BR/12/2020

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.”

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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

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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.