2014-03-18 14:02:54 - New Retailing market report from Business Monitor International: "Bulgaria Retail Report Q1 2014"
We forecast only modest growth in Bulgarian household spending to 2018. Although Bulgaria's fairly immature retail market provides plenty of room for 'catch up' growth, a lacklustre macroeconomic growth outlook and - more pertinently - serious demographic weakness impede a more positive growth forecast.
While rising household incomes will help grow the market for non-essential retail items over our current forecast period and beyond, low existing spending levels, uninspiring growth prospects by emerging market standards and a weak investment climate all contribute to Bulgaria's last place ranking in BMI's Retail Risk/ Reward Ratings for the emerging Europe region.
A key challenge facing retail investors in Bulgaria is the country's still-strong independent retail sector. This forces the organised retail sector to be highly
price sensitive to compete and drives down overall spending growth prospects. The country's ageing population - with this demographic a key customer for more independent retail channels - suggests that we will not see the erosion of traditional retail in Bulgaria anytime soon. This, coupled with the obvious demographic challenge of a declining population, also informs our only modest growth outlook for the sector.
Full Report Details at
Key BMI Forecasts
* Total household spending in Bulgaria is forecast to increase by 11.8% to US$37bn in 2018.
* We expect household goods expenditure to witness the strongest growth over this forecast period, expanding by 22.6%, with spending on household appliances the primary driver.
* Food and beverage spending will experience the most modest growth, expanding by only 4.2%, as strong competition from the traditional retail sector limits customer numbers and keeps prices low.
* We forecast Bulgaria's population to decline by 3.9% to 6.94mn by 2018, with household numbers dropping by a very significant 6.3%. These demographic challenges will weigh very heavily on the retail sector.
* However, household incomes will grow with the number of Bulgarian households earning US$10,000 or more as a percent of the total rising from 15.6% in 2013 to 27.0% by 2018.
* With a score of just 40.4 out of 100, Bulgaria is comfortably in last place in BMI's Retail Risk/Reward Ratings for emerging Europe, with the average rating for the region being 50.4.
* In the 10 years to 2011, Bulgarian real GDP growth averaged 4.1%; over the next 10 years, we expect growth to average just 3.0%.
Report Table of Contents:
The table of contents for this report is available upon request.
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