Le Manoir is one of the most exquisite
check our all-time favourites from Dizainar
places to buy international Christmas good-
and Atelier Anda Roman. Plus, you could seek
ies, all beautifully wrapped: Comtesse du
out Romanian brands that have invested in
Barry, Michel Cluizel, Maxim’s de Paris,
premium bedding materials: I’m cotton you
Cinco Jotas, Champagne Bollinger, Cognac
and Cotton therapy.
Delamain, Armagnac Chateau de Laubade, the brands you can find there. Roditor Market and Real Foods are online platforms that gather a series of Romanian handmade products and they are going to mix & match them for Christmas.
CERAMICS
Photo: Madalina Andronic
Famille Perrin, Joseph Drouhin are some of
There is beauty in every handmade piece, so unique ceramics are a great gift idea. See what’s in store at Poemi, Ceramica de Nochrich, Victoria Finala, Wagner Arte Frumoase si Povesti or Una ca Luna. Try something different: illustrations from Madalina Andronic
BEAUTY
FASHION The fashion list was probably the most dif-
each of their stores will feature a Romanian
ficult to put together. Check out Laura Hancu,
cosmetics producers’ corner, a first for this
PNK Casual, Ioana Ciolacu, IE Clothing, RAD
type of beauty chain. If you want to offer
Playground, Bianca Popp or Pineberry if you
cosmetics as a gift, we recommend that you
need clothes or try Fandacsia, Maria Palaria,
take a look at brands like Techir, Trio Verde,
Musette, Coca Zaboleanu, Laura Olaru, Iutta,
Sabio Cosmetics, NN Cosmetics, Fain Natural or Nuca Organic for inspiration.
HOME & DECO
Photo: Douglas
Douglas Parfumeries just announced that
Lemnia, Gabriel Geller or Daniel Savu for accessories for both men and women.
Check out Douglas Parfumeries' new made in RO cosmetics
A lot of homemade candle businesses have
KIDS Although the Disney universe can always give you a good idea for a present, there are
series of Romanian illustrators who are paint-
a number of Romanian shops providing a
ing incredible stories. Check Cup&Candles,
variety of other types of toys and goodies for
Lux Obscura Candles, MO - Candles and
kids. Look around for Moko Fun, Cosanzeana,
more, and The Room Candles for beautiful
Bubuland or Atelierul Leea.
candle ideas, and Madalina Andronic, Illustrescu, Diana Dragne, Ana Banica or Paula Rusu for graphics. For those looking for something more substantial, you should try some unique pieces of
Photo: Ialoc
appeared on the market this year, as well as a
Every day until Christmas, Business Review will feature Christmas gift ideas to cheer up the Surprise someone with a voucher for eating out
special people in our lives. Find recommendations online at business-review.eu.