Paulina Holbreich

Retail in Eastern Europe – Czech Republic

Tuesday, October 28th, 2008 | University | No Comments

From the mid-1998 the Czech retail market showed a continuous growth which speeded up sharply in 2005. Retail sales increased by 4,9% in 2007. Since then, this dynamic growth has apparently slowed down and the market especially for shopping centres and hypermarkets reached saturation at least in cities like Prague.
The allocation of retail area is dominated by the metropolitan region of the capital Prague, the Moravian-Silesian Region, Ustecky Region and South Moravia (see fig.1) with 120-150m²/ p.c.

It is not so long since 1998 there have been just 7 hypermarkets in Czech Republic, whereas the number increased to 231 hypermarkets in 2008. By now the penetration of hypermarkets is the highest in the Central Europe region (16 per 1 Mio. inhabitants). An important reason for this continuous expansion is the high preference for large-area shopping places for grocery by the Czech. With 38% market-share hypermarkets dominate the grocery shopping, followed by the discounters (25%) and supermarkets (16%). Especially in the category of durable food products hypermarkets retain their top position (33-39%). Generally, large-area food retailer (hyper-/supermarket, discounter) have got high preferences with 75-83%. Smaller specialized stores have an inferior position but play a big role at the fresh-food market segment.

Consumer Market Trends

In future increasing per-capita incomes will change the demand situation at the retail market in Czech Republic. The needs and motivations of customers will become more and more diversified. Their increasing interest in “life quality” products such as bio-food and generally quality fresh food (bread, pastry, meat etc.) will strengthen the position of specialized shops with more service and personnel quality. Approximately one half of Czech prefers to purchase those goods in small non-self-service stores or smaller groceteritas (e.g. butchers`s). The growing request for “new/affordable luxury”, covering also the higher interest in health-conscious life, and the preference for specialized drugstores, contribute to the withdraw of hypermarkets at those sensitive good categories. The change for better, in terms of smaller store formats, a more diversified range of products, better service and performance characterize the main brand change strategies of big retail chains in the near future.

The concentration of trade will go on and a small group of three or four retail chains will get segregated. In 2005 the competitive Czech market pulled out major retail chains (Carrefour, Edeka, Delhaize) hence about 45% market-shares are held by just a few retailers (Metro, Ahold, Schwarz, Globus). Besides the consolidation of the existing retailers many experts anticipate the entry (through acquisitions) of retail giants, as Wal-Mart or Aldi.

According the project “Retail Vision 2010” by INCOMA Research and Blue Strategy, the fastest growth is expected with discount stores from current 13% to 17% in 2010 and small-scale hypermarkets (up to 4 000 m²). Several retail chains build new hyper-/ and supermarkets in smaller versions to make it possible to operate in areas with a smaller number of customers or in city centres. A shift of destination for new openings of hypermarkets is expected. Townships below 50 000 inhabitants and even with only 15 000 inhabitants are targeted on by big retail companies as Kaufland, Hypernova or Tesco.

Tags: Carrefour, changes, city, hypermarket, Pilsen, play, Prague, retail, Supermarket, undefined

Study Trip to Prague 2008

Monday, March 3rd, 2008 | Journey | No Comments

This Prague trip has been something special! This time I went to Prague not to make some sightseeing with the usual tourist attractions like the Karlsbrücke, Prague Castle, Apostel`s Clock and the Jew Quarter. This time it was completely different!

Our group of 10 students ( all prospective Dipl. Geographers) plus our supervisor Mr. Dr. Waibel went to Prague to make some scientific research about the effects and structural changes the transitional process, which started with the Velvet Revolution in 1989, had caused in tourism, retail and industry.

The first weekend we were running through the city and the Metro stations with an average speed of 9km/h (our Navi proved it!). For Mr. Waibel didn`t look back very often to check if everybody is still on board, some of us who couldn’t`t or wouldn`t run, walked through the old City of Prague and admired the historism and art nouveau fassades of the old buildings or just enjoyed the great weather! Our “city guide” Veronika emerged as a former hotel executive who made guidance in the “Top Hotel” but not in the city…Does`t matter! In the evening on Sunday we had our first meetings in our “conference room” at Pension “Lucie”. It was now we noticed how much work it would be the next week!!! The tourism-group had to change their concept completely and worked now on the business tourism in Prague. The retail-group was also a little bit rattled by the unexpected criticism of Mr. Waibel. Only the IT-group had already its first two interviews on Monday. The next days we decided to meet in the evening and talk about the results of the day. Already on Thursday some of us got ill. The hypothermia while running in and out into hotels and shops doing surveys was the one of the reasons for illness. Nevertheless, our timetables were getting full. We ran from one interview appointment to another, just the IT-group had a temporary shortage and wrote about 200 emails to get some appointments. They hit all records, sitting about two days and half nights in their room in the same position with their laptops, typing and googling! On Friday evening we went to “Pravek”, a restaurant at the Metro station “Andel” which we noticed already on Saturday. The interior decoration of “Pravec” looked like the a stone-age cave with mammoth tusks and old paintings at the walls. The dishes` names like Jurrasic Globe, Mammoth or Pangeasteak are also quite funny, cause you don`t really know what you get , but it was really tasty!! After dinner some of us, Mr. Waibel (or by now just Michael) inclusive, walked over the Karlsbrücke to Stare Mesto to a night club named “Bombay”. It was OK, but nothing spectacular besides high prices and the dancing part on top the podest. Just the Taxi afterwords exceeded our budget! Next time no taxi!

On our second weekend at Prague we planned to go to Pilsen on Saturday and to visit the Jew Quartal on Sunday. Of course we went almost directly to the famous Plsen brewery. Before we could taste the beer we had to endure a exergerated media show about beer and then an incompetent guidance for about an hour. We looked forward to sit down in the brewery pub to drink more Pilsen beer but it wasn`t our day. Two wedding parties have been celebrating in both of the brewery Pubs! The toughest of us, this was Michael, walked in and sat down in the vestibule. We drank our beer but soon the staff noticed the uninvited guests and we were booted out:) In the evening nobody of us had the power to go out in the City neither fancied to to sit in the “Lucie” Bar with the unfriendly barmen, who was badly tempered because “the Germans” didn`t get wrecked every evening at “Lucie”. So everybody went to bed. On sunday all groups should finish their final presentaions and to report to the other groups. Especially the tourism-group which contained five persons had to struggle for an agreement. The conclusion of their work was, that tourism plays an important role for Prague but there are many difficulties at different levels. Here are some (incomplete) results of our group-workes:

Tourism (Jonas,Klaus, Margit,Gunnar,Dagmara)

First, there is no visible superior strategy for tourism development on the part of the state authorities. Second, the categorization of hotels in Prague has no common basement, that means every hotel tenant acts on his own discretion e.g. the stars-categories differ enourmously. Third, the trend for the future indicates the growing importance of family tourism and not as estimated of congress tourism. And there is no noticable crowding out in the backpacker sector.

Retail (Betty, Paulina, Martin)

The market for shopping center is full. There is a strong tendancy for building shopping malls in the City and not like in the end-90ies at the periphery. The location decision is dominated by the location and not by landprice. The choice of the right marketing strategy learning from the competitor is predominant. There is no direct competition between the shopping malls on the greenfield side, neither between the greenfield and the city. The new build city shopping mall “Palladium” has generated positive effects on the retail in the near vicinity. The role of the city authorities is marginal and constrained.

IT-Sector (Sakura, Simon)

The IT-sector in Prague is not developed very much yet. There exist no networkes between the IT-companies.

(I hope you`ll complete my short summary

All in all we did a good job, I think. Everybody of us learned a lot for the future and especially for the work on our diplomas.

Sunday evening most of us left the Pension “Lucie” to spend a pleasant evening in the famous Cafe “Slavia” at the Moldau opposite the Opera house. This cafe is famous for its Absinth (this is the green high proofed stuff). The interior design is art deco, elegant but strict. Famous is also the Viktor Olivia painting we called “The Absinth Woman” (actually it calls “The Absinthe drinker”), it shows a drunken old man with his Absinth glass on the table and a young, naked, green and transparent woman sitting on the table. Maybe some of us would have seen green, naked women after drinking some more glasses but it was already 11p.m. and the cafe closed. We decided to go somewhere else but had to leave also the next bar at 2 p.m. Now nothing was left besides the “Bombay”. The night ended after a couple of Bloody Marie`s, beers, Absinth`s and dancing at 5 o`clock in the morning. The right time to take the metro and not the taxi.

This was our somehow different Prague trip! I hope you enjoyed to read!

I`m waiting for your comments and for some good photos for I don`t have any!

Tags: beer, Pilsen, Prague, retail, Tourism, University