However, even if the local market ranks among the top in a European retail space growth ranking, from 50 to 100 square meters per 1,000 inhabitants over the last four years, it remained below the European average.
In 2016, the local market grew 12%, in the context of an increase in the minimum gross wage, which currently stands at RON1,450, the cut in the standard value added tax rate from 24% to 19% and a 0.16% higher employment rate versus 2015.
The increase in consumption boosted the dynamic of the retail market, being delivered 230,000 sqm of new retail space, up 40% against 2015. The trade sector also registered a record number of 240 new stores and the following players were the most active: Profi with 134 stores, Mega Image with 60 units, Lidl with 11 units and Kaufland with six stores.
The large cities boast an increasing appetite for large spaces, while street spaces still rent at high prices. Retailers Profi, Penny, Lidl keep developing their chains rather in small towns with lower rental rates.
Over 43,000 sqm of retail space were announced in Romania for 2017 and the main challenge is to boost the market in small and medium-sized towns. Statistics show the retail through large store chains accounts for 62.4% (February 2017) versus 90% in developed countries. In this context, the retail is prone to grow and concentrate in smaller towns with fewer than 100,000 inhabitants where the retail is currently based on street stores.
In this context, eMag is looking for a new logistics center, Carrefour and Kaufland will also expand their logistics centers serving the stores in Bucharest, and Profi opened in 2017 the first logistics center in Cluj.
Euler Hermes Romania expects the retail sector to keep its upward trend in 2018 due to positive macroeconomic indicators and to the latest fiscal changes. Nevertheless, the widening current account deficit and the reappearance of inflation pressures could diminish the growth potential of the trade sector.
Allianz Group will acquire 11.34% of the shares of Euler Hermes, raising its stake to 74.34%. Euler Hermes Romania currently holds 12% of its exposure concentrated in the retail sector.