BMI View: Bulgaria's retail market remains relatively fragmented, held back by a small and ageing population and low incomes. However, high levels of urbanisation have provided opportunities for international retailers and as disposable incomes grow over the medium term, Bulgarians ' appetite for non-essential goods will increase, providing opportunities for retailers across the spectrum.
|Headline Household Spending|
|e/f = BMI estimate/forecast. Source: Eurostat, BMI|
Key Views And Developments
Total household retail spending in Bulgaria will fall slightly in 2016, by 0.01%, but over our five-year forecast period to 2020 we see good growth, with spending rising from USD27.7bn in 2016 to USD36.5bn by 2020.
As households become richer, the share of spending on non-essential products and services will rise. Over our forecast period from 2016 to 2020 we see particular growth in the furnishing and home segment, from 7.69% to 8.23% of total household retail spending, while recreation and culture will grow from 8.15% to 8.59% and personal, insurance and other will grow from 5.77% to 6.08%. The share of spending on key essential segments is set to fall. Spending on food and non-alcoholic drinks as a share of total household retail spending will fall from 18.29% to 17.46%, while spending on housing and utilities will fall from 15.80% to 14.98%.
Bulgaria is the EU's poorest member state in per capita purchasing power terms, limiting opportunities for retailers. However, we expect household incomes to rise strongly over our forecast period, helping the country to converge towards the EU average. By 2020, the net income per household is forecast to be USD8,862, up from USD6,711 in 2016. The share of households with a net income of USD10,000 or more a year will rise from 13.0% in 2016 to 28.8% by 2020.
Retail expansion is hampered by the small size of Bulgaria's population, which is set to fall from 7.1mn in 2016 to 6.9mn in 2020. The decline will be particularly evident in the young adult (aged 20-39) demographic, which we forecast will fall from 1.8mn to 1.6mn.This demographic is a key one for retailers, as it encompasses those adults that typically have the highest disposable income and the most appetite for modern retail.
However, the number of babies aged up to 12 months is rising. We forecast annual growth of 2.7% in this demographic over our forecast period, while the number of young people aged up to 14 is also set to rise, albeit marginally.
The Bulgaria Retail Report has been researched at source and features BMI Research's independent assessment and forecasts for the retail sector. The report examines key drivers of retail sales growth and future prospects, including consumer spending and private sector investment.
BMI's Bulgaria Retail Report also examines the level of development and potential for growth of the retail sector, the commercial initiatives of major players, changing consumer demographics that influence demand and the regulatory environment. Key sub-sectors include mass grocery retail, autos, over-the-counter pharmaceuticals, computers and consumer electronics.
- Benchmark BMI's independent retail industry forecasts for Bulgaria to test other views - a key input for successful budgeting and strategic business planning in the Bulgarian retail market.
- Target business opportunities and risks in Bulgaria through our reviews of latest industry trends, regulatory changes and major deals, projects and investments.
BMI Industry View
Summary of BMI’s key forecasts and industry analysis, plus a discussion of major industry developments and a snapshot of key short-term demand-driving macroeconomic movements.
Industry SWOT Analysis
Analysis of the major Strengths, Weaknesses, Opportunities and Threats within the retail sector and within the broader political, economic and business environment.
BMI Industry Forecasts
There are four separate 5-year forecast modules in the retail reports. These are:
- Headline Retail Forecast: Total household spending (local currency and USDbn, % growth, % GDP, per capita, per household), spending by retail sector (food & non-alcoholic drink, alcoholic drink, clothing & footwear, housing & utilities, furnishings & home, health, transport, recreation, education, restaurants & hotels, personal care & insurance (local currency and USDbn, % growth, % GDP, % of total spending)
- Retail Sector Forecast: Breakdown of Food, Non Alcoholic Drink, Alcohol, Tobacco, Clothing, Footwear, Household Goods, Furnishings, Appliances, Glass and Tablewear, Household Textiles, Consumer Electronics, Garden Toys and Pets, Home and Garden tools, Personal Care, Personal Effects Spending (USDbn, % Growth)
- Household Income and Numbers Forecast: Number of Households (‘000, % growth); gross income per household and per capita; net income per household and per capita; tax and social contributions per capita; breakdown of household incomes – USD5000+, USD10,000+ USD50000+ (‘000, % of total); labour force, employment and unemployment (‘000, % change)
- Demographic Forecast: Total population; Babies 0-12 months; Young Children 0-4yrs; Children 5-9yrs; Young Teens and Older Children 10-14yrs; Older Teens 15-19yrs; Adults 21yrs +; Young Adults 21-29yrs; Middle Aged 40-64yrs (‘000, % growth, male, female); Urban Population (‘000, % population); Rural Population (‘000, % population).
BMI’s Retail Risk Reward Index
BMI’s Risk Reward Indices provide investors looking for opportunities in the region with a clear country comparative assessment of a market’s risks and potential rewards. Each of the country markets are scored using a sophisticated model that includes more than 40 industry, economic and demographic data points to provide indices of highest to lowest appeal to investors, with each position explained.
Provides a detailed country-specific analysis of the key trends and developments in the retail sector as a whole, as well as an assessment of the main drivers affecting the major retail segments including mass grocery retail, fashion, pharmacies, consumer electronics, home improvement and personal care. The market overview also considers the most effective store formats in a given country and the impact of these factors on the main international and domestic players’ development strategies.
This provides a brief overview of the key players in each subsection of the retail sector including MGR, Fashion, Home Improvement, Consumer Electronics, Pharmacies, and Department Store chains.
The Retail Reports draw on an extensive network of primary sources, such as multilateral organisations, government departments, industry associations, chambers and company reports.