With Kingfisher’s decision to expand into Romania and Debenhams closing six stores in the country, Retail Week takes a look at the opportunities and challenges in the Romanian retail market.

Why are we talking about this now?

B&Q owner Kingfisher revealed last week it is poised to expand into Romania through the acquisition of 15 Bricostore shops from French retailer Group Bresson, set to complete in the next two months. It comes as Debenhams reveals it is pulling out of the country and closing its six stores due to an “extremely difficult market”.

What are the demographics?

Romania has a population of 21 million people, according to consumer markets research firm Euromonitor International. Consumer expenditure hit US$102bn in 2012 and is predicted to reach $105bn in 2013. GDP grew 2.2% in 2011 and 0.3% in 2012 and a 0.6% rise in 2013 is expected. Annual gross income dropped between 2011 and 2012 and annual disposable income also fell in 2012.

How has it been affected by the economic crisis?

The effects of the economic downturn have been severe in Romania leaving very few consumers unaffected. “Lower salaries, a higher cost of living, and the higher risk of unemployment meant that Romanians came to rethink their shopping habits,” a Euromonitor International spokesman says. “In part by necessity, consumers had to make more value-conscious decisions, changing their criteria when picking both retailers and products,”

What has attracted Kingfisher to the market?

The Romanian DIY market was estimated to be worth approximately RON6bn (€1.4bn) last year and is expected to recover in 2012, along with the overall construction industry, according to the DIY retailer Obi Romania. The home improvement market in Romania has “solid growth potential”, Kingfisher chief executive Ian Cheshire explains. Outside DIY, few UK retailers are present however a number of multinational grocers including Carrefour and Lidl are in the market.

Who will Kingfisher’s competition be?

The main players in the Romanian DIY market are Praktiker, Dedeman, Bricostore, bauMax, Ambient, Hornbach, Obi and Mr Bricolage, according to consultancy PMR. At the end of 2011, French DIY retailer Leroy Merlin entered the Romanian market with the opening of a 183,000 sq ft store in Bucharest.

What are the drawbacks?

Debenhams’ decision to withdraw from Romania due to “an extremely difficult market” exposes what a challenging trading environment the country offers.

Romanian consumer confidence remains muted and lower than the European and global average, with only one quarter of consumers saying they are satisfied with their financial situation, according to Nielsen’s 2012 Shopper Trends report. Promotions continue to be an important factor in purchasing behaviour with price cuts the most popular promotional scheme among Romanian buyers.

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