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Retailers selling for small prices expected to gain the most in 2009

The large networks selling mainly food and field analysts say the effects of the financial turmoil on sales will only be felt next year, anticipating major changes in the shopping baskets of Romanians.

'Crisis is at an incipient stage in Romania. Once large production facilities close down, the services sector will shrink as well. In the current context, most likely to stand to gain will be retailers with small price policies, while the worst hit segment will be the retail of durables,' Deputy Chairman of the Association of Large Retail Networks of Romania (AMRCR) Alexandru Vlad told daily Ziarul financiar on Wednesday. Vlad is also the executive manager of the Selgros Cash& Carry Romania.

Executive Director of the Applied Economics Group (GEA) Liviu Voinea says the first signs of a decline in the consumer goods sales were visible in the fourth quarter of 2008, as consumer optimism dropped. He says the inflexion point was October, and since then consumer expectations and their perception of the financial crisis have changed a lot. Voinea believes the consumer goods market will witness a very visible substitution effect, with the premium segment to be the first affected.

As consumers are switching to less expensive products, retailers are expected to readjust their offerings and profit estimates. Food producers have already pointed to a drastic fall in their profits so far this year. 'From our point of view, 2008 is a very hard year: profits will be derisory, loan coasts are skyrocketing and, unfortunately, the investments so far performed by Romanian producers have been financed by bank loans,' says Chairman of the Romalimenta Federation of Romanian Food Employers' Associations Sorin Minea.

He adds that as pressure on consumer budgets is mounting, the market cannot afford price rises, explaining that this is one of the factors contributing to diminishing returns on fast moving consumer goods (FMCG) players in 2008.

One of the markets that could weather well the financial crisis is the wine market, argues Chairman of the National Vie and Wine Employers' Associations Ovidiu Gheorghe, adding that the demands for wine is on the increase, anticipating a rise of 11 percent in total 2008 sales, year on year, to 500 million euros.

PricewaterhouseCoopers managing partner Mihaela Motroi expects diminished purchasing power of Romanian consumers as a result of new crediting restrictions, and also an increase in prices for raw materials and imports as a result of expected fluctuations in the foreign exchange rates.

'As far as the segment of durables is concerned, I believe it will not see a drop in sale volumes, as rather in sales value, particularly as a result of credit restrictions. Consumers will orient themselves more toward promotion sales or those on a lower price level,' says Metro Chief Communication Officer Delia Cucu. She adds that the real problem in Romania is the magnitude of crediting over the past years in the current context of the global financial turmoil, and not the fact that economic growth has been driven by increased consumption.

 

Sursa: http://www.rompress.ro

Tags: consumer sales expected retailers

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