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Romania Retail Report Q3 2011
Business Monitor International, May 2011, Pages: 66
The Q311 BMI Romania Retail report forecasts that the country’s total retail sales will rise by 18% between 2011 and 2015, growing from a predicted RON20.70bn (US$8.26bn) in 2011 to a forecast RON24.48bn (US$9.77bn) by 2015. Continuing wage growth, the consumer lending boom and rising disposable income following the introduction of a new flat rate of income tax are key factors behind retail market expansion. Romania’s privatisation process since 1990 and EU membership since in 2007 have allowed retailers to make significant inroads into the market, contributing to forecast annual retail sales growth of 4.2% in local currency terms.
Romania’s nominal GDP is predicted to be US$192.85bn in 2011. Average annual GDP growth of 3.8% is forecast by BMI between 2011 and 2015. Although the population is forecast to decrease slightly, from 21.4mn in 2011 to 21.0mn by 2015, GDP per capita is predicted to grow by 28.7% by 2015, reaching US$11,624.
Wage growth in Romania, as in many other Central and Eastern European (CEE) countries, has accelerated quickly over the past few years, more than doubling between 2002 and 2006 from US$1,932 to US$4,083. The European Commission forecast nominal and real 2008 wage growth in Romania to be the fastest among all 27 member states, and BMI estimates the 2010 average annual wage was US$5,611. Romania has the second largest population in Central Europe, after Poland, with 39.2% of the total in the 20-44 age range in 2005, according to UN Population Division data. This segment of the population, which accounts for an important element of future retail spending, is estimated to have increased to 41.1% in 2010. The proportion of the population classified by the UN as economically active was 70.1% in 2005 and an estimated 70.7% in 2010.
Non-food retail sub-sectors benefiting from changing patterns of consumption in Romania include clothing and footwear, which constituted 6.2% of total household monthly expenditure in 2006, up from 5.9% in 2001, according to the Institute of National Statistics (INS). Furniture accounted for 4% in 2006, up from 2.9% in 2001.
Retail sub-sectors that are likely to experience strong sales growth over the period include over the counter (OTC) pharmaceuticals, which BMI predicts will total US$0.73bn in 2011 and grow by nearly 37% to US$0.99bn by 2015. Market growth is likely to be strong, boosted by factors such as EU membership, privatisation of the pharmaceutical industry and the consolidation and improvement in operating conditions in the retail and wholesale sectors.
Vehicle sales are forecast to reach 128,368 units in 2011 and grow by 32%, to 169,496 units, by 2015. The recovery in the Romanian automotive market will be faster than in most developed markets due to the country’s unrealised sales potential.
Retail sales for the BMI universe of CEE 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 fall only slightly, to 78%, by 2015. Romania’s forecast market share of 0.7% in 2011 is expected to fall to 0.6% by 2015.
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