BMI View: We believe that Romania will be one of the fastest-growing economies across the EU during the next year, supported by strong private consumption, a tightening labour market and rapidly rising wages. This will continue to attract new investors and prompt expansion of the existing players in the country's rapidly developing retail market thus intensifying competition across the board. That said, we note that Romania, especially its rural areas, remain some o f the poorest regions in the EU, and growth will come on a relatively low base.
|Headline Household Spending|
|e/f = BMI estimate/forecast. Source: National Sources, BMI|
Key Views And Developments
We forecast total retail sales growth (in USD terms) to average 7.9% over the next five years, with the pace accelerating towards the middle of the review period. Health and personal, insurance & other categories are expected to experience the strongest growth in terms of consumer spending.
Essentials share in the total spending pie is forecast to decline from 70.6% in 2015 to 70.1% in 2020. Food & drink along with housing & utilities will remain the two largest spending categories over the next five years, together making up more than 50% of the total spending.
Benefitting from VAT cuts in mid-2015 and early 2016, total retail sales in Romania registered 15.8% growth year-on-year (y-o-y) in May 2016. During the first five months of 2016, the sales of food, beverages and tobacco went up by 26.5% as compared to the same period last year.
As a part of its expansion strategy across Central and Eastern Europe, US-based fashion retailer Forever 21 plans to open its first store in Romania in September 2016. Run by the regional franchisee Teren Management Europe, the first 16,000 square metre outlet will be located in the new ParkLane shopping centre in central Bucharest.
Romania's second-largest drug stores/pharmacies brand Sensiblu is acquiring 73 Reteta pharmacies from Polisano Group. The transaction is subject for approval by Romania's competition authorities.
The Romania 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 Romania 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 Romania to test other views - a key input for successful budgeting and strategic business planning in the Romanian retail market.
- Target business opportunities and risks in Romania 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.