ERNST & YOUNG SRL

 | 

IRINA HINCU

 | 

MIOARA BUDIANA

  |  2014-12-16

Online retail: Front-rowing the chase for growth

2013 increased turnover for retailers from most market segments with food, consumer electronics, do-it-yourself and e-commerce generating the highest sales revenues.

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ERNST & YOUNG SRL


IRINA HINCU

IRINA HINCU

SENIOR CONSULTANT, TRANSACTION ADVISORY SERVICES at ERNST & YOUNG SRL


MIOARA BUDIANA

MIOARA BUDIANA

MANAGER, TRANSACTION ADVISORY SERVICES at ERNST & YOUNG SRL

Market overview

Among 11 consumer goods categories, food and beverages sector is the outlier when it comes to sales forecasts, with an expected growth of 21.1% until 2017 (BMI – Industry View – Romania – Q4 2013). The following two segments generating high turnover in 2013 are DIY and consumer electronics. In terms of household spending, food and beverages represent 27.4%, housing and utilities 22.7%, while recreation has a 5.1% share.

 

Consumer spending rising

Unlike Western European countries, Eastern Europe has managed to avoid stagnation in the retail market during 2013. According to forecasts released by BMI, a total retail spending of EUR 85 billion is expected in Romania in 2014, which is 9% higher than in 2013.


With the population steadily achieving a middle class status, consumers increasingly expand their purchasing power which drives sales growth across the retail market. As a result, a significant increase in the quality of life is expected among the population, driving upward preferences of consumers regarding retail experiences and brands.


Considering that food and non-alcoholic drinks represented approximately 27% of consumer expenditure in 2013 (Eurostat), global retailers still regard Romania as an attractive country in terms of further investment.

 

E-commerce, new shopping centers and possibly new international entries are among the modern trends foreseen for the Romanian market in the following period.

 

Wider retail expansion

Up to now, grocery retailers already present on the market such as Auchan, Carrefour, Cora, Kaufland, Lidl, Mega Image and Profi have focused their strategy on store expansion. However, sooner or later, the market will pressure operators to move on and adapt to strategies based on improving store performances as the returns from store expansion will diminish.


The Romanian food retail can be described as a relatively fragmented landscape where established international retailers share the market with independent convenience stores. Nevertheless, for the convenience stores the trend has been towards slowly losing share lately. Established large retailers aiming to improve their share started to open smaller shops. For instance, Mega Image, the local retailer held by Delhaize, opened 66 Shop & Go proximity stores during 2013. Moreover, following Metro Cash & Carry’s 2012 launch of La Doi Pasi franchise, over 700 local grocery stores acquired the franchise, which is now present in all counties in Romania.

 

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