Retail chain stores don’t kill, but develop market in Bulgaria

Photo: library

Many Bulgarians tend to think that the increasing presence of large retail chain stores has its negative impact on the home market, such as neglecting of national producers, predominant sales of imported goods, lower quality of foods, tax avoidance etc. However, an analysis of the Institute for Market Economics displays quite a different picture.

The authors say it’s misleading to assume that major retail chain stores are full of imported goods. In fact over 70% of all the goods sold are bought from Bulgarian suppliers. Statistics of the stores themselves shows that Bulgarian companies’ products take 60 – 70% of the overall volume. The Sega newspaper remarks that this data busts the populist myths for imposing ‘made in Bulgaria’ quotas and mandatory minimum presence of 51% for fruit, 50% for poultry, 70% for dairy products, 25% for other meat types and 75% for wine and alcohol.

At the same time the analysis of the Institute for Market Economics shows that retail chain stores are not only far from killing Bulgaria’s production, but they also invest directly in the latter. Some of them stimulate via specific campaigns certain products of producers from different regions of the country, while others contract directly with fruit and vegetables producers, guaranteeing that the quantities declared shall be sold.

It is also untrue to claim that retail chain stores are killing small stores and are reducing staff. The survey cites 2015 Eurostat data and points out that only 43 companies in Bulgaria have personnel exceeding 250 employees in the retail sector. Yes, hypermarkets and similar stores take some 40% of the retail market, but this is not at the expense of smaller traders, as their turnover in both 2012 and 2015 amounted to some EUR 2.2 bln. The growth of large stores is not at the expense of the small ones, but is more like related to the change in clients’ custom habits and to enhanced purchase ability due to the economic growth and the higher income, the authors of the analysis explain. According to them, employment statistics busts the myth of large-scale bankruptcies of small stores and reduced personnel as well. In the period 2005 – 2015 the number of people employed in retail trade grew by some 12% and this comes to show that the implementation of modern trade formats in fact leads to net growth of employment in the sector. Besides that the retail chain stores offer salaries that are sensitively higher. The average gross monthly salary across those was EUR 483, or more than twofold higher, compared to the one in smallest firms with up to 9 employees – EUR 225. Labor capacity is much higher in the largest companies in the sector, as the average annual added value per employee is EUR 11,100 with those, while at small firms it comes up to EUR 2,500 only.

Expansion of modern trade affects positively the consumer’s choice too. Modern commercial formats offer 2,000 – 20,000 items, which small stores simply cannot achieve. Their certification and control methods and also the counter requirements to suppliers increase the quality of the production, offered to the final user. According to the analysis of the Institute for Market Economics retail chain stores are not killing, but are boosting the Bulgarian market.

Edited by: Stoimen Pavlov

English version: Zhivko Stanchev 

More from category

Flat tax is one of the few things that actually works: Yavor Alexiev, Institute for Market Economics

There has been an 8 to 10 percent annual increase in the average salary over the past few years and this is an indication that we are slowly catching up with average European levels, seeing as the starting point for the Bulgarian economy was very low...

published on 9/19/17 10:05 AM

Defense industry trouble against the background of good financial results

Some 1000 workers in one of Bulgaria’s largest defense industry enterprises EMKO went on protest earlier this week over the company’s frozen license. The measure has been imposed by the Interdepartmental Council for the Defense Industry and..

published on 8/23/17 11:51 AM

Attracting capital key for Bulgaria: Georgy Ganev

“We should never stop comparing with Romania, because Romanians have been reforming, while Bulgarians have been only talking about reform in the recent years”, economist Georgy Ganev, professor at the Faculty of Economics and Business..

published on 8/19/17 2:04 PM