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Bulgaria Retail Report Q4 2011
Business Monitor International, Sep 2011, Pages: 64
Business Monitor International's 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 Q411 BMI Bulgaria Retail report forecasts that the country’s total retail sales will grow from an estimated BGN14.75bn (US$10.32bn) in 2011 to BGN18.58bn (US$12.99bn) by 2015. 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 average annual retail sales growth of 5.8% in local currency terms between 2011 and 2015.
Bulgaria’s nominal GDP in 2011 is forecast to be US$49.5bn, with growth of 2.7% expected for the year. Average annual GDP growth of 3.3% is forecast by BMI between 2011 and 2015. Although the population is predicted to decrease slightly, from 7.5mn in 2011 to 7.3mn by 2015, GDP per capita is forecast to grow by 31.3% to reach US$8,656.
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 predicts that consumer electronics sales will rise by 26%, from a forecast US$1.34bn in 2011 to US$1.68bn by 2015.
In the automotive 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 21,416 units in 2011 to 31,939 units by 2015, a rise of more than 49%.
Over the counter (OTC) pharmaceutical sales are predicted to increase by more than 24%, from US$0.24bn in 2011 to US$0.30bn by the end of the forecast period.
BMI food consumption data suggest that the food retail segment will have a market share of 44.5% in 2011. The sector is forecast to be worth US$4.59bn in 2011 but sales are expected to decline by 5.0% to US$4.36bn by 2015. 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 33.6% by 2015.
Mass grocery retail (MGR) sales are forecast to reach US$1.23bn in 2011 and to grow steadily while overall food sales fall, increasing by 9.0% to US$1.34bn by 2015. Although Bulgaria’s MGR sector is immature compared with most other countries in Central and Eastern Europe (CEE), rising disposable incomes over the longer term will provide a solid base for premiumisation. BMI forecasts that MGR’s share of the overall food market will rise from 26.8% in 2011 to 30.7% by the end of the forecast period.
Retail sales for the BMI universe of CEE countries in 2011 are forecast to amount to US$1,275bn based on the varying national definitions. Total consumer spending for the region based on BMI’s macroeconomic database is expected to be US$2,185bn. 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 slightly to 78% by 2015. Bulgaria’s predicted market share of 0.8% in 2011 is expected to remain the same throughout the forecast period.
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