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Croatia Retail Report Q3 2011
Business Monitor International, May 2011, Pages: 55
The Q311 BMI Croatia Retail report forecasts that the country’s total retail sales will rise by 16% between 2011 and 2015, growing from a predicted HRK78.90bn (US$15.37bn) to HRK91.51bn (US$17.83bn). Contributing to average annual retail sales growth of 3.5% are higher disposable incomes, consumers seeking the choice and low prices offered by foreign and domestic chains, easier access to credit and anticipated EU accession.
Croatia’s nominal GDP in 2011 is predicted to be US$63.2bn, with growth of 1.9% forecast for the year, up from -1.2% in 2010. Average annual GDP growth of 2.2% 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 by more than 20%, reaching US$17,512 by 2015. 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 in 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. Figures for January-October 2010 show that the number of foreign tourist arrivals was up nearly 5% y-o-y, a rebound on the poor performance in 2009.
In terms of retail sub-sectors, spending on food, drink 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 17% to US$0.13bn by 2015.
The automotives sector is also predicted to grow strongly, with BMI forecasting sales to increase by more than 25% during the period, from 47,895 units in 2011 to 59,904 units by 2015. 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.
The retail sub-sector likely to show the most growth is consumer electronics, with sales forecast to grow by 24.5%, from US$1.03bn in 2011 to US$1.28bn by 2015. The Croatian consumer electronics market offers continued growth potential, particularly in key digital product groups.
Retail sales for the BMI universe of Central and Eastern European countries in 2011 are forecast to amount to US$1,280bn based on the varying national definitions. Total consumer spending for the region based on BMI’s macroeconomic database is expected to be US$2,206bn. Russia, Turkey and Poland are predicted to account for an estimated 79% of regional retail sales in 2011, a share that is likely to only slightly, to 78%, by 2015. Croatia’s predicted market share of 1.2% in 2011 is expected to fall to 1.1% by 2015.
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