How locals and foreigners compete in the CEECs

How locals and foreigners compete in the CEECs

The retail sector has undergone a profound reorganization since 1990 in each country of the area. Within a few years, retailing has become privatized and the number of outlets has increased considerably, as the Revue Elargissement has already mentioned (in particular in issue RES07 of May 2001, available on www.dree.org/elargissement). In this edition, we provide a progress report on the way the large-scale retail sector is gradually nibbling away market shares from the traditional retailers.

The local players and/or their outlets have often disappeared:

In Slovakia, the local players have been acquired by Czech (Interkontakt) or foreign chains (Tesco);

In Hungary, Tengelmann, Delhaize, Julius Meinl or Tesco have become involved in privatization by acquiring existing chains; as for Spar and Rewe they have begun to form their own network;

In Romania, some older forms of retailing have survived the reorganization: kiosks, itinerant vendors and local markets are still present.

Some local players were able to adapt to the new environment. Thus, in 1994, the former state-owned co-operatives in Slovakia were transformed into groups, such as “purchase co-operatives” (Co-op). In Hungary, the old provincial stores have tried to withstand the competition of the multinationals by creating national chains, such as Co-op and CBA (centralization of purchasing, retailing and marketing).

Retailing is a dynamic sector in the majority of the CEECs, even if it does sometimes remain a sector with little structure. The growth of large scale retailing does not prevent consumers from continuing to patronize local shops.

The Romanian retail sector still remains underdeveloped (economic weakness of the present retailers) and poorly structured. This country has, from 1996 onwards and to the present day, been assailed by large foreign chains, in particular German, and then by Spanish and French chains. The number of outlets (small shops, grocery stores and kiosks) has more than doubled in 10 years. They represent the very great majority of outlets and 90% of the turnover of the retail sector.

In Slovakia, new foreign retail chains (Carrefour, Kaufland, Metro) appeared in 2000. The opening of the first Carrefour hypermarket in Bratislava fundamentally altered the parameters of the existing retail network (supremacy of Tesco in town centres and disparate outlets). It should be emphasized that, in spite of the “hypermarket boom”, the Slovaks still prefer small local shops.

The Hungarian retail sector was radically reorganized by the creation of national chains (Co-op, CBA) and by the appearance of Cash&Carrys (Metro), hypermarkets (Tesco, Auchan, Cora, Spar) and shopping centres. Even though the hypermarkets play an increasingly important role, local shops still occupy a prime position in the retail trade in Hungary, in particular in the provinces. Discounts also play a significant role.

In Bulgaria, the small retailers still play a very important role. However, reorganization is also taking place since the arrival of METRO in 1999. Nevertheless, for the moment the number of large hypermarkets remains limited. Three large international companies currently operate : METRO Cash & Carry (7 hypermarkets throughout the country), Billa (9) and Ramstor (2). The local chains are of less significant size and mainly target the customers of Sofia (Fantastico, Oazis, Elemag), Plovdiv (Mega Marina) and Varna (Picadilly).

For more analyses see the

enlargement website of DREE.