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Croatia Retail Report Q1 2011
Business Monitor International, Nov 2010, Pages: 57
Business Monitor International's Croatia Retail Report provides industry professionals and strategists, corporate analysts, retail associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Croatia's retail industry.
The Q111 BMI Croatia Retail report forecasts that the country’s total retail sales will rise by more than 12% between 2011 and 2014, growing from a predicted HRK81.61bn (US$15.90bn) to HRK91.77bn (US$17.88bn). Contributing to average annual retail sales growth of 3.6% are higher disposable incomes, consumers seeking the choice and low prices offered by foreign and domestic chains, easier access to credit and forthcoming EU accession.
Croatia’s nominal GDP in 2011 is predicted to be US$61.2bn, with growth of 1.8% forecast for the year, up from -0.4% in 2010. Average annual GDP growth of 3.4% is predicted by BMI between 2011 and 2015. Although the population is forecast to remain static throughout the forecast period at 4.4mn, GDP per capita is forecast to rise, reaching US$18,001 by 2015. Our forecast for consumer spending per capita is for an increase from US$8,213 in 2011 to US$9,749 by 2014.
The strong tourism industry in Croatia should continue to boost retail sales across all sectors, especially if the developing recovery in the last months of 2010 persists. Croatia is the 18th most popular tourist destination in the world, receiving more than 11mn foreign tourists in 2008 and generating about EUR8bn (US$10bn) in revenue. The 3% year-on-year (y-o-y) decline in tourist arrivals over January-December 2009 was a result of key tourist groups from the eurozone tightening their belts rather than from any fundamental decline in Croatia’s popularity as a tourist destination. Tourist arrivals increased by 6% y-oy to 6.2mn by September 2010, but it is likely to be well into 2011 before the recovery really gathers pace.
In terms of retail sub-sectors, spending on food, beverages, alcoholic drinks and tobacco fell between 2005 and 2007 as Croatians began to spend more on aspirational items such as clothing, footwear and furniture, according to figures from the Central Bureau of Statistics (CBS).
Data from the Household Budget Survey by the CBS show that average annual personal consumption per household of food and beverages fell from 33.2% of personal consumption in 2005 to 31.6% in 2007, while consumption of alcoholic drinks and tobacco declined from 4.0% to 3.9%. Consumption of clothing and footwear, on the other hand, rose from 7.7% to 7.9% of personal consumption, while consumption of furniture increased from 5.1% to 5.4%.
Retail sub-sectors likely to achieve steady growth over BMI’s forecast period include over the counter (OTC) pharmaceuticals as the availability and demand for pharmaceutical products both increase. BMI data suggest that OTC pharmaceutical sales will amount to US$0.11bn in 2011, and we forecast an increase of more than 12% to US$0.13bn by 2014.
Consumer electronic sales are forecast to grow from US$1.03bn in 2011 to US$1.22bn by 2014, an increase of 17.5%, with the Croatian market offering continued growth potential in key digital product groups.
The retail sub-sector likely to show the most growth is automotives, with BMI predicting that sales will increase by nearly 22% during the forecast period, from US$1.39bn in 2011 to US$1.70bn by 2014. Croatia is the second largest car market in the former Yugoslavia in terms of market share and the number of cars per capita, with the Croatian Chamber of Economy (CCE) reporting that 50% of Croatian customers do their shopping mostly by car, particularly when visiting cash-and-carry outlets and hypermarkets.
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. Croatia’s predicted 201 market share of 1.3% is expected to remain static until 2014.
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