Because of the centralistic economic structures before 1989 it has been a radical turn towards the market economy during the period of transition. The relative stable economical situation as well as the high acceptance in the population made Vaclav Klaus (financial minister of Czechoslovakia from 1989-1992) to choose the radical strategy of the so called “shock therapy”.  One in all the liberalization of the prices and markets showed a positive development of the GDP especially in the end of the 90ies and 2000 (see chart).

The main reform in the economic restructuring plan has been the privatization. Private ownership should be replaced by public ownership to get the basics for market competition. Coupons and restitution made sure to involve every Czech into this process.  By the end of 1992 there have been about  100 000 units of small and medium-sized enterprises being privatized (so called “small privatization”), mainly enterprises of the retail, gastronomy and hotel sectors. Therefore the part of the tertiary sector rose to 68%.

Privatization reform in the retail sector had a strong impact on the commercialization and formation of a  city in Prague (in terms of a CBD). The demand of foreign companies for modern office and retail estate in the old town center grew steadily from the beginning of the 90-ies. To preserve and to avoid the modernization of the old city structures the old town has been declared as UNESCO world cultural heritage by the city administration.

In these times the „ decisions of the central government as well as local politicians have been grounded in a neo-liberal approach, which has seen the free, unregulated market as the only mechanism of allocation of resources, that would generate a wealthy, economically efficient and socially just system” (Sykora).  This reserved point of view in terms of market regulation as well as the lacking competence of this stakeholder group   is typical for the institutional reorganization during transition, which will be discussed in the next posts.

Since the 90ies a lot of shopping centers have been build in the Greenfield side. 15 years later, local authorities are confronted with problems like desolation of cities, unoccupied sales areas and therefore sinking tax incomes especially in smaller townships. Now the regulation from the city authorities has become stronger and more target-oriented than it was in the beginning of the 90ies. The integrated areas in the city are gaining in importance. Large scaled areas for retail in the city are accounted from the authorities. Shopping centers as well as high price galleries in best location are built directly in the city.

Exemplary for this development is the new opened shopping mall “Palladium” in Prague. Centrally located the “Palladium” is now part of the inner city commercial district which starts at VaclavskeVaclavskeNamesti Namesti, cPrikopes in Na Prikope and leads directly to the Palladium. The accessibility afoot is about 10min in the Old Town. The very modern inner design contrasts the historic outside facade (19th century).

This new shopping magnet for tourists and people with above-average income working in the City are the main target groups. Besides the most purchased goods like fashion, accessories and gifts a whole Gourmet Paradise is located in the upper floor. The strategy contains no entertainment as cinema or bowling (on the contrary to the Greenfield side) and no bulk buying, but fashion dining and meeting spots for business people working in the offices, which are also integrated in this complex.

This rapid development in the retail industry has already caught up and overtaken the one in the West. The generations of shopping centers in Eastern Europe are changing very fast and soon will reach the US standard certainly.