Corner shops to make comeback?

SHOPPING centres and hypermarkets became popular in Slovakia in early 2000. However, consumer trends seem to show that the slogan "Everything under one roof" is not enough.
The growing purchasing power of Slovakia's population, along with an increasing demand for comfort and quality, mean that changes to the Slovak retail market can be expected.

SHOPPING centres and hypermarkets became popular in Slovakia in early 2000. However, consumer trends seem to show that the slogan "Everything under one roof" is not enough.

The growing purchasing power of Slovakia's population, along with an increasing demand for comfort and quality, mean that changes to the Slovak retail market can be expected.

Styles are shifting back to smaller shops and large commercial chains are already planning to open stores that will be open seven days a week and cover no more than 500 square metres.

The advantage that larger chains such as COOP Jednota and Tesco have over smaller competitors like Bala, which already has smaller stores around the country, is their experience and developed distribution and logistics networks, Ľubomír Drahovský, an analyst from the Terno survey agency, told the Sme daily.

Tesco has already experimented in the UK with smaller shops known as Tesco Express.

"Currently, Tesco has focused on opening stores in smaller towns with 10,000 to 20,000 inhabitants," Oľga Hrnčiarová, spokeswoman of Tesco in Slovakia, told The Slovak Spectator. She said that in these locations, Tesco builds hypermarkets covering around 3,000 square metres and smaller shops covering no more than 1,000 square metres.

Customers in these smaller supermarkets have some 2,500 products to choose from, including food, drugstore goods, clothing, appliances and electronics, Hrnčiarová said. Fresh bread and pastries, dairy products, fruits, vegetables and meat are among the most important products, she said.

Gabriel Csollár, president of COOP Jednota, told Sme that their small stores are meant mostly for the younger generation, which demands fresh products and a fast checkout.

However, the anticipated changes are also encouraging private equity groups to invest in this business segment. At the end of May, the private equity group Penta bought a Polish convenience store chain called Žabka Polska, established in 1999.

"Žabka shops are not meant to be competition for hypermarkets," Martin Danko, Penta's spokesman, told The Slovak Spectator.

"They are small stores you can walk to instead of drive to, they are literally on every corner and they are open seven days a week," he said. He added that these stores are not meant for people to do their weekly shopping in.

Žabka's competitive advantages are that one of its branches is always at hand, and shoppers can top-up their mobile phone credit or pay bills there.

According to Danko, there is a lot of room on the Slovak market for this type of retail chain, just like in other post-communist countries. Penta's priority is to expand Žabka in Poland, said Danko. At the moment, the chain only has a 1.5 percent share of the Polish food market, and Penta plans to double the amount of Žabka stores.

"We believe in the concept of Žabka, since it's very successful in Poland and it could be successful in Slovakia and the Czech Republic as well," Danko said. Penta is working on a feasibility study at the moment that will serve as a basis for Žabka's planned expansion.

According to Drahovský, the arrival of Žabka in Slovakia could mean a chance for smaller stores located outside of cities mainly in northern Slovakia, Sme wrote.

"Penta has a chance to turn existing stores into a franchise that would be supplied by a single supplier," Drahovský told Sme.

According to the Slovak weekly Trend, another network, Metro Cash & Carry, is planning to do something similar - not open their own stores, but modernise existing stores that are run by selected entrepreneurs in small towns and villages, under the condition that the stores be branded with the Metro colours and that the managers order at least 80 percent of their goods from Metro.


Biggest food retail chains in Slovakia
Chain Revenue in 2006
COOP Jednota Sk32 billion (€965.55 million)
Tesco Stores SR Sk26.9 billion (€811.48 million)
Metro Cash & Carry Sk17.4 billion (€524.9 million)
Billa Sk12.2 billion (€367.96 million)
Kaufland SK Sk9.8 billion (€295.57 million)
Ahold Retail Slovakia Sk7.4 billion (€223.24 million)
CBA Slovakia Sk4.8 billion (€144.83 million)
Carrefour SK Sk4.5 billion (€135.76 million)
Lidl SR Sk4 billion (€120.68 million)

Source: Trend

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