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Czech Republic Retail Report Q1 2011
Business Monitor International, Nov 2010, Pages: 67
Business Monitor International's Czech Republic Retail Report provides industry professionals and strategists, corporate analysts, retail associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on the Czech Republic's retail industry.
The Q111 BMI Czech Republic Retail report forecasts that the country’s retail sales will grow by 14% between 2011 and 2014, from a predicted CZK943.15bn (US$90.48bn) in 2011 to CZK1.08trn (US$103.14bn) by 2014. Rising disposable incomes, easier access to credit, the increasing number of large retail outlets and shopping centres and increasing car ownership are key factors behind retail market expansion. EU membership since 2004 and substantial foreign direct investment (FDI) continue to drive growth, contributing to predicted annual retail sales growth of 4.2% in local currency terms over the forecast period.
The Czech Republic’s nominal GDP in 2011 is forecast to be US$208.22bn, up 2.3 year-on-year (y-o-y). Average annual GDP growth of 3.3% is predicted by BMI for 2011-2014. The population is expected to remain static at about 10.6mn throughout the forecast period, but GDP per capita is predicted to rise 31.1% by 2014, reaching US$24,849. Our forecast for consumer spending per capita is for an increase from a predicted US$9,887 in 2011 to US$12,355 by 2014.
BMI data suggest that over the counter (OTC) pharmaceutical sales will grow by nearly 25%, from US$0.79bn in 2011 to US$0.98bn by the end of the forecast period.
Consumer electronic sales are forecast to expand by more than 12%, from US$4.28bn in 2011 to US$4.81bn by 2014, with per capita consumer electronics spending forecast to grow by 19% to US$513 by 2014 as sales of digital products increase.
Vehicle sales are expected to rise by just over 11%, from US$12.54bn in 2011 to US$13.93bn by 2014. On the domestic sales front, new car registrations are estimated to have been flat in 2010 but growth is expected to recover strongly from 2011 as the economy picks up, credit becomes more widely available and the effects of government incentives begin to be felt.
Food sales in the Czech Republic, forecast by BMI to be US$11.85bn in 2011, are forecast to rise by 16.7% to US$13.83bn by 2014. Food expenditure as a percentage of GDP is expected to decrease slightly, from 5.7% in 2011 to a projected 5.3% in 2014. This reflects the broader expansion of the economy and the ability of consumers to purchase a wider range of consumer goods, although price consciousness – as in all Central and Eastern European (CEE) countries – still characterises purchasing habits.
According to UN data, in 2010 38% of the Czech population was in the 20-44 age range. This is forecast to dip to 33% by 2015 but will continue to be a key element of retail spending. The proportion of the population classified by the UN as economically active was 70.7% in 2010 and is forecast to be 67.4% by 2015.
The unemployment rate is forecast to fall to 7.6% in 2011 as the effects of the global economic slowdown decrease. BMI forecasts that it will decrease further, to 5.5%, by the end of the forecast period. Retail sales for the BMI universe of CEE countries in 2011 are forecast to amount 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. The Czech Republic’s forecast market share of 7.4% in 2011 is expected to decline to 7.1% by 2014.
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