2014-01-26 18:59:58 - New Retailing market report from Business Monitor International: "Hungary Retail Report Q1 2014"
We believe that the key drivers of growth in the Hungarian retail market over the next few years will be increased economic prosperity despite the financial downturn, easier access to credit and demand for premium products. Such trends will offset the negative impact of demographic factors such as an ageing and shrinking population, so the industry continues to offer substantial opportunities for foreign and domestic retailers.
The new Hungary retail report provides an extensive and comprehensive forecast of various retail indicators including household spending, and headline total spending across each retail subsector, household income and employment forecasts, demographic forecasts, and a detailed breakdown of household and per capita spending across a large number of retail areas including food & drink, healthcare
and insurance, consumer electronics, toys, pets, gardens, household goods, and a number of other subsectors.
Full Report Details at
Overall, we see long-term potential in the local consumer market, particularly for non-essential items and aspirational purchasing by a growing affluent middle class. We forecast the average net household income will be around US$11,981 over 2013, with over 50% of earning households falling into the middle class wage bracket of US$10,000+. However, by 2018, almost 70% of households fall into the US$10,000+ income bracket, which represents the key demographic for increased household spending on luxury items beyond necessities such as food, utilities and transport. We expect this number to grow, resulting in a corresponding increase in household spending on personal care and effects, consumer electronics, luxury household goods and high-end household appliances, restaurants and entertainment. Meanwhile, transport expenditure will also continue to rise as a larger number of households purchase cars and bikes and travel longer distances, including the purchase of holiday flights.
With the Hungarian general election due to be held in spring 2014, we expect incumbent Prime Minister Viktor Orban's Fidesz party to once again emerge victorious and maintain its majority in parliament. The electoral pact between the centre-left Socialists and Egyutt 2014, led by former prime minister Gordon Bajnai, may cause Fidesz concern in some constituencies, but such is the governing party's lead in opinion polls we do not believe it will result in a change in government. With Fidesz likely to retain power, we expect broad policy continuity, with punitive corporate taxes propping up the state's coffers, while households emerge largely unscathed, with austerity measures and consumer tax hikes unlikely.
The Hungarian economy will continue on a gradual path to recovery, bolstered by an improving export story. Key trading partners in Central Europe are set to increase import demand in 2014 and 2015, as is Germany, Hungary's largest single export destination. The Hungarian National Bank is set to continue its easing cycle in the early stages of 2014 before increasing demand-side pressures push up consumer price inflation in the latter part of the year, resulting in a halt to the cutting cycle.
* In April 2013, the bakery chain Lipoti Pekseg opened its largest bakery to date. The new unit brings the total number of the bakery chain's stores in Hungary to 180. The chain, which has annual sales of over HUF6bn, also plans to expand to Austria by the end of the year.
* Supply in Siofok recently increased with the opening of Sio Plaza while, in the capital, WING's Hegyvidek Centre is under construction and will increase provision by 6,000m2 upon completion. The Arkad Center in Budapest completed is extension of 20,000m2 in 2013.
* The ban on constructing commercial facilities larger than 300m2 came into force on January 1 2013, with the so-called 'plaza stop' legislation remaining in place until December 31 2014. However, exemptions have been granted to a number of schemes, including Echo Investment's 37,000m2 MUNDO Center in the Zuglo district of Budapest.
* Retail sales in Hungary declined in June 2013 after rising for two consecutive months. Sales fell 0.4% from a year ago, reversing May's 2.2% rise. Before adjustment, sales were down 0.9%. The volume of sales declined 1.9% in food, drinks and tobacco stores, and 0.5% in non-food retail stores.
Key BMI Forecasts:
* We expect total household spending to be US$69bn over 2013.
* Food & non-alcoholic drinks spending will reach almost US$12bn over 2013, while household & utilities spending will top US$14.5bn.
* Household numbers will reach over 8.3mn over 2013.
* Over 1.9mn houses will be in the US$10,000+ income bracket by the end of 2013, according to our forecasts, and we expect this figure to almost double by 2018 when nearly 2.6mn households will qualify.
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