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CBI MARKET SURVEY: THE FOOTWEAR MARKET IN ROMANIA

Source: CBI Market Information Database URL: www.cbi.eu Contact: [email protected] www.cbi.eu/disclaimer

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CBI MARKET SURVEY

THE FOOTWEAR MARKET IN ROMANIA

Publication date: May 2010

IntroductionThis CBI market survey gives exporters in developing countries information on some maindevelopments in the footwear market in Romania. The information is complementary to theinformation provided in the CBI market survey The footwear market in the EU, which coversthe EU in general. That survey also contains an overview and explanation of the selectedproducts dealt with, some general remarks on the statistics used, as well as information on otheravailable documents for this sector. It can be downloaded from http://www.cbi.eu/marketinfo.

1 Market description: consumption and production

Consumption

The footwear market in Romania was valued at 759 million in terms of retail sales, registeringan average annual increase of 2.4% since 2004, being well above the EU average of 0.3% over

the same period. Romania was the thirteenth EU market, behind Portugal, but ahead of Denmarkand Finland in value. See chapter 1 of the CBI market survey Footwear for ranking of all EUmember states by value.

Table 1.1 Consumption of footwear in Romania, 2004-2008 million / millions of pairs

2004 2006 2008Population(million)

Consumptionper capita

value volume value volume value volume

691 45 762 49 759 50 21.5 36

Source:Afaceri, Euromonitor (2010)

By volume, Romanians bought 50 million pairs in 2008, which meant 2.4 pairs per capita,spending 36 per year, being one of the lowest within the EU, compared to an EU average of 100 per capita (4.2 pairs). This below average consumption can be explained as many Romanianconsumers can only afford lower quality items. It is also explained by below average prices formany shoes in this sector.

Since 2004, the Romanian footwear market increased substantially both in volume and value.Much of this growth is due to price inflation, but the economy has been growing rapidly because

of joining the EU. More expensive footwear was available from the foreign chains. The Romaniancurrency has lost some value against the Euro in 2007. This is making footwear prices frominternational retail outlets more expensive and limiting purchases to just the most affluent. In

2008, Romania was also affected by the recession and value sales of footwear have slowed, whilevolume sales continued to rise.

Buying habitsAccording to the Footwear Business magazine Afaceri, the average Romanian owns around fivepairs of shoes, characterised as normal shoes, which includes sports shoes or sneakers. Mostpeople only renew shoes when the old ones are obsolete. Around 20% of Romanians do not

have typical winter footwear, whereas 30% has only one pair of (ankle) boots. It is alsoestimated that around 30% of Romanians does not have sandals for summer.

A recent survey of Central European consumers concluded that Romanian consumers madepurchases based on a products usefulness and the prestige it will afford them, compared withCzech consumers who made rational purchases and Hungarians who made emotionalpurchases. This suggests that Romanians are quite brand conscious when buying footwear, butalso make sure they are getting good value for money.
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Trends

The ratio of working women increased from 52.1% to 53.0% of all Romanian women between2004 and 2006, but slightly fell to 52.5% in 2008. The main growth was in the group ofworking women aged between 25 and 54 years. Working women are the most importantsegment for footwear.

The Romanian market is experiencing a significant transformation that is affecting itspopulations shopping behaviour. Romanian women are gradually developing a taste for

modern shopping. Modern living leads to a busier lifestyle, resulting in an increased demandand appreciation for the convenience of doing all of ones shopping at a single location.

With regards to footwear, Romanian people increasingly pay attention to the material andcheck the made of leather label, if the inside is also made of leather and the material used forthe soles. Some popular sports footwear brands were Nike, Adidas, Lotto, Puma, Reebok andWrangler. For an idea of fashionable footwear and popular brands in Romania seehttp://www.benvenuti.ro

Market outlook

The footwear market in Romania will continue to expand in the coming years, but growthrates will not be as great as price inflation and higher import prices will slow down demand.

Growth rates in Romania have been amongst the highest in the EU. This continued into 2008.However, the retail trade contracted by more than 10% in 2009, with fashion retailers

particularly affected. Sales of footwear decreased by a similar proportion. It is expected thatgrowth in the footwear will return in 2011 driven by the rising number of working women.

Romanian consumers are developing a taste for well-designed footwear and sports footwear,but many now cannot afford to buy branded footwear. In future there are good prospects forfashionable footwear, however, counterfeit sales of branded footwear continues to be a problem.

Production

Romanian footwear production has expended in the past few year. The Romanian leathergoods industry has benefited from its EU membership, and particularly its close trading linkswith Italy. Romania provides a realistic option for higher cost western EU countries who wish

to outsource production to lower cost suppliers.

The majority of Romanian production was destined for export, but local products are still indemand in the home market. However, since 2005, the Romanian industry also suffers fromgrowing competition from China and Vietnam and the tendency among EU manufacturers tolook for outsourcing countries with lower wages such as the Republic of Moldavia or Ukraine.

The 1,286 companies were mostly small-sized. Production volume was 89 million pairs of shoesin 2008 and represented a value of 1,455 million, an average annual increase of 2.8% overthe period between 2004 and 2008. However, production slightly fell since 2008 due to the

recession in most (EU) export markets.

Table 1.2 Production of footwear in Romania, 2004-2008

million / millions of pairs

2004 2006 2008Number ofcompanies

2007

Number ofemployees

2007

value volume value volume value volume

1,302 83 1,486 91 1,455 89 1,286 13,117

Source: Afaceri, Ubifrance (2010)

The main advantages of the Romanian footwear sector remains the competitiveness of the

footwear products on foreign markets; high adaptability of the sector to market requirements;a skilled and cheap labour force; a competitive environment within the sector, given the greatnumber of manufacturers.
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The main shortcomings of the sector consists of excessive levels of administration; obsolete

technology in the tanning sub-sector; insufficient financial means to upgrade production;inability to supply raw materials from domestic sources (quantitatively and qualitatively).

The main feature of the footwear industry consists of the high level of outsourced productionfor EU footwear manufacturers, referred to as lohn type systemin Romania. This refers to the

use of Romanian labour in conjunction with the import of capital, raw material and technology.This type of contract is used in a number of related industries.It has been adopted by an increasing number of manufacturers because of the difficultiesgenerated by the decreasing domestic supply of raw hides, on one hand, and the advantages itoffers, on the other. This makes the import of raw materials particularly important, due to the

size of the industry and limitations in relation to new technologies.

Around 90% of all production value (60% of volume) is leather footwear. Footwear partsaccounts for 30% of volume but just 8% of value. The remaining production is outdoor textilefootwear, as well as limited volumes of waterproof and rubber or plastic footwear. Around 60%of the total production is womens outdoor footwear.

Some interesting manufacturers in Romania include: Medimpact SA, located inMedias (http://www.medimpact.ro). One of the biggest Romanian

footwear producers with a capacity of over 60.000 pairs/month and 800 employees. Theirrange include sports shoes, moccasins, goodyear, stitched through sole, casual, trendy

shoes, as well as army boots and protective footwear.

Antilopa, located in Bucharest, is manufacturer of casual and formal footwear, for womenand men. They offer leather footwear and sport footwear (http://www.antilopa.ro).

Bontimes, (http://bit-bontimes.ro), located in Dumbravita, is a producer of casual andcomfortable leather and synthetic footwear for men and women. They also produce sportfootwear.

Comodi, (http://www.comodi.ro), located in Oradea, manufactures comfortable leatherfootwear for men. We can see their catalogue on line. This company was established in 1992.

Trends in productionThe decline in 2008 may be temporary as a consequence of the global economic downturn,

which has resulted in a drying up of export markets, particularly to Italy. The Romanianfootwear industry is better placed than some other Eastern European Member States to compete

in the global market, despite the competition on the domestic market from low cost imports.

Opportunities and threats+ Despite the reduction in consumer spending as a result of the economic downturn, Romania

is one of the EU markets offering most opportunities for DC exporters. As well as the relativelyhigh population, consumers are interested in engaging in international fashion trends.

+ Although the footwear industry is very export oriented, it still also supplies domesticdemand. As the industry needs investment, there are opportunities for exporters through

partnerships with local producers, setting up a joint production unit or by providingoutsourced production.

- As an exporter from developing countries, you may face a strong competition from

counterfeit footwear from Asia which is likely to be more available in the Romanian market.- Since its EU accession, Romania is also a competitor to exporters from developing countries

in other EU markets.

Many exporters will also be viewing the opportunities available on the Romanian market. Any ofthese trends can equally be an opportunity for one exporter but a threat to another. Buyers arenot always loyal to particular overseas suppliers, so you may lose out to a supplier from yourown country or neighbouring country

More information on opportunities and threats can be found in chapter 7 of the CBI marketsurvey The footwear market in the EU.
http://www.cbi.eu/http://www.cbi.eu/mailto:[email protected]:[email protected]://www.cbi.eu/disclaimerhttp://www.medimpact.ro/http://www.antilopa.ro/http://bit-bontimes.ro/http://www.comodi.ro/http://www.cbi.eu/disclaimermailto:[email protected]://www.cbi.eu/http://www.comodi.ro/http://bit-bontimes.ro/http://www.antilopa.ro/http://www.medimpact.ro/


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2 Trade channels for market entry

The footwear distribution network in Romania is dominated by small independent retailspecialists, many of whom are also manufacturers. Markets and bazaars have also claimeda significant share of footwear sales, although this is forecast to change quite rapidly asinternational retailers and new shopping malls change the nature of retailing in Romania.

Exporters from developing countries would be advised to locate importers and wholesalers asthe best means of reaching this sector. There were 1,115 agents involved in textiles, clothing,footwear and leather goods in 2007, and 3,890 wholesale enterprises of clothing and footwear.

Interesting wholesalers and importers in Romania include:

Adion Chem, located in Bucharest, is an importer and a wholesaler of a wide range ofleather footwear and others leather items (http://www.adion13.com).

Office Shoes, located in Bucharest, is an important wholesaler of branded footwear(http://www.officeshoes.ro).

Euroconex, located at Bucarest (mailto:[email protected]), founded in 1881 andprivatised in 1995. Wholesalers and producer of mens, women's and childrens footwear

and gloves of leather, which is made in their own tannery. They produce mocassins(handmade uppers) sports shoes, rangers and military shoes (Good Year).

Starcom, located in Brasov, is a wholesaler in footwear. They offer different brands(http://www.starcom.ro).

Retail trade

Street markets account for a significant share of sales, although the entry of internationalretailers and construction of new shopping centres is changing the nature of retailing inRomania. Consumers increasingly prefer to do their shopping under one roof, which has helpeddrive the change to non-specialists such as hypermarkets and department stores.However, some retailers are moving out of some centres due to low traffic and returning to thehigh street, a trend that may be repeated elsewhere.

There were 1,292 footwear and leather goods outlets in 2007 with independent footwearretailers and market stalls taking up around 75% of footwear sales in the country.

A major new shopping concept (Mega Designer Outlet) due to open soon will house numerous

leading fashion retailers. Leonardo, the leading specialist footwear and leather goods retailer,filed for bankruptcy in 2009. Benvenuti http://www.benvenuti.ro - is a similar specialist

retailer with 32 outlets. Deichmann, Europes largest footwear retailer entered the Romanianmarket in 2007, by opening three outlets.

Other footwear specialists include Grtz with 2 outlets and Bally. Equipe Romania is one of anumber of developing local specialist chains.

Within the non-specialists, International clothing retailers are Inditex, including Zara, Kenveloand Steilman. The French discount clothing retailer Kiabi launched its first store in Romania inSeptember 2009. Other non-specialists include department stores (Debenhams) and

hypermarkets (Kaufland, Cora, Carrefour).

More information on trade structure and business contacts can be found in Chapter 6.
http://www.cbi.eu/http://www.cbi.eu/mailto:[email protected]:[email protected]://www.cbi.eu/disclaimerhttp://www.adion13.com/http://www.officeshoes.ro/mailto:[email protected]://www.starcom.ro/http://www.benvenuti.ro/http://www.benvenuti.ro/http://www.starcom.ro/mailto:[email protected]://www.officeshoes.ro/http://www.cbi.eu/disclaimermailto:[email protected]://www.cbi.eu/http://www.adion13.com/


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3 Trade: imports and exports

ImportsIn 2008, Romanias imports of footwear were valued at 467 million, or 91 million pairs.Outof the 27 EU countries, Romania is ranked thirteenth largest, and as such is regarded as amedium-sized country for footwear imports. Between 2004 and 2008, Romanias footwear

imports grew by an average of 10.9% per annum in value, from 309 million and massively involume, from 1 million pairs. The increase in value has occurred fairly steadily over the period.

Exports exceeded imports by more than double in value and 78% in volume in 2008.In valueterms, imports were increasing, while exports have decreased. Both imports and exports have

increased significantly in terms of volume. Consequently, the market dynamic is changingrapidly as imports take an increasingly important share. The same period has seen an increasein footwear production (2.8%), and an above average annual increase in consumption (2.4%).However, domestic production is still important in the local market, especially as exportsdecreased. Most EU supplies were from Italy.

By source, more than 22% or 105 million of Romanias imports came from developing

countries in 2008 (88% by volume or 80 million pairs). This proportion was just 14% by value in2004. China accounted for 59% of all developing country imports by value in 2008 (90% by

volume), followed by Moldova (18.1% by value and 2.5% by volume) and Turkey (11% by valueand 3.7% by volume). India, Vietnam, Tunisia and Indonesia were also important suppliers.

China increased the value of their supplies by an annual average of over 17% over the periodwhilst the volume of their supplies increased from 1 to 72 million pairs over the period.

By product group, Romanian imports of footwear consisted of:

Other footwear(52% by value and 3% by volume), of which other parts of footwearwas the largest sub-group (51% of all footwear imports by value) these footwearparts were then used by local producers to assemble shoes for export.

Footwear with leather uppers (29% by value and 12% by volume), of which outdoorfootwear with other outer soles was the largest sub-group (23% of all footwear importsby value).

Footwear with rubber or plastic uppers (13% by value and 59% by volume), of whichoutdoor footwear was the largest sub-group (8.1% of all footwear imports by value).

Footwear with textile uppers (6.2% by value and 24% by volume), of which textilesports footwear was the largest sub-group (2.8% of all footwear imports by value).

ExportsFootwear exports from Romania were valued at 1 billion in 2008, representing 51 millionpairs. Between 2004 and 2008, the average annual decrease in exports was 1.8% by valuewhilst export volumes had increased significantly. There is a large amount of re-exporting fromRomania, as there is a significant trade in footwear parts. This highlights the fact that much ofthe increased production in this period was for the local market.

Opportunities and threats

+ Romanias import trade is dominated by footwear parts, and there continue to beopportunities to supply parts.

+ All the other footwear sectors are also offering opportunities for exporters, as the Romanianmarket is developing fast. This especially applies to rubber or plastic footwear, and leatherfootwear.

See Chapter 7 of the CBI market survey Footwear for more on opportunities and threats.

Useful sources

EU Expanding Exports Helpdesk - http://exporthelp.europa.eu Eurostat official statistical office of the EU - http://epp.eurostat.ec.europa.eu Understanding eurostat: Quick guide to easy comext http://www.eds-destatis.de/en/database/download/Handbook_Comext_Database.pdf
http://www.cbi.eu/http://www.cbi.eu/mailto:[email protected]:[email protected]://www.cbi.eu/disclaimerhttp://exporthelp.europa.eu/http://epp.eurostat.ec.europa.eu/http://www.eds-destatis.de/en/database/download/Handbook_Comext_Database.pdfhttp://www.eds-destatis.de/en/database/download/Handbook_Comext_Database.pdfhttp://epp.eurostat.ec.europa.eu/http://exporthelp.europa.eu/http://www.cbi.eu/disclaimermailto:[email protected]://www.cbi.eu/


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4 Price developments

Consumer pricesPrices of footwear are lower in Romania, along with Bulgaria, than any other EU country. Infact footwear prices in Romania are virtually half the EU average. Prices generally have continuedto increase as the economy integrates further into the EU. Consumer prices rose by 7.9% in 2008,

and by 5.6% in 2009. This was higher than most EU countries. Over the same period, prices offootwear rose by 3.3% in 2008 and 2.4% in 2009.

The website of Romanian National Statistics (http://www.insse.ro) publishes harmonisedindices of consumer prices, which includes the clothing and footwear sector. Not many

Romanian footwear retailers feature prices on their website. The footwear retailer Benvenutihas some prices on their website (http://www.benvenuti.ro). Some prices can also be foundat the hypermarket retailer Cora - http://www.cora.ro - and at http://www.berry.ro.

Import pricesThere was a downward trend in the prices of imported footwear by Romania, however, since2004 prices dropped substantially. As Table 4.1 indicates, developing country prices have

increased. Prices of imports from developing countries were very low, possibly explained by thehigh proportion of footwear parts in the Romanian trade. Please also note that there is a large

amount of re-exporting from Romania, so these trends should be interpreted with extreme care,as changes in imports do not reflect the demand in Romania.

Table 4.1 Development in Romanian average import values/prices,

2004 2008,

2004 2006 2008 ave. Annual

ave price ave price ave price % change

per pair per pair per pair

Total imports 14.88 9.67 5.22 -23.1

Intra-EU 51.11 54.82 55.91 2.3

Developing countries 0.44 0.89 1.32 31.6

Source: Eurostat (2009)

Price structureIn each trade channel different margins and prices apply, with multiples of 2.0 up to 2.9 of the

manufacturers or importers price. Generally, wholesalers margins range between 25 - 40%of the CIF price, while retailers margins are between 35 75%. As the market is not yet asordered as in some of the other more mature EU countries, higher margins can still be earnedin Romania. More information on margins can be found in chapter 3.2 of the CBI marketsurvey The footwear market in the EU.

The VAT rate in Romania is 19%.

5 Market access requirements

As a manufacturer in a developing country preparing to access Romania, you should be awareof the market access requirements of your trading partners and the Romanian government.For information on legislative and non-legislative requirements, go to Search CBI databaseat http://www.cbi.eu/marketinfo, select footwear and Romania in the category search, clickon the search button and click on market access requirements.

Detailed information on packaging can be found at the website of ITC on export packaging:

http://www.intracen.org/ep/packit.htmInformation on tariffs and quota can be found athttp://exporthelp.europa.eu
http://www.cbi.eu/http://www.cbi.eu/mailto:[email protected]:[email protected]://www.cbi.eu/disclaimerhttp://www.insse.ro/http://www.benvenuti.ro/http://www.cora.ro/http://www.berry.ro/http://www.cbi.eu/marketinfohttp://www.intracen.org/ep/packit.htmhttp://www.intracen.org/ep/packit.htmhttp://exporthelp.europa.eu/http://exporthelp.europa.eu/http://www.intracen.org/ep/packit.htmhttp://www.cbi.eu/marketinfohttp://www.cbi.eu/disclaimermailto:[email protected]://www.cbi.eu/http://www.berry.ro/http://www.cora.ro/http://www.benvenuti.ro/http://www.insse.ro/


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6 Doing business

Information on doing business like approaching potential business partners, building up arelationship, drawing up an offer, handling the contract (methods of payment, and termsof delivery) and cultural differences can be found in CBIs export manuals Export Planner,

Your image builder and Exporting to the EU. These can be downloaded from

http://www.cbi.eu/marketinfo - go to search publications. For more information on doingbusiness in Romania, visit the following websites:

The main trade association for footwear is the Association of Romanian Leather & FootwearManufacturers. They can be contacted via the manufacturer Oxalaga(http://www.factbook.net/oxalaga_index.htm).

The main footwear trade fair is Modexpo, occurring twice a year in Bucharestin February and September (http://www.romexpo.ro). There are also other smaller fairsaround the country.

TEXIN - http://www.texin.ro - is a wholesalers organisation for the textile, leather andfootwear sectors that also organises trade fairs.

Afaceri (Footwear Business) is a monthly magazine (mailto:[email protected]). Dialog Textil isa trade publication that covers the fashion industry but also makes reference to footwear

(http://www.dialogtextil.ro). The website of the Romanian Fashion & Textile Industry has a link to footwear companies

(http://www.romtextiles.com. The Romanian Centre for Trade and Investment may also bea useful contact (http://www.traderom.ro), as may the Romanian Business Digest

(http://rbd.doingbusiness.ro).

Ziarul Financiar - http://www.zf.ro - and Business Review Magazine http://www.businessmagazin.ro are good sources of business information.

This survey was compiled for CBI by Searce

Disclaimer CBI market information tools: http://www.cbi.eu/disclaimer
http://www.cbi.eu/http://www.cbi.eu/mailto:[email protected]:[email protected]://www.cbi.eu/disclaimerhttp://www.cbi.eu/marketinfohttp://www.factbook.net/oxalaga_index.htmhttp://www.romexpo.ro/http://www.texin.ro/mailto:[email protected]://www.dialogtextil.ro/http://www.romtextiles.com.theromaniancentrefortradeandinvestmentmayalsobeausefulcontact/http://www.romtextiles.com.theromaniancentrefortradeandinvestmentmayalsobeausefulcontact/http://www.traderom.ro/http://rbd.doingbusiness.ro/http://www.zf.ro/http://www.businessmagazin.ro/http://www.cbi.eu/disclaimerhttp://www.cbi.eu/disclaimermailto:[email protected]://www.cbi.eu/http://www.cbi.eu/disclaimerhttp://www.businessmagazin.ro/http://www.zf.ro/http://rbd.doingbusiness.ro/http://www.traderom.ro/http://www.romtextiles.com.theromaniancentrefortradeandinvestmentmayalsobeausefulcontact/http://www.romtextiles.com.theromaniancentrefortradeandinvestmentmayalsobeausefulcontact/http://www.dialogtextil.ro/mailto:[email protected]://www.texin.ro/http://www.romexpo.ro/http://www.factbook.net/oxalaga_index.htmhttp://www.cbi.eu/marketinfo

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