Boston, MA -- (ReleaseWire) -- 03/17/2014 -- Poland's retail sector is expected to experience robust, if unspectacular, growth over our forecast period to 2018. We are forecasting household expenditure to increase by 29.9% in local currency terms to 2018. While this will reflect a slowdown from the growth levels experienced over the past two decades, it does highlight the fact that there is still room for catch up growth in the retail sector.
The primary driver of growth will be an improvement in macroeconomic conditions, which will improve consumer confidence, especially coming in tandem with wage growth. This will be supported by the ongoing expansion of premium and more discount-focused retail channels, which will in the case of the former boost overall spending and, in the case of the latter, engage more consumers in the formal retail sector.
While Poland remains an attractive retail investment destination - as evidenced by its fourth-placed rating in BMI's Retail Risk/Reward Ratings - our growth forecast is unspectacular compared to other emerging market investment destinations. This is in part due to its existing maturity - the country already boasts a competitive mix of local and international retail brands - but also due to the country's less favourable demographics.
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An ageing population is eroding the size of Poland's key consumer base. While this will not have a huge impact on retail spending over our existing forecast period, it certainly will weigh on growth over the longer-term. This will be offset marginally by an increase in household numbers in Poland - as new, less traditional household structures emerge. However, the impact of this will be most significant in sectors such as furnishings and home spending and as such it will not provide a huge boast to the sector as a whole.
- Total household expenditure in Poland will increase by 29.9% to PLN1,264bn in 2018.
- The highest growth expenditure category within the retail sector will be furnishings and home spending - at 31.0% to 2018.
- The lowest growth areas will be food and non-alcoholic beverages and clothing and footwear at 24.5% and 21.9% to 2018 respectively. In both cases, the strong presence in the discount sector will impede overall value sales growth.
- Poland rates in fourth place in BMI's Retail Risk/Reward Ratings for the Central and Eastern European region. While weighed down slightly in terms of opportunity, due to the size of the market, it performs well in terms of risk, thanks largely to well developed physical infrastructure.
- We expect the number of households in Poland to increase by 6% to 2018, amid broader declines in overall population size.
- Importantly, the number of households with earnings over US$10,000 as a percent of the total will increase from 36.4% in 2013 to 55.5% in 2018.
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