Low purchasing power of the population and increased competition among international retailers contributed to another difficult year for the FMCG market in Bulgaria. However, analysts say the next period will be characterized by slight improvement of the business climate in the country, which will contribute to the positive growth of the economy.

Quality was in the focus of the offers

The big story in the Bulgarian FMCG market in 2013 was the withdrawal of Roda Megamarket from the country. The owner of the brand, Mercator Group, decided to withdraw after four years of unsuccessful attempts to execute its plans for development in Bulgaria. In spite of the spacious stores, plenty of promotions and quality private labels that the chain offered to its Bulgarian customers, the retailer’s concept for growth suffered a complete failure.

The other representatives of international and local companies continued to expand, opening new, smaller-format stores in the city centers. The efforts of the major hyper- and supermarkets to win the hearts of Bulgarian consumers were not successful enough as customers retained their preference to shop closer to home, ignoring the stores’ offers and discounts. A survey by GfK Bulgaria conducted in the middle of the year showed that the traditional small shops are still an important market channel accounting for one-third of the spending of Bulgarian households on fast-moving consumer goods. That is why discounter Lidl opened a shop in the heart of the capital.

Special offers continued to be the main focus of communication with the customers. However, unlike last year, when a low price would be enough to attract customers, 2013 saw a change in attitudes and quality became the leading requirement for Bulgarian shoppers. That was the reason most retailers started to concentrate on offering quality products and shifted their focus from lower prices.

Local initiatives

Relationships with suppliers throughout the year were again in the center of attention. Objections to unfair practices in the negotiations and abuse of dominant position by retail chains led to a promise from the new Bulgarian government to take action and introduce a law that would reduce the chains’ pressure on suppliers.

Another point of contention for businesses was the limited supply of Bulgarian-produced goods in the stores of international retailers. This urged some professional unions to act and after some negotiations, most international chains increased the range of local produce offered in their outlets. There were two distinct points in the communication of retail chains with the consumers: product quality and supply of Bulgarian goods.

In an effort to win over Bulgarian business, the country's new government came up with a proposal to close big hyper- and supermarkets on the weekends. The purpose of this initiative was to promote trade in small retail outlets. At the end of the year, the Minister of Economy said he supported the idea of ​​creating a hypermarket which would sell only products manufactured in the country.

In turn, some independent local traders, intimidated by the growth of large retail chains, have decided to join forces and offer better conditions to the suppliers, and therefore compete with international players.

Characteristics of Bulgarian consumers

Observations and studies confirm that the Bulgarian consumer is not as easy to win as it may seem at first sight. With an average weekly budget for food of only about 20 EUR (40 BGN)*, the consumer is not impressed by special offers, while seeking a quality guarantee. The respondents in the survey have said that they shop four times a week and choose food products to buy based on the following criteria: a good balance between price and quality (46,0%); lowest price (22%); special offer (20,5%) and brand familiarity (11,6%). The Bulgarian consumers want to find quickly what they are looking for once they enter the shop, they are curious and open to trying new and innovative products, and they look for courteous service.

In conclusion, any company who wants to win their place in the FMCG market in Bulgaria has to be aware of the increased competition between retail chains, the endless price wars and the specific characteristics of the Bulgarian consumer.

Still, the good news is that Bulgarians are the Europeans who shop most often. Which retail outlet will they choose and which product will they put in their basket? The answers to these questions lie in the hands of retailers and suppliers.

Katya Dzhatova

PROGRESSIVE Bulgaria

*Data based on a study by GfK Bulgaria commissioned by Lidl Bulgaria