BMI View: Household incomes are set to rise over the next five years, especially among middle-income earners, as wages for skilled workers rise on the back of a shortfall in supply. The country is already highly urbanised, and with improving intercity and international transport links, a number of cities are ripe for increased retail investment. However, the declining and ageing population poses risks to retailers.
Opportunities for retail growth will be limited in the medium term to 2019. A lack of impetus to continue with political and economic reforms will dampen investors' enthusiasm, and economic growth is forecast to be sluggish, at 1.0% this year, not rising above 2.0% until after the end of our forecast period. Bulgaria's shaky financial system is under strain as a result of exposure to Greek banks as well as past bankruptcies, including the default by Corporate Commercial Bank in 2014. Even though Bulgaria's public debt is the second smallest in the EU (27.6% of GDP in 2014; only Estonia has a lower rate), it is struggling to balance its budget. The parliament was seeking to approve the issue of EUR8bn of bonds over the next three years. Fitch approved new Issuer Default Ratings for Bulgaria in June 2015, assessing its long-term foreign currency debt with BBB- and local currency debt with BBB with a stable outlook. Such ratings may prevent the country from borrowing cheaply in the next five years.
Despite this rather pessimistic outlook, there is increasing activity in the retail market. Mass grocery retail (MGR), which is almost entirely controlled by foreign companies, is growing rapidly and is expected to diversify. In 2014 the market's biggest players all had a successful year. Germany-based Lidl's revenues rose 26%, while Austrian retailer Billa's sales were up 5%. Both brands are planning expansion in the country, capitalising on an underdeveloped market and betting on a robust growth of household income. Cities such as Plovidv, Varna and Burgas...
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.