In Romania, standard indicators of a retail market such as GDP per capita, purchasing power parity, disposable income distribution and population growth are either difficult to find or veil the opportunities in a country with years of pent-up demand.
In GDP per capita (in Purchasing Power Parity – PPP) Romania – at $11,600 -- ranks below Bulgaria and Turkey ($12,300) but ahead of South Africa and Serbia ($10,900). Romania’s population of 21 million is only a quarter of Turkey’s, and less than half of South Africa’s.
The global recession has certainly slowed the growth of Romanian consumer spending and therefore the retail market. However, the development of the retail sector in the twenty years since the end of Communism has not yet absorbed all of the demand in Romania, and the entry and expansion of European retailers such as dm, Lidl, Carrefour, H&M, and Zara suggest that it is far from saturated.
This report seeks to describe the Romanian retail market in the following terms:
• Sales Channels
• Outlook and Consumer Spending
• Retail and Real Estate
An in-depth analysis of all sectors, Romanian consumer behavior, or brand strategies are not contained in this report. Likewise, this report does not include an analysis of macroeconomic forces on retail growth.
The total value of Romania’s retail market was estimated at approximately 24 billion euro in 2010. Despite depressed spending due to the recession, by mid 2010 these companies had achieved better results than the previous year with an 8% increase in turnover. This increase comes at the end of a decade of rapid retail growth (123% between 2000 and 2010), and in a market that is still considered to be emerging along with Bulgaria and the Baltic countries. Romania’s retail sector is expected to continue to grow, with total spending expected to reach 27.5 euro in 2013.
Romania’s retail market consists of more than 100,000 companies that represent a combined total of 23 billion euro in annual turnover. Nearly 10% of Romania’s population is located in Bucharest and its environs and naturally the greatest concentration of retail establishments, more than 31,000 is found there.
The retail food sector dominates in all regions, with the largest numbers in Bucharest (5,675 companies) and Prahova County (2,444 companies) to its north.
However, specialized, non-food retailers represent a larger share of total sales in each of the country’s regions, reflecting the higher unit prices of goods such as clothing and electronics versus food.
The vast majority of Romanian retail establishments are small or even “micro” enterprises. Micro enterprises have fewer than 9 employees and yearly net turnover of less than 2 million euro, while small enterprises have from 10-49 employees. It is the small traditional corner shop, often independent, that dominates in number, if not in business value.
There is a correlation between establishment size and what is described in Romania as traditional retail versus “modern” retail. The latter is usually represented by foreign companies, for example French, German or Belgian and channels such as “big box” hypermarkets or shopping malls.
Composition of the Retail Market, by type of companies (June 2010)
The Romanian Retail market is broadly divided into food and non-food sectors, and specialized or non-specialized within those categories. The market is split nearly evenly between food and non-food, with the largest category non-specialized food retailers. This group would include retail establishments that sell some food items among other products (e.g. general merchandise shop, even gas stations).
In terms of sales, the composition of retail trade has remained stable, with a slightly larger portion in non-food sectors. Again, this is consistent with the relatively low price points for food products versus other types of goods.
Regardless of retail segment, the capital city of Bucharest continues to dominate. In 2010 there were 8,766 companies selling clothing and footwear. Of these, 21.24% (1,862 companies) were located in Bucharest. Only 3 other counties had more than 380 stores.