German electrical goods chain Media Markt is reconsidering its position in the Greek market after 13 years in the country, as – despite signs of recovery in the local economy – parent company Ceconomy appears to have lost its patience with repeated annual losses by the chain and the failure to expand its market share. The sale of its Greek activities to a rival chain is said to be among the scenarios on the table.
If that happens, then Media Markt will join the list of electrics and electronics companies that have been wiped off the Greek map in the last 10-15 years. The most recent example was Ilektroniki Athinon, which went bankrupt in 2016, and its activities were not transferred to another chain.
The crisis has played a role in the sector’s concentration. After all, spending on technological goods, be it washing machines or cell phones, is considered flexible and is among the first to be curtailed by households when disposable incomes shrink.
Yet in many cases the main cause of the problems of the chains on that list was not the crisis itself but rather poor management: Excessive expansion, the selection of the wrong points of sale, inconsistency with suppliers, and the inability to obtain credit. The crisis merely accelerated their market exit.
Media Markt’s case is slightly different: There is no problem with financing as the parent group bankrolls its Greek subsidiary, but this does not mean it will do so endlessly, while most years in the last decade have produced losses. Media Markt has failed to match Kotsovolos (the local subsidiary of Dixons Carphone); its local officials argue that this might have happened if it had more points of sale, and suggest banks have not given Media Markt equal treatment in consumer finance programs for paying for goods in installments.
Another factor was the bursting of the property bubble, as after 2007 the demand for new household electrical equipment declined considerably. Then the start of the bailout period in 2010 had a dramatic impact on the market: From 2007 to 2015 its turnover shrank 47 percent, and after the 750 million euros of turnover in the first quarter of 2010, the other three quarters of that year saw sales at just 620 million euros per quarter. The market has yet to recover to the early 2010 level.