Romania, one of the most competitive retail markets in Central and Eastern Europe

Romania is among the most competitive countries in Central and Eastern Europe in terms of the retail market. The extensive development of commercial spaces, but also the increased appetite of Romanians for shopping, have encouraged new companies from various industries to expand or enter the local market, according to the CBRE Romania report – “Market Outlook 2023“, the global leader in the real estate consulting market.

Last year, 17 new brands entered the Romanian market, and most of them chose Bucharest as the first location in the country to open stores. Among the most important entries are Primark, Converse, and Foot Locker, which inaugurated their stores in shopping centers.

„After the extremely good year 2022 for retail, with results that exceed the level recorded in 2019, a reference year for the industry, the market continues its natural evolution and enters the plans of some international retailers, but also new developers on the market, niched on the retail park sector. In addition, new opportunities appear in the market for developers, taking into account that the available commercial spaces are mostly rented, the vacancy rate is 3% in malls and even lower in retail parks“, stated Carmen Ravon,  Head of Retail Occupier CEE, CBRE

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In 2023, retail players are advised to pay attention to three main factors, according to CBRE:

1. Incorporating ESG in refurbished or new projects– ESG is becoming a constant topic in retail boardrooms and a distinct theme in refurbishment projects. Not only because of the interest in reducing consumption and acting operationally sustainable but also to meet consumer expectations that are increasingly selective of brands acting ESG and therefore brands look for a property’s ESG credentials when deciding to expand. CBRE is already seeing refurbishment projects from its under-management portfolio adding this component into the new plans, but also witnessing new developments that not only incorporate but actually create the entire development plan around ESG and their impact on the local community.
2. Strategic expansion based on analytics – Data is key to being able to make quick decisions. Regardless of being a developer brainstorming for new locations or a retailer deciding on the next steps, an analytics-driven strategic expansion gets a front seat. This approach helps developers and investors to make the right decision in the current context by providing data, benchmarks, and comparisons. Retailers, in their struggle to find space in shopping centres, also need to base a rapid decision for stakeholders on complete and quality data and analytics.
3. Omnichannel & Technology increase turnovers – Multichannel growth is a certain thing. Online commerce is here to stay and we’re already discussing about a new dimension of it – m-commerce (mobile commerce), reinforcing the 15% envisioned growth of e-commerce penetration in Romania by 2025. Logistics automation is highly supporting this transformation and soon automation will enter bricks-and-mortar stores as a solution that eases both consumers’ journey but also retailers’ workforce shortage through self-check-outs, pick-up points, virtual shop assistants, and even AI-driven & delivered promotions. The bricks-and-mortar stores’ performances are yet proof that customers are still deep into shopping experiences therefore the integration of these channels – the omnichannel is a bet to be kept.

„Two trends already developing are also important to consider: firstly, the development of smaller towns and cities, which goes hand in hand with the development of retail parks, a product highly valued by investors and developers. And secondly, the downsizing of hypermarkets which aims to become more efficient on occupied space, an opportunity also for shopping centre owners, especially shopping malls: there is almost no vacant space, so this downsizing can generate additional GLA for new tenants”, stated Carmen Ravon, Head of Retail Occupier CEE, CBRE

The stock of modern retail spaces in Romania recorded a total volume of approximately 4.08 million sqm in 2022, after 11 new retail parks were inaugurated last year. Annual deliveries amount to 86,700 rentable sqm, of which Bucharest attracted 41%, with three newly built retail spaces, while the vast majority of spaces were developed in small towns, but strategically placed near county capitals such as Iași, Timișoara or Craiova.