Marius Caluian, general manager of market research firm MEMRB, says there are no reasons for a steep decline in consumer spending. "Theoretically, a steep consumer spending decline could be triggered either by a cash shortage, or by higher consumer goods prices," says Caluian. Against the current market backdrop, which is putting pressure on households, most FMCG companies expect to see the end of booming consumption for the time being.
Caluian highlights, however, that the lower growth rate of FMCG is a natural trend as the fast expansion of past years cannot continue forever. Indirectly, consumer spending may be hurt by the elimination of some jobs in the countries where a lot of Romanians now work, he also forecasts.
Domestically, pressures on consumers' budgets are generating a growing strain on prices. "As a trend, the market is increasingly focusing on prices. For most consumers, prices are the most important criterion when selecting FMCG items. (...)," Caluian explains. Under the circumstances, retailers will focus even more on sales prices, and Caluian expects discount retailers to further expand at a fast pace.
At present, modern retail is divided into four different formats, namely supermarkets, hypermarkets, discounters and cash & carry stores. On the other hand, traditional trade is losing ground to international store chains.
Caluian explains that it is only when the four formats settle in the territory that we can speak of a mature market in Romanian food retail. The Romanian consumer goods market could be put at 23-25bn euros in 2008, according to Caluian. According to a MEMRB survey for the first half of this year, Romania's consumer goods market rose by 13.6% in volume compared with the same period of 2007. Food products saw an advance of 8.2%, below the one registered by non-food products (15.6%) and drinks (18%).
Amid rising inflation during this period, the FMCG market rose at the fastest rate in the past two years, by almost 25%, according to MEMRB data. "In the past two years, the annual growth rate was superior to the one posted in the first half. Should this trend continue, we could talk about a growth rate of above 13.6% at the level in 2008. However, given current market conditions, we may see growth of below 13.6% this year," Caluian adds.
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