Cosmetics retail market sees around 2% growth in Central Europe
In 2012, cure the Central European cosmetics retail market experienced 2% growth (based on constant exchange rates), thus resulting in the market value of almost ?8.6bn. It was a 0.3 p.p. decrease in growth rate, and a result of the decrease in net household income as well as in consumption in many CE countries. However, the market is expected to grow in 2013 at a faster rate and it will increase by 2.6%, as indicated in the latest PMR?s report ?Cosmetics retail market in Central Europe 2013. Market analysis and development forecasts for 2013-2015?.
Economic performance in CE remained unfavourable in 2012, as the GDP grew slower in all the countries compared to 2011, and countries such as Hungary and the Czech Republic faced recession. The difficult and uncertain situation on the CE labour markets, as well as fiscal austerity measures, constrained the income of households as well as their propensity to consume. However, the cosmetics market did not experience any dramatic changes. Although consumers in these countries became even more price sensitive than in the previous years, the cosmetics market in general could be considered stable. Even during the time of recession, consumers continued to spend money on cosmetics.
Overall, the good 2% cosmetics market growth result in 2012 was mainly due to the Polish market, which grew by more than 3% year on year. It showed that the CE cosmetics market stabilised over the last three years, with an average yearly increase of almost 2%.
The Czech Republic was the only country that reported a year-on-year decrease in cosmetics sales (0.8%). Moreover, the result in Hungary ? just less than 1% ? shows the stagnation on the market. The four other countries reported rates of sales growth ranging from 1.3% in the case of Bulgaria to 3.1% for Poland. Only Poland and Slovakia had better local cosmetics markets growth rates in 2012 than the year before.
Poland is the largest cosmetics market in the region with more than a half of the market share of total CE sales. The second-ranked country is the Czech Republic and Bulgaria is the smallest market.
According to PMR forecasts, the CE cosmetics market is expected to grow in 2013 at a rate of 2.6%. There are two main growth factors. First of all, this is a more stable situation in various economies as well as a better situation in the second half of the year in comparison to 2012. Secondly, consumers tend to save and pay off their loans, which gives them a sense of security to increase their household expenditures on purchases that were postponed in previous years. As cosmetics are one of the least expensive products in comparison to clothing, footwear or consumer electronics, these products will thus be those most commonly bought by customers.
Slovakia is the only country where the growth rates will be lower in 2013 compared to the previous year. However, the growth rate will still be close to the CE average. The markets in Romania and Poland will grow the fastest. The Czech Republic and Hungary are forecast to experience a stagnation in cosmetics sales in 2013. In Hungary, macroeconomic indicators are improving, though they are still negative, as was the country?s GDP in the first quarter of the current year. In the Czech Republic both the economy and private consumption are declining, and the growth of wages did not offset the rising prices. Sales increases in both countries will only be the effect of higher inflation, and sales by volume are not expected to grow next year.
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