Azernews.Az

By Bloomberg

At the Bucharest Mall, a flamingo-pink paean to consumerism in the center of Romania’s capital, Amelie Spatar threw austerity to the wind.

The 26-year-old human resources officer held up two blue Zara dresses and flashed a smile, even as the purchases put a dent in her $1,000-a-month income. The economic crisis that crippled Romania, forced a bailout in 2009 and turned residents into misers is a dimming memory as shopping sprees mean wading into crowds for spring fashions.

“I was much more afraid of spending during the crisis,” said Spatar. “I was afraid of squandering my money like that and I used to chase sales a lot more. Lately, I’ve been feeling more secure in my job, so I can go shopping every weekend at the mall.”

With sanctions against Russia for its role in the Ukraine conflict souring that country’s outlook, investors including Inditex SA, Hennes & Mauritz AB and Debenhams Plc are seeking eastern European alternatives where sales are on the rise, including Romania. Demand in the largest Balkan nation is resurging after Premier Victor Ponta replaced fiscal tightening with tax cuts and the economy grew 2.8 percent in the fourth quarter of 2014, erasing losses triggered by the global crisis.

Russian retail sales contracted 8.7 percent in March from a year earlier, the Federal Statistics Service said in a report on April 17. That was the biggest drop since 2009, according to data compiled by Bloomberg. Conversely, retail sales in Romania advanced 3.5 percent in February from a year ago, after growing 6.4 percent in 2014. That compares with a 7.2 percent decline in 2010.

‘Growth Alternative’

“In Russia, some retailers are trying to exit because of the tough market conditions, so they are trying to expand in Romania as a growth alternative,” Walter Wolfler, the head of CB Richard Ellis Inc.’s central and eastern European retail unit. “Many more retailers want to enter Romania.”

Declining purchasing power and currency volatility in Russia is also prompting Russian business men look for opportunities in Romania.

A Russian supermarket, Berezka, opened three stores in Bucharest and plans to continue an expansion to five by the end of the year, according to a Ziarul Financiar report on Tuesday.

Slim Pocketbooks

Though spending power in the European Union’s second- poorest country remains stunted by the $418-a-month average wage, that figure has grown 25 percent since 2009. Romania’s gross domestic product per capita is expected to catch up to about 70 percent of the European Union average by 2020 from the current 54 percent, according to the Romanian Finance Ministry.

At least four new malls are set to open this year and three more will be expanded across the country. The Mega Mall in Bucharest is scheduled to swing open its doors for customers as soon as next month, according to real-estate consultancy DTZ Echinox.

“Private consumption is taking the leading role from net exports” in boosting growth, said Ciprian Dascalu, ING Bank Romania’s chief economist. “Private services taking the largest share of the pie makes the current growth less cyclical and more domestically driven.”

In addition, Romanians are also among the least thrifty citizens in Europe, allocating more than three-quarters of their income on consumption, Eurostat data show.

Back in Business

And that’s music to the ears of retailers.

U.K. fashion retailer Debenhams reopened in Bucharest on March 16, two years after their franchised store closed its doors to clients in the same location. It plans to open two new stores each year through 2020.

“It’s the right time to start development,” said Chris Harper, the sales director at MRPI, which owns the local Debenhams franchise and considers Romania one of Europe’s leaders in terms of food and non-food consumption.

“The dynamics within the shopping centers and real estate is a sign that the market is on the right path,” Harper said.

H&M reported a record increase in sales in Romania last year of 3.6 million euros ($3.9 million) a store, the highest rate among central and eastern European countries, exceeding Poland, the EU’s largest eastern economy, and Hungary.

“As Romania is one of the biggest markets in the eastern European bloc, it’s automatically the No. 1 priority for any retailer looking to expand eastwards,” said Bogdan Marcu, the head of real-estate consultancy DTZ Echinox’s retail department.

New Mall

New Europe Property Investments Plc will open a 72,000 square-meter (775,000 square-foot) shopping mall in Bucharest next month, the fourth-largest by rented space, following an investment of about 165 million euros, according to the company’s chief executive officer, Martin Slabbert.

The Bucharest Mall, which is housed in a building erected by former communist dictator Nicolae Ceausescu to dole out food rations to citizens, is due for another massive renovation, the mall operator said on April 24.

The out-of-date pink facade, which has clad the retail center since it opened in 1999, will be replaced by toned-down browns and tans and will be remodeled into a more “contemporary design” with outside terraces, seating areas and cafes.

Spatar, who says she allocates as much as 40 percent of her monthly income for clothing purchases, sticks to malls for most of her shopping needs, buying food from chain hypermarkets and tracking sales at chains to sate her clothes-buying habit.

“Since I spend quite a lot on clothes,” said Spatar as she swung her Zara shopping bag for emphasis, “I pay extra attention to everything related to them. I have my trusty store apps on my phone, so if I see something I like, I don’t wait for the weekend, I just hop down to the store and get it.”