Eastern Europe still offers retailers immense potential for expansion, despite poor supply chain infrastructure and rapid retail consolidation, according to a new report from IGD - “Unlocking Eastern Europe's Potential” – which polled the views of 70 leading industry executives.
“Retailers and suppliers remain very optimistic - 88% of respondents expect growth to exceed 5% in 2007, with 17% of respondents projecting total growth in excess of 25%. But there is a concern that rapid consolidation of retail markets will put further pressure on price, while the relatively basic supply chain in many countries will raise costs,” said report author Cecile Riverain, senior business analyst at IGD. “Respondents predict over 25% growth in five countries this year, and feel Russia presents huge opportunities, as the strong economy, surge in middle class consumers - up from 15% to 59% in five years, and relatively fragmented market will all contribute to double digit growth over the next few years,” she added.
The survey also found that respondents expect growth in Bosnia, Serbia, Turkey and Ukraine to exceed 25% in 2007-2008. They also predicted growth of 10% or greater in Poland, the Baltic states, Bulgaria and Romania. IGD predicted that the gap in living standards between East and West will not close until 2025 but warned that retailers and manufacturers who fail to react to increasing differences between consumers within individual countries, and across the region, will struggle. “A one-size-fits-all approach to the eastern European consumer is no longer appropriate,” said Riverain.
UK based IGD provides impartial industry overviews and analysis on all areas of food and grocery. (talkingretail.com)