New Retailing research report from Business Monitor International is now available from Fast Market Research
Boston, MA -- (SBWIRE) -- 03/01/2013 -- The Czech Republic Retail Report examines the long-term potential of the local consumer market, but flags short-term concern about the impact on the country's economic outlook of the government's sustained fiscal austerity drive.
The report examines how best to maximise returns in the Czech retail market while minimising investment risk, and also explores the impact of the ongoing eurozone sovereign debt crisis on the Czech consumer and on the ability of producers and exporters to realise returns in the short term. The report also analyses the growth and risk management strategies being employed by the leading players in the Czech retail sector, as they seek to maximise the growth opportunities offered by the local market.
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Czech per capita consumer spending is forecast to increase by a modest 10% between 2013 and 2016, compared with a regional growth average of 33%. The country comes second (out of 10) in BMI's Central and Eastern Europe (CEE) Retail Risk/Reward Ratings, and notably outperforms for Risk. Among all retail categories, mass grocery retail (MGR) will be the outperformer through to 2016 in growth terms, with BMI forecasting sales to expand by more than 20%, from US$15.34bn in 2013 to US$18.48bn by 2016. Through to 2016, we expect the proportional contribution of supermarkets and hypermarkets to remain dominant, with premiumisation momentum expected to pick up in line with the pre-crisis trend.
In the competitive arena, BMI sees upside potential in the fact that the Czech Republic, which joined the EU in May 2004, has a reasonably open economy compared with some neighbouring CEE markets, and some companies from outside the region continue to transfer part of their business to the Czech Republic to reduce costs and take advantage of the domestic market.
Over the last quarter, BMI has revised the following forecasts/views:
- We estimate the Czech economy to have remained in recession in 2012 to the tune of 0.7% before recovering to 0.8% real GDP growth in 2013. The ongoing eurozone sovereign debt crisis will continue to depress domestic activity in the Czech Republic via weaker exports and investment. Meanwhile, the government's sustained fiscal austerity drive will feed through to lower household and government spending.
- BMI estimates private consumption to have fallen by 3.5% in 2012, posing a 1.6-percentagepoint (pp) drag on real GDP. In 2013, while we still forecast a contraction in consumer spending as uncertainty surrounding the future of the eurozone remains high, our forecast for a 0.5% drop in real private consumption will drag on real GDP growth by only 0.2pp.
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