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Qzone

1.3 Distribution and import channels

A highly concentrated retail market with high foreign participation

Following years of privatisation and continued influx of foreign retailers upon the country’s EU accession, the retail market in the Czech Republic is considered one of the most concentrated in Central and Eastern Europe, with the 10 largest retail chains accounting for 64% of the whole retail market in the country. As was the case in other CEE countries, the rise of modern retail formats such as hypermarkets and supermarkets, which deals with abundance, is responsible for the high concentration ratio, although cooperatives and independent grocery stores in rural areas and small towns maintain a key position in the Czech retail market. Like many other emerging markets, the Czech Republic has seen increases in the participation of foreign players in its retail sector, with most, if not all, of the largest retailing groups in the country being foreign-owned. In terms of market share, Germany, dominating the top 10 list with four different retail groups, is by far the largest foreign player in the Czech retail market.

Top 10 retailers by sales (2009) in the Czech Republic

Rank

Group / Firm

No. of stores

Sales

 (in Czk bn)

Website

1.

Schwarz (German)

-          Kaufland

-          Lidl CR

306

59

http://www.kaufland.cz

http://www.lidl.cz

2.

Rewe (German)

-          Billa

-          Penny Market

519

49

http://www.billa.cz

http://www.penny.cz

3.

Tesco (UK)

-          Tesco hypermarket

-          Tesco obchodní dům

-          Tesco supermarket

-          Tesco Express

135

47

http://www.itesco.cz

4.

Ahold (Dutch)

-          Hypernova

-          Hyper Albert

-          Albert

279

43

http://www.ialbert.cz

5.

Makro Cash & Carry (German)

13

37

http://www.makro.cz

6.

Globus (German)

-          Globus

-          Globus Baumarkt

14

26

http://www.globus.cz

7.

GECO Tabak (Czech)

225

17

http://www.geco.cz

8.

Spar (Austrian)

-          Interspar

-          Spar supermarket

-          Spar Šumava

33

14

http://www.spar.cz

9.

Peal (Czech)

-          Don Pealo

20

9

http://www.peal.cz

10.

IKEA (Swedish)

4

9

http:// www.ikea.cz

1-10

Total

1,548

309

 

Source: Incoma GfK, Moderni obchod

While the continued influx of foreign retailers has significantly improved the shopping experience and infrastructure in the country, they have also intensified competition and driven many small- to medium-sized retailers out of the market. Although most of the leading foreign retailers in the market are selling both imported and locally sourced products, the prices and variety of their products are usually inferior to those available in other CEE markets such as Poland. The higher price is due mainly to the small order quantity of Czech importers, despite the lower operational and labour costs in the Czech Republic.

Unwavering shopping mall boom and the rise of corner shops

Thanks to its high purchasing power and rising consumerism, the Czech Republic has seen a massive increase in the number of shopping malls in recent years, with currently some 60 of them dotted around the country. According to Incoma Research, the Czech Republic has the highest number of shopping malls per capita than any other country in the CEE region, even if we don’t take into account the other 50 shopping mall projects in the pipeline.

Selected major shopping centres in Prague

Name

Website

Arkády Pankrác

http://www.arkady-pankrac.cz

Černá růže

http://www.cernaruze.cz

Metropole Zličín

http://www.metropole.cz

Myslbek

http://www.myslbek.com

Nový Smíchov

http://www.novysmichov.eu

Palác Flóra

http://www.palac-flora.cz

PALLADIUM

http://www.palladiumpraha.cz

Slovanský dům

http://www.slovanskydum.com

Vinohradský Pavilon

http://www.pavilon.cz

While shopping malls have already been an essential part of the everyday lives of Czechs, and that boom looks set to sizzle again as the recession ebbs, quite a few existing retailers have planned or even started to turn away from shopping malls to making inroads into the “corner shop”[1] market. In this regard, discounters and convenience stores show the most promise, thanks partly to the uncertain economic situation. For instance, according to Incoma Research’s study “Retail Vision 2010”, the market share of discounters is projected to increase to 17% in 2010 from 14% in 2007. For convenience stores, Tesco’s Express and Zabka (Poland’s biggest independent retail store chain) are good examples of the new penetration strategy of foreign retailers. On the one hand, further consolidation and expansion of retailers in the Czech Republic will lead to a greater inclination towards direct sourcing from manufacturers, posing a rising threat to Hong Kong traders; on the other hand, further consolidation and expansion of retailers in the Czech Republic could mean greater power to place larger orders, creating a bigger pie for Hong Kong traders to clamour for.

Higher degree of organisation

Thanks to their competitive prices, increased diversity of offerings and generous instalment plans, hypermarkets/supermarkets and discount chains continue to proliferate in the Czech Republic, accounting for around 35% of the total store-based retail sales in the country in 2009. In face of the keenest-ever competition and hardest-ever operating environment in the retail sector in the Czech Republic, many of these retail chains in the country have not only expanded their product range, for example, to cover more non-grocery items such as own-brand clothing, footwear and electronics products, but have also undergone regular renovation to offer new shopping experiences to consumers. Also worth noting is the hypermarket/supermarket chains’ march to tap the market in rural areas and small towns with say less than 50,000 inhabitants. This movement not only helps widen the scope of hypermarkets/supermarkets’ business in the Czech Republic and eases the market saturation in big cities, but also further increases the degree of organisation in the Czech retail market.

Chart: Retail sales in the Czech Republic, 2009

The vast and expanding distribution network throughout the whole country of these hypermarkets, supermarkets and discounters makes them good business partners with whom Hong Kong exporters should make contact when planning to tap into the Czech market. As a matter of fact, some of these retail chains, especially those from Western Europe, already have buying offices or appointed agents on the Chinese mainland or other Southeast Asian countries to carry out sourcing and quality control. To jump start, as an alternative to setting up a direct presence in the Czech Republic, Hong Kong exporters can approach the offices of these Czech buyers for business.

To use the Czech Republic’s edge as a springboard for Hong Kong exporters to tap into other markets in CEE, Hong Kong companies may find it useful to partner with local retailers that have extensive retail networks throughout the Czech Republic as well as other neighbouring countries, especially Slovakia.

Selected examples of national importers/distributors and retailers in the Czech Republic

Consumer electronics

 

Alza

http://www.alza.cz

Datart

http://www.datart.cz

Electro World

http://www.electroworld.cz

Fast

http://www.fastcr.cz

HP Tronic

http://www.hptronic.cz 

Kappenberger+Braun Expert

http://www.kbexpert.cz

Okay

http://www.okaycz.eu

Fashion (i.e. clothing and footwear)

Adler

http://www.adler.info

Andrie

http://www.andrie.cz

Bata

http://www.bata.cz

Uncle Sam

http://uncs.eu

Jewellery and timepieces

 

Alo

http://www.alo.cz

Diamonds International Corporation

http://www.dic.as

Klenoty Aurum

http://www.klenotyaurum.cz

Spleen

http://www.spleen.sk

Vivantis

http://www.vivantis.cz

Toys and games

Alltoys

http://www.alltoys.cz

HM Studio

http://hmstudio.cz

Lamps

http://hracky.lampshracky.cz

Pompo

http://www.pompo.cz

Rappa

http://www.rappa.cz

Sparkys

http://www.sparkys.cz

Wiky

http://www.wiky.cz

Gifts and premiums

 

IMI Partner

http://www.imi.cz

Moravia Propag

http://www.moraviapropag.cz

Reda

http://www.reda.cz 

Whiteberry

http://www.whiteberry.cz

Home furnishings and building materials

Siko Koupelny

http://www.siko-koupelny.cz

Household products

 

Tescoma

http://www.tescoma.com

TV Products

http://www.tvproducts.cz 

UTC

http://www.utc.cz

Velkoobchod Orion

http://www.oriongroup.c

 


[1] Local shops within walking distance to homes or offices of customers

Content provided by Hong Kong Trade Development Council
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