Boston, MA -- (ReleaseWire) -- 05/29/2014 -- Slovenia's retail sector is set to post minimal growth over BMI's forecast period to 2018. Household spending is forecast to rise by 1.5% per annum, aided by falling unemployment and more households entering the middle-income wage bracket of USD10,000-plus, which will enhance spending power. However, economic instability still plagues the country, with real GDP growth set to expand by only 0.5% in 2014. Despite increased purchasing power, consumer confidence remains low, with premium brands and non-essential items such as clothing and household appliances suffering, allowing discount retailers such as Aldi and Lidl to increase their market share.
The outlook for retail sales in Slovenia during 2014-2018 remains subdued. Supporting of our view has been the sustained contraction in retail sales in 2012-2013 of 3.6% year on year (y-o-y) on average over this period. However, we have recently revised our real GDP growth forecast: whereas previously we anticipated a contraction of 0.5% in 2014, now we expect the economy to emerge out of recession and post 0.5% growth in 2014. This means that the outlook for retail sales, while remaining subdued, has also moderately improved. We see the picture improving further for many retail sub-sectors from 2016 onwards, buoyed by increased consumer confidence and tourism arrivals, with the latter factor anticipated to result in higher restaurant and hotel spending.
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Food & non-alcoholic drinks sales are to see the least y-o-y growth over the period (0.4% per annum); however, the acquisition of a 53% stake in mass grocery retailer Mercator by Agrokor could see spending rise beyond 2018, with measures put in place over the next few years to drive sales. Slovenian pharmaceuticals companies have a particularly positive outlook, with both Krka and Lek posting good growth forecasts. As a result, health spending will rise, ramping up to 4.7% y-o-y in 2017 and 2018.
- The acquisition of mass grocery retailer Mercator by the Croatian Agrokor is drawing to a close, with the Pivovarna Union giving its consent to the deal. When finalised, the deal will give Agrokor a 52% stake in the retailer. The agreed price has been lower than offered by Agrokor in 2013: EUR86 per share against EUR61.
- In August 2013, it was reported that Sportina Group had acquired the Burger King franchise for the Croatian market. It is already the owner of Burger King's franchise for the Slovenian market, where it operates just one restaurant.
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