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Bulgaria Retail Report Q1 2011
Business Monitor International, Nov 2010, Pages: 60
Bulgaria Retail Report provides industry professionals and strategists, corporate analysts, retail associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Bulgaria's retail industry.
The Q111 BMI Bulgaria Retail report forecasts that the country’s total retail sales will grow from an estimated BGN14.45bn (US$10.10bn) in 2011 to BGN16.76bn (US$11.72bn) by 2014. Key factors behind retail market expansion include rising disposable incomes and Bulgarians seeking the choice and low prices offered by foreign and domestic chains. EU membership gained at the start of 2007 and a substantial amount of foreign direct investment (FDI) have allowed retailers to make significant inroads into the market, contributing to forecast annual retail sales growth of 4.8%, in local currency terms, between 2011 and 2014.
Bulgaria’s nominal GDP in 2011 is forecast to be US$41.85bn, with growth of 2.6% expected for the year. Average annual GDP growth of 3.4% is forecast by BMI between 2011 and 2014. Although the population is predicted to decrease slightly, from 7.5mnin 2011 to 7.4mn by 2014, consumer spending per capita is expected to increase from US$4,062 to US$4,852 over the same period. Consumer spending per capita of the middle 60% of the Bulgarian population is forecast by the World Bank to rise to US$5,941 by 2012.
The growth in the overall retail market will be driven largely by a growing urban population with higher disposable incomes and an interest in aspirational purchasing. According to the UN Population Division, the urban population in Bulgaria reached 72.2% in 2010 and will rise to more than 78.0% by 2030. Retail sectors that are likely to expand over the forecast period include consumer electronics, due to the growth potential offered by relatively low household penetration rates for digital products. BMI estimates that consumer electronics sales will rise by more than 17%, from a forecast US$1.23bn in 2011 to US$1.44bn by 2014.
In the automotives sector, sales of new imported completely built units (CBUs) should grow rapidly over the coming years, with BMI forecasting an increase in vehicle sales from US$1.91bn in 2011 to US$2.54bn by 2014, a rise of nearly 33%.
Over-the-counter pharmaceutical sales are predicted to increase by more than 22%, from US$0.21bn in 2011 to US$0.26bn, by the end of the forecast period.
BMI food consumption data suggest that the food retail segment will have a market share of 42.5% in 2011. The sub-sector is forecast to be worth US$4.29bn in 2011 and sales are expected to grow by 2.8% to US$4.41bn by 2014. Given that expansion of non-food retail is expected significantly to exceed that of the food segment, BMI’s forecast is for a reduction in the retail market share of food to 37.6% by 2014. Mass grocery retail (MGR) sales are forecast to reach US$1.20bn in 2011 and to grow much faster than overall food sales throughout the forecast period, increasing by more than 14% to US$1.37bn by 2014. Although Bulgaria’s MGR sector is immature compared with most other countries in Central and Eastern Europe (CEE), rising disposable incomes in the longer term will provide a solid base for premiumisation. BMI forecasts that MGR’s share of the overall food market will rise from 28.0% in 2011 to 31.1% by the end of the forecast period.
Retail sales for the BMI universe of Central and Eastern European (CEE) countries in 2011 are forecast to amount to US$1,214bn, based on the varying national definitions. Total consumer spending for the region based on BMI’s macroeconomic database is expected to be US$2,359bn. Russia, Turkey and Poland are predicted to account for an estimated 83% of regional retail sales in 2011, a share that is likely to be sustained through to 2014. Bulgaria’s predicted market share of 0.7% in 2011 is expected to remain stable during the forecast period.
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