Czech Republic · The Czech Republic’s wholesale and retail trade sector is one of the important...
Transcript of Czech Republic · The Czech Republic’s wholesale and retail trade sector is one of the important...
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Retail SectorCzech Republic
July 2015
CZ_44_0001_Jul’2015_GM_NY
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Table of Contents
I. Retail Sector Overview
1. Retail Sector Highlights
2. Economic Importance
3. GDP Trends
4. GDP Trends (cont’d)
5. Driving Forces of Retail Sector
6. Forecast
7. Retail Sales Dynamics
8. Confidence Indicators
9. Household Loans
10.FDI Flows
11.Consumer Prices
12.Wage and Employment
13.Number of Enterprises
14.Government Policy
II. Supply Channels
1. Supply Channels Highlights
2. Customer Preferences for Shopping Place
3. Franchise Systems
4. Retail Market Ranking
5. Shopping Center Stock
6. Shopping Centers
III. Retail Trade Except of Motor Vehicles and
Motorcycles Sub-Sector
1. Retail Trade Sub-Sector
2. Retail Trade Sub-Sector (cont’d)
3. Retail Trade by Segments
4. Employment and Wages
5. Output and Sales
6. Food and Beverages Retail Market
7. Food and Beverages by Segments
8. Food and Beverages Trade
9. Pharmaceuticals Market
10.Apparel Retail Market
11.Furniture Market
IV. Wholesale Trade, Except of Motor Vehicles Sub-
Sector
1. Wholesale Trade Highlights
2. Key Indicators
V. Motor Vehicles and Motorcycles Sub-Sectors
1. Wholesale and Retail Trade of Motor Vehicles Highlights
2. Local Sales
3. Registrations
4. Passenger Car Registrations
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Table of Contents
5. Light Commercial Vehicle Registrations
6. Employment and Wages
VI. E-Commerce
1. E-Commerce Highlights
2. Central Europe Ranking
3. Internet Retailers
VII. Major Players
1. Top M&A Deals
2. M&A Activity, 2013-2014
3. Tesco Stores CR
4. Tesco Stores CR (cont’d)
5. Ahold Czech Republic
6. Ahold Czech Republic (cont’d)
7. Kaufland Ceska Republika
8. Penny Market
9. Billa
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I. Retail Sector Overview
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Retail Sector Highlights
The Czech Republic’s wholesale and retail trade sector is one of the important sectors in the economy, accounting for 10.2% of total gross value added (GVA) in 2014. The sector
has been one of the drivers of economic growth in the last few years. The wholesale and retail trade sector grew by a real compound annual growth rate (CAGR) of 3.3% in the
period 2010-2014, outpacing the economy’s overall GVA growth rate of 1.2% for the same period. Still, the sector’s value-added output accounted for only 0.28% of the world
output of wholesale and retail services in 2014, according to the estimates of forecasting consultancy Oxford Economics.
Importance
Growth Rates
Drivers
Outlook
After the global financial crisis the Czech Republic’s retail trade sector followed a downward trend, but the tendency reversed and the sector started to recover in 2013, supported
by growing employment, increasing incomes, economic recovery and improving consumer confidence. Retail trade (excluding motor vehicles) rose by 3.3% y/y in 2014, while sale,
maintenance and repair of motor vehicles stepped up by 13.5% y/y for the same period – which were the highest growth rates reported in the last seven years. The sector is
labour-intensive. It employed about 1.24mn workers in 2014, accounting for 24% of the total employment in the country. There are about 250,000 enterprises operating in the trade
sector, of which more than 50% are in the retail trade sub-sector. Most of the enterprises are small ones and only 0.1% of retail trade enterprises have more than 250 workers.
Increasing real incomes and growing employment have been the main driving factors for the retail’s sector development in the country. In addition, the improved business and
consumer confidence of the last two years – together with the economic recovery which started at end-2013 and has continued in 2015 – has had a positive effect on domestic
demand and consumer consumption, which has stimulated retail sales. The Czech Republic has had one of the lowest unemployment rates in the EU (6.1% in 2014, far below the
EU average of 10.2%). Poverty has also declined in the country in the last few years, which has further boosted consumption and retail trade. The percentage of the population
reckoned to be “at risk of poverty” has dropped, falling from 9.6% in 2012 to 8.6% in 2013, the lowest in any EU country.
The wholesale and retail trade sector is expected to continue to grow at a high annual rate of 2.9% over the period 2015-2020, according to the estimates of economic research
specialist Oxford Economics. The sector will continue to be one of the main drivers of economic growth. This will result not only from domestic demand and strong household
consumption, but also from high investments in the sector, which are expected to reach CZK 88.4bn in 2020.
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Source:
Economic Importance
Main Economic Indicators
Czech National Bank, CEIC, IMF, Statistics office
2008 2009 2010 2011 2012 2013 2014
Total population, mn 10.5 10.5 10.5 10.5 10.5 10.5 10.5
Urban population, % of total 72.8% 72.9% 72.8% 73.1% 73.1% 73.1% 73.2%
GDP, current prices (CZK bn) 4,012 3,925 3,951 4,020 4,048 4,086 4,266
GDP, real growth rate, % 2.5 -4.7 2.1 2.0 -0.7 -0.7 2.0
GDP per capita, current prices USD 22,649 19,698 19,764 21,656 19,670 19,858 na
Final Consumption Expenditures, CZK mn,
current prices2,678 2,731 2,756 2,775 2,781 2,829 2,890
Final Consumption Expenditures,s (% of GDP) 66.7% 69.6% 69.8% 69.0% 68.7% 69.2% 67.7%
Wholesale and Retail Trade; Repair of Motor
Vehicles and Motorcycles, Gross Value Added,
current prices (CZK bn)
394 357 375 376 380 376 395
Wholesale and Retail Trade; Repair of Motor
Vehicles and Motorcycles, Gross Value Added,
% of total GVA
10.8% 10.1% 10.5% 10.3% 10.4% 10.3% 10.2%
Wholesale and Retail Trade; Repair of Motor
Vehicles and Motorcycles, Gross Value Added,
y/y change, real growth, %
0.0 -7.6 8.5 4.0 0.8 -0.6 3.8
FDI Flow, Wholesale and Retail Trade, Repair of
Motor Vehicle and Motorcycles (CZK mn)na 11,561 35,628 8,007 23,030 -24,731 1,201
FDI Flow, Services na 67,513 112,027 -5,384 109,955 86,873 97,726
FDI Flow, Wholesale and Retail Trade, Repair of
Motor Vehicle and Motorcycles (% of total in
services)
na 17.1% 31.8% -148.7% 20.9% -28.5% 1.2%
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Comments
Source:
GDP Trends
The Czech Republic is а service-based economy, with the services sector accounting for a fairly steady share of around 60% in total GVA.
The service sector has been one of factors driving economic growth, making a positive contribution to the GVA growth rate (0.6pps in 2013
and 0.9pps in 2014). Along with finance and insurance activities, trade has been among the main driving forces behind the performance of
the services sector, with trade and finance and insurance activities, achieving average real growth rates of 3.3% and 3.7%, respectively, over
the last five years. Trade sector dynamics have been in strong correlation with those of GDP in recent years. The sector accounted for 10.2%
of GVA in 2014, contributing 0.4pps to GVA growth of 2.6% in 2014.
GVA Structure GDP and Trade Value Added, Real Growth Rate, %
CEIC, Statistics office
2.1% 1.8% 1.7% 2.4% 2.6% 2.6% 2.6%
37.7% 36.8% 36.7% 37.0% 37.0% 36.7% 37.9%
60.2% 61.4% 61.6% 60.6% 60.4% 60.7% 59.5%
0%
20%
40%
60%
80%
100%
2008 2009 2010 2011 2012 2013 2014
Services Industry (incl. construction) Agriculture
0.0%
-7.6%
8.5%
4.0%
0.8% -0.6%
3.8%
2.5%
-4.7%
2.1% 2.0%
-0.7%-0.7%
2.0%
2008 2009 2010 2011 2012 2013 2014
Wholesale and retail trade; repair of motor vehicles and motorcycles
GDP
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Comments
Source:
GDP Trends (cont’d)
From the final expenditure side, household consumption has been the engine of economic growth, rising by 0.3% on average over the last five years. Increasing
real incomes, economic recovery, low interest rates and low inflation contributed positively to the expansion of consumption. The positive growth of household
consumption reported in 2013 served as a base for gradual recovery, triggering domestic demand. Thus, the growth rate of household consumption rose to 1.7%
y/y in 2014. Increasing business and consumer confidence from mid-2013 gave reason to suppose that consumption would continue to rise in the following years.
And subsequent data confirmed these tendencies, as GDP increased by 4.2% y/y in Q1 2015, exceeding the expected growth rate for the quarter by 0.3pps. Again,
the main factors were domestic demand and, in particular, household consumption and investments.
GDP, Final Expenditures, % GDP and Household Consumption, Real Growth Rate, %
47.7% 48.9% 49.3% 49.3% 49.4% 49.6% 48.2%
19.1% 20.7% 20.5% 19.7% 19.4% 19.6% 19.6%
31.1% 26.5% 27.2% 27.0% 26.3% 25.0% 25.4%
2.2% 3.9% 3.1% 3.9% 4.9% 5.8% 6.9%
0%
20%
40%
60%
80%
100%
2008 2009 2010 2011 2012 2013 2014
Net Export Gross Capital Formation
Government Spending Households and NPISH Consumption
2.5%
-4.7%
2.1% 2.0%
-0.7% -0.7%
2.0%
2.8%
-0.6%
0.9%
0.3%
-1.8%
0.4%
1.7%
2008 2009 2010 2011 2012 2013 2014
GDP Household Consumption
CEIC, Statistics office
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Source:
Driving Forces of Retail Sector
Comments
Average Unemployment Rate, %
Population, End of the Year
Average Gross Wages per Person
Statistics office, World Bank, CEIC, Eurostat
The main factors that contributed to the growth of the retail sector were
higher real wages and a stable labour market, which has been
characterised by growing employment and decreasing unemployment
rates over the last five years. Annual average unemployment fell to 6.1%
in 2014, which was among the lowest levels in the EU, bettered only by
Germany (5%), Austria (5.6%), Luxembourg and Malta (5.9%), Iceland
(5%) and Norway (3.5%). The EU average unemployment rate stood at
10.2% in 2014 (10.9% in 2013). The demographic trends operating in the
Czech Republic were also favourable, as population continued to grow
and the urbanisation rate rose to 73.2% in 2014, compared to 72.8% in
2008. The at-risk-of-poverty rate dropped to 8.6% in 2013 (from 9.6% in
2012), the lowest in the EU.
4.4%
6.7%
7.3%6.7%
7.0% 7.0%
6.1%
2008 2009 2010 2011 2012 2013 2014
10.47
10.51
10.53
10.51
10.52
10.51
10.54
7.62
7.66
7.67
7.68
7.68
7.68
7.71
2008
2009
2010
2011
2012
2013
2014
Urban population, mn Total population, mn
24,3
09
25,4
18
25,5
91 26,2
11 27,0
55
26,5
91 27,2
00
2.6%
4.2%
-1.4%
0.0% 0.4%
-2.8%
1.8%
2008 2009 2010 2011 2012 2013 2014
Nominal value, CZK Рeal growth rate, %
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Source:
Sector Forecast
Retail & Wholesale Distribution, VA, % of world
Retail & Wholesale Distribution, VA, Real USD bn
Employment in Retail & Wholesale Distribution, Thousands
Comments
Oxford Economics
Retail and wholesale value-added is expected to increase at an
average rate of 2.9% in the period 2015-2020, according to
Oxford Economics’ forecasts. It is expected to reach to USD
24.6bn in 2020, on the back of domestic demand related to
increasing disposable incomes and higher employment.
Investments in the distribution chain are also forecast to
increase by 3.9% per year on average over the same period –
and to reach to CZK 88.4bn in 2020.
724.6
727.5728.5 729.0 729.6
731.1
734.2
2014 2015 2016 2017 2018 2019 2020
0.2770.276
0.274
0.272
0.2710.270
0.269
2014 2015 2016 2017 2018 2019 2020
20.7821.34
21.94
22.56
23.22
23.91
24.61
2014 2015 2016 2017 2018 2019 2020
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Comments
Source:
Retail Sales Dynamics
Retail trade (excluding motor vehicles) rose by 3.3% y/y in 2014, while sales, maintenance and repair of motor vehicles increased 13.5% y/y in that year.
These were the highest growth rates reported in seven years.
The outlook for retail trade in 2015 is good, taking into account the continued growth of GDP, which was one of the highest in the last few years (4.2% y/y
in the first quarter of 2015).
Retail Trade Except of Motor Vehicles, y/y change, %* Sale, Maintenance and Repair of Motor Vehicles, y/y change,%
Statistics office, - * seasonally adjusted, but not working day adjusted
-20
-15
-10
-5
0
5
10
15
20
25
Jan,
200
8
Jan,
200
9
Jan,
201
0
Jan,
201
1
Jan,
201
2
Jan,
201
3
Jan,
201
4
Jan,
201
5
Sale, maintenance & repair of motor vehicles & motorcycles
-8-6-4-202468
101214
Jan,
200
8
Jan,
200
9
Jan,
201
0
Jan,
201
1
Jan,
201
2
Jan,
201
3
Jan,
201
4
Jan,
201
5Retail trade except of motor vehicles and motorcycles
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Source:
Confidence Indicators
Comments
CEIC, Statistics office, - * seasonally adjusted
Business Confidence Index, 2005=100*
Confidence Indices, y/y change*
70
80
90
100
Dec, 2008 Dec, 2009 Dec, 2010 Dec, 2011 Dec, 2012 Dec, 2013 Dec, 2014
60
70
80
90
100
110
Dec, 2008 Dec, 2009 Dec, 2010 Dec, 2011 Dec, 2012 Dec, 2013 Dec, 2014
2009 2010 2011 2012 2013 2014
Consumer Confidence, y/y growth rate 18.0% -2.6% -22.6% 5.4% 22.3% 13.5%
Business Confidence, y/y growth rate 1.9% 17.8% -9.0% -3.5% 7.4% 4.3%
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Comments
Source:
Household Loans
Increasing incomes and growing employment due to economic expansion have been driving credit demand expansion since 2003. The credit boom
continued until the global financial crisis, when high interest rates cooled down demand. However, even after the financial crisis, household loans continued
to increase, albeit at a decelerating growth rate, which fell to its lowest in 2012, at 3.4% y/y. Since 2013, household lending growth has picked up
somewhat due to low interest rates and the economic recovery that started in the middle of that year. In 2014, no less than 73.3% of the credits extended
were for housing purchases, followed by consumer loans (15.8% of the total as at end-2014). We expect that the demand for credit will continue to be brisk
this year and will boost further consumer spending on durable goods, automobiles and real estate.
Household Loans, eop, CZK mn Household Debt, % of nominal GDP
Czech National Bank, CEIC
25.1
26.7
27.8
28.7
29.529.0
Dec-09 Dec-10 Dec-11 Dec-12 Dec-13 Dec-14
851,
470
940,
483
1,02
8,14
1
1,09
5,24
4
1,13
2,23
1
1,18
0,73
1
1,22
8,14
9
20.3%
10.5%9.3%
6.5%
3.4%4.3% 4.0%
2008 2009 2010 2011 2012 2013 2014
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Comments
Source:
FDI Flows
The trade sector as a whole (including both wholesale and retail trade and the sub-sector dealing with repair of motor vehicles and motorcycles) has
attracted a significant portion of FDI inflows into the Czech Republic, accounting for 9.7% of the total over the period 2009-2014. According to international
consultancy firm KPMG, factors driving general FDI increase have included good infrastructure, advantageous geographical location, availability of
suppliers and inputs, and high profitability, as well as low external and internal imbalances. In terms of the profitability of FDI in the whole economy, the
Czech Republic ranked first among EU new member states (the countries entered the EU in 2004 and 2007) in 2012, followed by Estonia. Among types of
FDI inflow to the sector, “other capital” – as distinct from equity capital and reinvested earnings – was the most prominent source of increase, accounting
for about 70% of the sector’s total FDI in the period 2009-2014.
Total FDI and FDI in Wholesale and Retail Trade, CZK mn FDI Inflow Structure, CZK mn
CEIC, Czech National Bank, KPMG, AmCham
55,7
94
117,
275
41,0
11
156,
309
71,9
18
122,
646
11,5
61 35,6
28
8,00
7
23,0
30
-24,
731
1,20
1
2009 2010 2011 2012 2013 2014
Foreign Direct Investment, Flow
Wholesale and Retail Trade, Repair of Motor Vehicle and Motorcycles
5,93
9 11,2
59
1,10
9 5,37
4
-8,1
18
2,60
9
-1,3
14
3,60
6
-595
499
-6,3
55
2,13
96,93
6
20,7
63
7,49
2
17,1
57
-10,
258 -3,5
47
2009 2010 2011 2012 2013 2014
Equity Capital Reinvested Earnings Other Capital
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Comments
Source:
Consumer Prices
Inflation has been low over the last few years, and has dropped significantly since a modest spike in 2012: it is now at or below the lower boundary of the 1%
tolerance band around the inflation target of the Czech National Bank (CNB), which has been at 2% since 2010. The government has increased a number of taxes,
including VAT, but the policy has not had sufficient positive impact to overcome the tendency to price slowdown. In autumn 2013, at a moment when interest rates
were too low to cut further the central bank was forced to implement an expansionary monetary policy by means of interventions on the foreign exchange (FX)
market, in order to weaken the koruna and to maintain the exchange rate close to EUR1:CZK 27. In 2015, the bank decided to continue with FX intervention until
mid-2016 in order to cope with inflation dynamics. The main factors for decreasing overall price growth have been falling prices of fuels and telecommunications
services.
Inflation, Measured by Harmonized Consumer Price Index, % CNB’s Key Policy Rates, %
Czech National Bank, Statistics office
3.9
4.7
1.8
0.1
2.8
1.9
2.52.8
6.3
1.01.5
1.9
3.3
1.4
0.4
2000 2002 2004 2006 2008 2010 2012 2014
Inflation
0.75 0.75
0.50
0.05 0.05 0.050.05 0.05
0.25 0.25 0.250.05 0.05 0.05
0.05 0.05
1.751.75
1.50
0.25 0.25 0.25 0.25 0.25
2W repo Discount Lombard
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Comments
Source:
Wage and Employment
In 2014, employment in the retail sector continued to increase for the second consecutive year, boosted by domestic demand. It reached 1.24mn in 2014,
up by 0.6% y/y. Employment in the sector accounted for about 24% of total employment in the country in 2014, exceeding the level in the pre-crisis period
(23.7% in 2008), which suggests that the sector has succeeded in recovering and is showing potential for higher growth rates than those of the total
economy. The average gross monthly wage also started to increase in 2014, due to higher demand for labour as a result of the expansion of the economy
and higher consumption. The average gross monthly wage in the sector was lower (by around 8.6% in 2014) than the average wage for the total economy,
probably because the sector is labour-intensive and uses mainly low-skilled people.
Average Gross Monthly Wage, CZK Employment in Trade, ESA2010, Person
Statistics office, CEIC
22,7
73 23,5
61
24,5
81 25,4
05
24,2
61 24,8
74
0.5%
3.5%
4.3%
3.4%
-4.5%
2.5%
2009 2010 2011 2012 2013 2014
Avg Gross Monthly Wages in Wholesale, Retail Trade and Repair of MotorVehiclesy/y change, %
1,23
4,51
7
1,24
6,33
9
1,24
1,90
1
1,23
1,77
7
1,23
4,31
8 1,24
1,94
1
-0.7%
1.0%
-0.4%
-0.8%
0.2%
0.6%
2009 2010 2011 2012 2013 2014
Trade, Transportation, Accommodation & Food Services
y/y change, %
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Comments
Source:
Number of Enterprises
According to the available official data, the total number of active enterprises in the trade sector (including NACE 45, 46 and 47) reached
248,104 as at end-2012, up by 1.1% y/y – and by 19.2% on 2006. The number of enterprises will probably turn out to have increased in 2013
and 2014 at a higher annual rate than in 2012, to judge from the reported growth rates of the sector and higher household consumption,
which has stimulated demand for the sector’s products. Most of enterprises were in the retail trade sub-sector (NACE 47), which accounted
for 53.2% of the total number of enterprises. Meanwhile, the retail sector was dominated by small businesses: at end-2012, just 107
enterprises had workforces of more than 250 employees.
Number of Active Enterprises, Units (year-end) Structure of Trade Sector, Units
Statistics office
202,
074
204,
167
212,
578
222,
781
231,
934
245,
411
248,
104
2006 2007 2008 2009 2010 2011 2012
Trade
30,3
89
30,6
59
31,5
62
32,6
51
32,8
10
32,9
74
32,7
1851,1
24
52,3
67
58,0
50
61,5
44
69,9
45
77,0
03
83,2
50
120,
561
121,
141
122,
966
128,
586
129,
179
135,
434
132,
136
2006 2007 2008 2009 2010 2011 2012
Wholesale and retail trade and repair of motor vehicles and motorcycles (CZ-NACE 45)
Wholesale trade, except of motor vehicles and motorcycles (CZ-NACE 46)
Retail trade, except of motor vehicles and motorcycles (CZ-NACE 47)
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Government Policy
VAT rate
The government imposed a number of fiscal restrictions after the global financial crisis and the eurozone debt crisis, in
order to cope with the increasing budget deficit, which was at its highest at 5.5% of GDP in 2009 and 3.9% in 2012. In
order to decrease the budget deficit the government started a policy of increasing its revenues by imposing higher VAT
rates. The VAT rate was increased by 1pps to 20% as of January 1, 2010 and by an additional 1pps to 21% as of January
1, 2013. The country had a reduced VAT rate of 15% on foodstuffs, medical goods and services, pharmaceutical products,
passenger transport, newspapers, admission to cultural sporting and entertainment events, and hotels. As of January 1,
2015, the government approved a second new reduced VAT rate of 10% on medicines, pharmaceuticals, books and baby
foodstuffs. The government planned to eliminate the reduced VAT rate by imposing a single VAT rate at 17.5%, but has
delayed its plans to 2016. Thus, in order to reduce the tax burden, the government decided to introduce the second
reduced VAT rate. Fiscal policy has now turned expansionary, which will have a positive effect on disposable incomes and
on the consumption of various goods and services. The estimated cost for the government of introducing the second
reduced VAT rate is CZK 3bn.
Monetary
Policy
As noted above, the central bank has intervened on the forex market in order to keep the Czech koruna weak in relation to
foreign currencies. This policy had a positive impact on sales, especially in export-oriented sectors. The expansionary
monetary policy has affected economic development positively. Increasing disposable incomes, the low unemployment
rate and high consumer confidence led to a significant increase in retail trade (excluding motor vehicles), which stepped up
by 3.3% y/y in 2014.
Czech National Bank, Statistics office, Europa.eu, Vatlive.com
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II. Supply Channels
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Supply Channels Highlights
The main type of retail channel in the Czech Republic is the hypermarket. In 2014, the top five hypermarket retailers reported a 1% y/y increase in their sales, according to a study by
the United States Department of Agriculture (USDA). They operated 307 outlets with total selling space of more than 1,400 square meters. The five biggest hypermarket chains in the
country were Albert, Globus, Interspar, Kaufland and Tesco. Kaufland is the most popular chain on the market with a 23% market share, according to a survey conducted in 2015 by
Prague-based market research company Incoma GfK.
Hypermarkets
Discounters
Supermarkets
Franchise Market
Discounters have gained popularity in recent years, especially in the years since the economic downturn of 2012. They reached a share of 25% as of end-2014, up from 18% at
end-2012, according to Incoma’s 2015 study. The top two discounters are Lidl and Penny Market. Lidl has attracted customers by offering non-food items at competitive prices.
Discounting is at present the retailing channel most dependent on economic development. The behaviour of discounters’ customers has been determined mainly by overall price
levels and has been less dependent on other factors. Customers preferred the discounters because they were offering good prices and were also time-saving. Discounters’ sales
rose quickest in 2014, up 6% y/y, according to the USDA.
Supermarkets were preferred by 16% of households in 2014 – down from 18% in 2012. The top three supermarket chains in the country are Albert, Billa and Tesco. Supermarkets reported a growth rate
of 3% y/y in sales in 2014, according to USDA’s report. According to a survey carried out for Billa by the Datank market research agency (and reported by national news agency CIA), Czech families do
not have a preference for a “big shopping”: two-thirds of shoppers prefer to visit the supermarket several times a week. The most important factor for customers was the price of goods. The survey
showed that if the stores announced discounts, 89% of respondents said that they were motivated to go to purchase. Most of the respondents (99%) preferred Czech foodstuffs; specialised retailers also
have great popularity. About 86% of households shopped in specialised stores, such as butcher shops, bakeries, greengrocers, etc. Customers visited specialised stores once a week on average,
according to data from international market research company GfK.
The franchise market in the Czech Republic started to develop as long ago as 1990. The number of franchise agreements has been growing in recent years, reaching 219 in 2013,
according to data published by the international consulting company PROFIT system . That figure represents a y/y growth of almost 10%, suggesting that there is keen interest in
using this system for expansion. The number of franchise units rose by more than 16% y/y to 6,152 in 2013. The biggest increase in franchise systems was seen in the trade
sector, while the services sector reported a decline.
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Source:
Comments
Customer Preferences for Shopping Place
The shopping outlets most favoured by households were hypermarkets. As many as 47% of households preferred them as of end-2014, at the expense of
small shops, which offered a smaller range of goods, in most cases at higher prices. As many as 82% of households claimed that the economic situation
had an impact on their shopping behaviour, according to the results of an Incoma Shopping Monitor Survey. About 50% of households responded that the
economic crisis “definitely” had an impact on their shopping behaviour (versus 27% in 2010), while 32% of households claimed that the economic crisis had
an impact on their behaviour “to some extent”(versus 36% in 2010).
Main Shopping Places, % of Households
Incoma GfK
39 40 43 44 47 44 47
16 17 1518
1817
16
25 24 25 21 18 25 24
17 15 15 17 15 12 133 3 3 1 2
0
10
20
30
40
50
60
70
80
90
100
2008 2009 2010 2011 2012 2013 2014
Elsewhere
Small shops
Discounters
Supermarkets
Hypermarkets
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Comments
Source:
Franchise Systems
Entrepreneurs have chosen franchising as a preferred way of doing business due to the economic situation, which was not so favourable especially in 2012 and
2013. About 55% of the franchise systems were in the services sector, while the remainder were in the trade sector. The number of franchise systems in the trade
sector rose by 29% y/y to 98 in 2013, while those in the services sector declined by 6% y/y to 121. Their expansion in retail trade was due to small grocery stores
and convenience stores, which moved closer to customers, according to Marek Halfar, the director of PROFIT system. Most of the franchise systems are of
domestic origin, accounting for 132 or 60.3% of the total number of franchise systems. Taking into account the fact that, in Europe as a whole, domestic franchise
systems account for about 70% of the total, it can be expected that the number of companies operating under franchise in the Czech Republic will continue to grow,
Halfar added.
Number of Franchise Systems, Units Origin of Franchise Systems, %
PROFIT system
150 16
8
200 21
9
12.0%
19.0%
9.5%
2010 2011 2012 2013
Number of Franchise Systems in the Czech Republic
y/y change, %
Foreign franchise
systems 39.7
Domestic franchaise
systems 60.3
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Source:
Retail Market Ranking
Target Markets 2015
The Czech Republic ranked as the 11th most
attractive European market for international retailers
and the 17th globally, according to the 2015 survey
How Active Are Retailers Globally?, published by
international real-estate specialists CBRE.
The Czech Republic was a more attractive area for
international retailers than, for example, the
Scandinavian countries, Ireland or Portugal.
Its most recent scores mark a slight decline,
however: in 2013, the country had ranked 10th, with
16% of retailers planning to open a store there in
2014.
CBRE’s report showed that the Czech Republic’s
market was a saturated one which, however, still
offered retailers high-quality retail space. The country
actually offered not only modern retail shopping
centres, but also a highly developed high street.
According to the report, most retailers entered the
country first in the capital Prague and after that in
regional cities like Brno and Ostrava.
CBRE Research
Rank Country% of Retailers Targeting
the Country in 2015
1 Germany 40%
2 United Kingdom 33%
3 France 31%
4 Spain 23%
5 Italy 21%
6 Netherlands 21%
7 Belgium 20%
8 Austria 19%
9 Swtzerland 17%
10 Poland 14%
11 Czech Republic 13%
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Source:
Shopping Center Stock
Retail Market Key Figure, end-2014
Shopping Center Stock by an Extend of Refurbishment, 2014
Shopping Center Stock, by Size, end-2014
Comments
CBRE Research
The retail real estate market in the country continued its
positive trend in 2014 — its expansion having been especially
significant in the preceding two years. The total shopping-
centre stock reached 2.313mn sq m at end-2014, up by 3% y/y.
However, new supply in 2014 was only 78,000sq m, the third-
lowest level in the last ten years.
In 2014, five new shopping centres were opened. These were
mainly small ones, but were the first in their respective
locations.
Prague Regions
Total shopping center stock (sq m) 814,000 1,499,000
Space under construction (sq m) 8,000 51,900
Prime high street rent (EUR per sq m per
month)190.0 70.0
Prime shopping center rent (EUR per sq m per
month)100.0 55.0
Prime retail park rent (EUR per sq m per month) 12.5 11.0 Small 26%
Medium 34%
Large 25%
Very Large15%
None 66%
Partial 24%
Full 10%
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Source:
Shopping Centers
Completed Shopping Centers, Year-end 2014
Under Construction and Planned Shopping Centers, Year-end 2014
CBRE
Project Name City GLA (sq m) Developer
H1 Galerie Teplice Teplice 21,800 Dandreet
Pivovar Decin Decin 17,500 Settimo Development
OC Luziny Prague 16,000 Urban Developers and Investors LTD
H2 Quadrio Prague 8,000 CPI
Fryda Frydek-Mistek 14,800 TK Development
Project Name City Year GLA (sq m) Developer
Under
ConstructionCentral Kladno Kladno 2015 26,000 Crestyll
Aupark Hradec Kralove 2015 25,900 HB Reavis
Nova Plamovka Prague 2016 8,000 Metrostav
Olanned Borislavka Prague 2017 10,000 KKCG
Centrum Chodov Prague 2017 40,700 Unibail-Rodamco
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III. Retail Trade (Excluding Motor Vehicles and Motorcycles Sub-
Sector)
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Retail Trade Sub-Sector
Retail trade in non-specialised stores generated about 40% of the total sales of the sub-sector. It is also one of the segments which
reports strong growth rates, especially in 2014, when they increased 3% y/y. The segment’s development is determined by higher
growth in retail sales in non-specialised stores, with food, beverages and tobacco dominating and rising by 3.4% y/y in 2014, following
a 1.1% y/y growth rate the year before.
The most dynamic segment in the sector is retail trade outside of stores, stalls or markets, which reported strong growth rates even in the crisis years. The sales generated by the segment accounted for about 6-7% of total retail trade sub-sector sales. However, the segment’s high growth rates, reported at 9-10% y/y in the last two years, meant that its contribution to the reported growth rate of the whole sector has been significant. The positive development of the segment can be explained by the strong demand for various products via mail order houses or via the internet, triggered by new technologies and the expansion of e-commerce. The changed behaviour of customers, who nowadays try not to spend too much time shopping in stores, has determined the strong performance of the segment.
Retail trade (excluding motor vehicles and motorcycles) accounted for 32.3% of the sector’s output and employed 46.2% of trade
sector personnel in 2014. The sub-sector also reported the highest trade margin of 23.2% in 2014, up by 0.2pps y/y. Its average
monthly gross wage was below that of the trade sector as a whole, at only 79.3%. The growth rate of the sub-sector outpaced that of
the trade sector as a whole.
Importance
Online Retail
Non-specialised Stores
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Retail Trade Sub-Sector (cont’d)
The food and beverages sector generated about 8.3% of the sales revenues of processing industry in 2013. The retail sales of food, beverages and tobacco in specialised stores dropped by 1% y/y in 2013 and grew by 1.2% y/y in 2014 in line with the dynamics of household consumption, where the food and beverages accounted for about 23% of household expenditures. The largest revenues in the food sector came from meat and meat products (22.7% in 2013), followed by dairy products (17%). Meat consumption has followed a downward trend and has still not regained its pre-crisis level. Annual meat consumption per capita reached 74.8 kg in 2013 versus 80.4 kg in 2008. The revenues from the sales of beverages also declined after the crisis. Reported revenues reached CZK 54.8bn, down 2.8% y/y in 2013. However, it is likely that in 2014 revenues will have started to increase, as there was strong external demand for beer, which accounted for the main part of the alcoholic drinks market in the country (40.1% in 2013). The Czech Republic remains the country with the highest beer consumption per capita in the world (144 liters in 2014).
Food and Beverages
Pharmaceuticals
Apparel Retail
Furniture
The pharmaceutical market’s value shrank by 9% to EUR 2,125mn in 2013, according to data from the European Federation of Pharmaceutical Industries and
Associations. The industry employed 14,800 persons in 2013, up from 2,300 the year before, and invested EUR 77mn in research and development (R&D). The
expansion of the sector in 2013 was in line with improved prospects for the development of the economy, higher incomes and growing employment. In 2014, the
sector is expected to have continued to grow. The anticipated CAGR for the period 2013-2018 was 3.8%, according to the estimates of the Marketline industry
research consultancy. The main player on the market was Johnson and Johnson, which had a market share of 16.8% in 2013.
Households have been spending about 4.7% of their expenditures on clothing and footwear over the past couple of years, according to the data
provided by the Czech Statistics Office (CZSO). The revenues generated by the segment stood at CZK 49.5bn in 2013. The Czech apparel retail
market accounted for 0.6% of the European market in 2013.
Furniture retail reported a 13% y/y increase in revenues in 2014, which was the highest growth rate seen in a decade and a half, local daily E15 reported. The
production of the sector reached CZK 40bn in 2014, according to the Association of Czech Furniture Makers. The surge in the sector’s revenues was due to an
significant increase in exports, while domestic sales fell. The reason for that was the fact that local consumers sacrificed quality for lower prices. Thus, the net
trade balance in furniture reached CZK 7.5bn in 2014, increasing significantly as compared to a year ago. The surge in exports was triggered by higher external
demand, related to the recovery of the European economy.
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Source:
Retail Trade by Segments
Retail Sales by Main Segments, Nominal Growth Rates, %
Statistics office
2008 2009 2010 2011 2012 2013 2014
Retail trade except of motor vehicles and motorcycles (CZ-NACE 47) 7.1 -5.9 -0.4 2.5 0.3 -0.5 3.3
Retail sale in non-specialised stores 4.9 -2.5 -0.6 2.7 -0.4 0.6 3.0
Retail sale of food, beverages and tobacco in specialised stores 0.6 -6.8 -5.9 0.9 0.0 -1.0 1.2
Retail sale of automotive fuel 22.4 -16.6 9.7 7.3 5.1 -3.8 2.2
Retail sale of information and communication equipment in specialised stores 0.7 -11.3 -4.2 -2.8 0.2 0.2 7.3
Retail sale of other household equipment in specialised stores 4.1 -8.8 -6.2 0.4 -3.2 -4.4 3.8
Retail sale of cultural and recreation goods in specialised stores 7.2 -1.0 -1.1 2.3 2.8 0.5 5.4
Retail sale of other goods in specialised stores 2.2 0.2 -1.2 1.2 -0.1 -1.1 2.1
Retail sale via stalls and markets -6.9 -4.0 -3.0 -11.2 -8.4 -0.7 -3.3
Retail trade not in stores, stalls or markets 16.2 -3.6 0.9 3.3 1.2 9.0 9.8
incl. Retail sale via mail order houses or via Internet 20.5 -0.7 6.7 7.6 4.0 16.2 15.0
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Comments
Source:
Employment and Wages
Average Number of Employees, Persons Average Monthly Gross Wage, CZK
Statistics office
240,583
241,476
240,314
241,201
234,875
234,914
234,478
237,195 232,721
231,458
230,478
232,482
I II III IV I II III IV I II III 1) IIV2)
2012 2013 2014
Average registered number of employees (actual persons)16,831
17,249
17,355
18,597
16,983
17,426
17,826
18,441
17,552
18,058
18,278
18,900
I II III IV I II III IV I II III IV
2012 2013 2014
Average monthly gross wage per actual person
The average registered number of employees in the sub-sector has decreased in recent years, especially after the global financial crisis in
2008, when the average number of employees was 245,963 persons. The non-financial corporations and households in the sub-sector tried
to restructure their enterprises in order to cope with the negative effects of crisis, which were related mainly to the lower demand for the
sector’s products such as automotive fuel, information and communication equipment, and other household equipment.
Meanwhile, the sub-sector’s enterprises managed to increase the average monthly gross wage to CZK 18,196 in 2014 (compared with CZK
15,863 in 2008).
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Comments
Source:
Output and Sales
The sub-sector generated CZK 956bn worth of sales in 2014, up by 2.9% y/y, following a decline of 0.5% y/y in the previous year. The
recovery of domestic consumption explains the improved performance of the retail trade sub-sector. Good perspectives for economic
development in 2015 and improved consumer confidence will have positive effects on the sub-sector’s development. The output of the sub-
sector reached CZK 257.1bn in 2014, up by 3.4% y/y, accounting for 32% of the sector’s output.
Sales, CZK mn Output and Value Added, CZK mn
Statistics office
213,337
233,035
229,816
257,021
207,246
228,713
231,428
260,977
213,246
237,246
237,605
267,596
I II III IV I II III IV I II III 1) IIV2)
2012 2013 2014
Sales,total
55,413
63,442
61,482
72,325 53,740
61,030
60,983
72,939 55,499
63,669
63,170
74,773
25,032
28,952
29,240
35,951 23,191
27,978
29,282
37,344 24,445
28,997
29,466
38,649
I II III IV I II III IV I II III 1) IIV2)
2012 2013 2014
Outputs, incl. trade margin Value added
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Source:
Food and Beverages Retail Market
Food Retail Revenues, CZK bn
Food Retail Market Revenues’ Forecast
Food Retail Market Distribution, % Share
Comments
Marketline, Statistics office
The food retail market, including retail sales of food products and beverages, generated total
revenues of CZK 408bn in 2013, down by 0.9% y/y, as Marketline reported. The CAGR for the
period 2009-2013 was 0.3%. The downward trend in the segment’s revenues was related to
low domestic and external demand. However, in 2014, the segment can be expected to report
an increase, due to the recovery of domestic consumption, which reported a growth rate of
1.7% y/y in 2014. Food and beverages accounted for the biggest share of household
expenditures (about 23% in 2014).
The recovery of external demand in 2014 and 2015 will also contribute to higher revenues for
the segment in the coming years. The Czech Republic is a net exporter of beverages and
tobacco products and a net importer of food products.
The 2013 turnover of the organic food market surged by 10% to CZK 2.7bn, of which domestic
consumption accounted for CZK 1.95bn. Of the latter total, CZK 1,745bn was generated by
sales in retail outlets (as opposed to public catering and direct sales).
403
410
423
411
408
1.7%
3.1%
-2.7%
-0.9%
2009 2010 2011 2012 2013
Food Retail Industry Value, CZK bn y/y change, %
Supermarkets/hypermarkets
49.9
Independent and Specialist
Stores 35.9
Convenience stores 12
Other 2.2
410.
1 411.
2
413.
9
413.
9
414.
6
0.6%
0.3%
0.7%
0.0%
0.2%
2014f 2015f 2016f 2017F 2018f
Food Retail Industry Value, CZK bn y/y change, %
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Source:
Food and Beverages by Segments
Meat and Meat Products’ Revenues, CZK bn
Bakery Products’ Revenues, CZK bn
Dairy Products’ Revenues, CZK bn
Beverages’ Revenues, CZK bn
Ministry of Agriculture
57.1
54.1
51.3 51.7
52.8
51.7
2008 2009 2010 2011 2012 2013
41.1
35.9
37.0
38.938.1
41.0
2008 2009 2010 2011 2012 2013
32.5
30.2 29.9
31.631.2
27.4
2008 2009 2010 2011 2012 2013
63.5
60.9
56.455.6
56.4
54.8
2008 2009 2010 2011 2012 2013
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Source:
Food and Beverages Trade
Exports and Imports of Food Products, CZK bn
Exports and Imports of Beverages, CZK bn
Trade Balance of Food Products, CZK bn
Trade Balance of Beverages, CZK bn
Statistics office- External Trade Database
77.9
73.9
76.3 91
.4 108.
1
116.
1
130.
2
105.
2
106.
9
112.
6
123.
2
136.
8
145.
8
157.
4
2008 2009 2010 2011 2012 2013 2014
Exports of Food and Live Animals Import of Food and Live Animals
-27.
3
-33
-36.
3 -31.
8 -28.
7
-29.
7
-27.
2
2008 2009 2010 2011 2012 2013 2014
16.4
16.2
16.8
17.1 19
.9 22.6 27
.1
12.7
13.5
14.4 16
.3 18.5
19.8
19.6
2008 2009 2010 2011 2012 2013 2014
Exports of Beverages and Tobacco
Imports of Beverages and Tobacco
17.6
14.3
19.9 21
.8
20.9
26.7
30.6
2008 2009 2010 2011 2012 2013 2014
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Comments
Source:
Pharmaceuticals Market
The Czech OTC pharmaceuticals market reported total revenues of USD 1,121mn in 2013, expanding by a compound annual growth rate (CAGR) of 4% over the period 2009-2013,
Marketline reported. The biggest segment in the sector was traditional medicines, with a share of 31% of the market’s value. Traditional medicines generated total revenues of USD 347.9mn
in 2013. Most of the sector’s products were distributed by pharmacies and drugstores, followed by supermarkets and hypermarkets. The Czech pharmaceuticals market accounted for 2.5%
of the European market in 2013. In 2014 and 2015, the market is estimated to have expanded at higher growth rates.
According to the data provided by the European Federation of Pharmaceutical Industries and Associations, the Czech Republic spent EUR 77mn on R&D related to medicines in 2013, up
from EUR 49mn in the previous year. Thus, there is potential for faster development of the industry in future.
In addition, as of January 2015 the VAT rate on medicines was reduced from 15% to 10%, which should have a positive effect on the consumption of the sector’s products.
Pharmaceuticals Market Segmentation by Value, % Share Market Distribution, % Share
Marketline, European Federation of Pharmaceutical Industries and Associations
Traditional medicines
31.0%
Cough and Cold
Preparations16.2%
Analgesics14.4%
Indigestion Preparations
11.0% Vitamins and Minerals10.7%
Medicated Skin Products
6.9%
Other 9.7%
Pharmacies/dragstores62.6%
Supermarkets/hypermarkets
17.7%
Independent Retailers 9.0%
Specialist Retailers 5.4%
Other 5.3%
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Source:
Apparel Retail Market
Apparel Retail Market’s Revenues, CZK bn
Apparel Retail Industry Distribution, % Share
Apparel Retail Industry Segmentation, % Share
Comments
Marketline
The retail revenues from apparel sales rose by 3.8% y/y to CZK
49.5bn in 2013. The market has reported growth in the years
after the crisis and is expected to continue to expand in the
following years, to reach USD 3bn in 2018. Apparel retailing in
the Czech Republic accounted for 0.6% of the total European
market.
Most of the revenues were generated in the women’s wear
segment, followed by men’s wear.
More than 50% of the segment’s products were distributed by
clothing and footwear shops in 2013.
45.6
45.7
45.9
47.7
49.5
0.2%
0.4%
3.9%
3.8%
2009 2010 2011 2012 2013
Apparel Retail Market Revenues, CZK bn y/y change, %
Womenswear52.0%
Menswear32.5%
Childrenswear15.5%
Clothing, foot/sportswea
r & accessories
56.7%
Department stores 21.4%
Hypermarkets, supermarkets
and discounters
20.1%
Discount, variety and
general merchandise
1.2%Other 0.7%
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Source:
Furniture Market
Exports and Imports, CZK bn Trade Balance, CZK bn
Statistics office – External Trade Database
44.1
39.5
43.8 47
.6
48.7
58.8
72.5
26.5
25.2
23.9 25
.8 27.8
32.1
41.9
2008 2009 2010 2011 2012 2013 2014
Exports of Furnitures, and parts thereof
Imports of Furnitures, and parts thereof
3.7
2.7
2.4
0.8
1.4
2.8
7.5
2008 2009 2010 2011 2012 2013 2014
Trade Balance
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IV. Wholesale Trade, Except of Motor Vehicles Sub-Sector
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Copyright © 2015 EMIS, all rights reserved.
Wholesale Trade Highlights
Importance
Wholesale trade sales increased by 1.7% y/y to CZK 2,235bn in 2014, following a decline of 0.5% y/y in the previous
year. The sub-sector’s sales accounted for 62.1% of total trade sector sales in 2014. The output of the sub-sector
reached CZK 450bn in 2014, up 7% y/y, accounting for 56.4% of the sector’s output. Wholesaling reported a trade
margin of 12.3% in 2014, much lower than the margin of over 23% registered by retail trade (excluding motor
vehicles and motorcycles).
Employment
The average registered number of employees in the sub-sector has increased over the last three years and reached
213,738 persons in 2014, up by 2.6% y/y. It accounted for 42.8% of total trade sector employees.
Companies tried to cut the average monthly gross wage in order to optimise labour costs. The average monthly
gross wage in the sub-sector fell to CZK 27,866 in 2014, down from CZK 28,219 in 2012. It corresponded to 122%
of the total trade sector’s average wage for the year.
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Source:
Key Indicators
Average Number of Employees, Persons
Sales, CZK mn
Average Monthly Gross Wage, CZK
Output and Value Added, CZK mn
Statistics office
204,
970
207,
565
209,
035
211,
520
208,
641
208,
901
209,
374
209,
947
212,
578
214,
432
215,
591
216,
349
I II III IV I II III IV I II III IV
2012 2013 2014
27,2
61
26,9
98
27,1
04
31,4
48
26,7
26
26,9
06
26,7
27
28,8
02
27,3
47
27,6
80
27,2
36
29,1
87
I II III IV I II III IV I II III IV
2012 2013 2014
Average monthly gross wage per actual person
515,
420 55
3,13
0
555,
272 58
4,93
3
503,
733
548,
574
560,
733
583,
941
511,
215
563,
063
571,
447
588,
818
I II III IV I II III IV I II III IV
2012 2013 2014
94,2
01
104,
458
102,
704
121,
173
93,0
62
103,
370
105,
007
118,
779
101,
042
110,
715
113,
575
124,
213
41,1
82
45,0
69
42,0
95
47,1
38
39,7
52
43,0
71
43,2
85
47,6
11
42,4
18
45,1
94
47,1
98
48,9
04
I II III IV I II III IV I II III IV
2012 2013 2014
Outputs, incl. trade margin Value added
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V. Motor Vehicles and Motorcycles
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Wholesale and Retail Trade of Motor Vehicles Highlights
Importance
The automotive sector, being one of the main sectors in the economy, is an important driver for the development of
other sectors, such as wholesale and retail trade in, and repair of, motor vehicles and motorcycles.
The automotive sector is one of the Czech Republic’s dynamic sectors. Producing about 20% of industrial output, its
development is related to the overall economic development of the country. The economic crisis in the country in
2012 and 2013 led to corresponding declines in sector performance (by 1.7% and 3.9% y/y respectively). However,
in 2014 the situation improved as a result of the government’s austerity measures, aimed at stabilising the fiscal
state of the country, and the monetary authorities’ policy of maintaining inflation within target ranges under the
inflation-targeting monetary regime. Total vehicle production rose by a significant 10.6% y/y to 1.278 million in 2014,
which is the highest in the country’s history both as an independent state and as part of Czechoslovakia. Car
ownership in the country stood at an average of 516 cars per 1,000 people in 2013, which is above Europe’s
average of 451, according to the OICA’s data.
Automotive
Sector
Wholesale and retail trade in motor vehicles and motorcycles employed 10.9% of the total number of employees in
the trade sector in 2014 and generated 11.3% of its total output. The average number of employees has declined
significantly since the global financial crisis of 2008, which may be explicable by restructuring of the sub-sector’s
enterprises. The average number of employees shrank in 2014 by 1.5% y/y, to 54,725 persons.
The sub-sector’s average monthly gross wage, which stood at CZK 23,146 in 2014, was 1.2% above the average
monthly gross wage of the trade sector as a whole.
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Comments
Source:
Local Sales
Domestic sales increased by 16.2% in 2014, outpacing the growth rate of production. The rise in domestic sales was due to a growth in new contracts,
which rose by 23.9% year-on-year. The leader in domestic sales was the Czech firm Skoda, although its share decreased from 93.1% in 2009 to 84.2% in
2014. South Korea’s Hyundai gained ground, reaching a market share of 15.3% in 2014, up from 5.5% in 2009. Electric and hybrid cars accounted for
0.3% of the total car sales in the Czech Republic in 2014, which is below the EU average of 0.76%. However, sales of electric and hybrid cars rose by 23%
(to 588 units) in that year. Electric car registration per 1mn people in the Czech Republic stands at 55, while in the EU and EFTA it is 194 cars per 1mn
people.
Local Sales, Units Local Sales by Manufacturer, Units
Automotive Industry Association, OICA, Czech Statistics Office
64,4
50
66,3
96
71,3
44
71,7
06
83,3
49
6.2%
3.0%
7.5%
0.5%
16.2%
2010 2011 2012 2013 2014
Local Sales y/y change, %
58,033 58,202 59,674 60,04270,200
853 909 1,180 764
4365,510 7,28210,479 10,900
12,71354 3
11 0
0
64,450 66,39671,344 71,706
83,349
-10,000
10,000
30,000
50,000
70,000
90,000
110,000
2010 2011 2012 2013 2014
Kaipan HyundaiToyota, Peugeot, Citroen SkodaLocal Sales
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Comments
Source:
Registrations
Light vehicle registrations rose by 7.7% in 2014 to 332,889, which was faster growth rate than in any of the preceding five years. New registrations of
passenger cars and light commercial vehicles (LCVs) accounted for most light vehicles registrations. The increase may be partially attributed to a “low base
effect”, since there had been a drop in registrations in the previous two years. In January 2013, the government had increased the VAT rate by 1pps to
21% as part of its temporary consolidation package. The increased VAT rate initially discouraged Czechs from buying cars. According to a survey carried
out by the local market research agency STEM/MARK, local citizens use their savings to buy cars, especially used cars from domestic vendors. The survey
showed that the main criterion for purchasing a car is its price (71% of respondents), followed by the state of the vehicle (62%).
Passenger Cars, Units Light Commercial Vehicles, Units
Automotive Industry Association, European Commission, Car Importers Association
161,659 169,236 173,282 174,009 164,736192,314
144,602 127,034 131,707 124,343 126,115
120,408
0
50,000
100,000
150,000
200,000
250,000
300,000
350,000
2009 2010 2011 2012 2013 2014
Used Vehicles New Vehicles
19,427
11,57613,269 11,821 11,669 13,165
8,337
7,4707,286
6,384 6,6287,002
0
5,000
10,000
15,000
20,000
25,000
30,000
2009 2010 2011 2012 2013 2014
Used Vehicles New Vehicles
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Source:
Comments
Passenger Car Registrations
New passenger car registrations rose by 16.7% in 2014 to 192,314 units, accounting for 61.5% of all passenger car registrations. Most of the new
registrations were for lower medium-class cars, which held a market share of 26.34%. Next came small and medium cars at 21.36%, followed by SUVs and
crossovers with 16.89%. Luxury class cars accounted for the smallest share, with just 0.3%. In terms of the type of fuel used, the share of new passenger
cars with diesel engines dropped to 41.67%, while that of passenger cars with petrol engines increased to 55.53%.
Passenger Cars, First Registrations, Units
Automotive Industry Association, Car Importers Association
2012 2013 2014
New Registration Market Share New Registration Market Share New Registration Market Share
Skoda 53,778 30.9% 49,971 30.3% 58,091 30.2%
Hyunda 15,162 8.7% 16,239 9.9% 18,934 9.8%
Volkswagen 15,185 8.7% 14,948 9.1% 18,281 9.5%
Ford 12,719 7.3% 9,460 5.7% 12,576 6.5%
Peugeot 6,725 3.9% 7,252 4.4% 7,175 3.7%
Kia 8,564 4.9% 6,325 3.8% 6,701 3.5%
Renault 10,456 6.0% 6,047 3.7% 6,314 3.3%
Citroen 5,711 3.3% 5,981 3.6% 5,445 2.8%
Dacia 3,805 2.2% 5,655 3.4% 9,280 4.8%
Opel 3,836 2.2% 4,448 2.7% 6,908 3.6%
Seat 2,680 1.5% 4,360 2.6% 6,163 3.2%
Toyota 3,951 2.3% 4,173 2.5% 4,009 2.1%
BMW 3,901 2.2% 3,730 2.3% 4,530 2.4%
Audi 3,810 2.2% 3,289 2.0% 3,935 2.0%
Mercedes-Benz 3,236 1.9% 3,168 1.9% 3,863 2.0%
Others 20,490 11.8% 19,690 12.0% 20,109 10.5%
Total 174,009 164,736 192,314
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Source:
Comments
Light Commercial Vehicle Registrations
New light commercial vehicle registrations accounted for 65.3% of the total light commercial vehicle registrations in 2014. New LCV registrations rose by
12.8% year-on-year to 13,165 units in 2014. Most of the new LCVs were in categories up to 3.5 tonnes (53.44%), the share of the category “up to 3 tonnes”
being 33.68%. In terms of fuel used, the share of LCVs with diesel engines was 89.32%, while the share of those with petrol engines was 5.35%.
Light Commercial Vehicles, First Registrations, Units
Automotive Industry Association, Car Importers Association
2012 2013 2014
New Registration Market Share New Registration Market Share New Registration Market Share
Fiat 1,654 14.0% 1,989 17.0% 2,037 15.5%
Peugeot 1,133 9.6% 1,632 14.0% 1,431 10.9%
Volkswagen 2,077 17.6% 1,606 13.8% 1,631 12.4%
Ford 1,783 15.1% 1,545 13.2% 1,826 13.9%
Renault 1,204 10.2% 1,104 9.5% 1,320 10.0%
Citroen 1,010 8.5% 928 8.0% 1,127 8.6%
Mercedes-Benz 815 6.9% 913 7.8% 1,152 8.8%
Iveco 517 4.4% 550 4.7% 631 4.8%
Toyota 271 2.3% 260 2.2% 309 2.3%
Opel 157 1.3% 247 2.1% 349 2.7%
Dacia 305 2.6% 219 1.9% 499 3.8%
Skoda 276 2.3% 144 1.2% 255 1.9%
Nissan 129 1.1% 84 0.7% 97 0.7%
Multicar 31 0.3% 75 0.6% 138 1.0%
Hyundai 61 0.5% 60 0.5% 27 0.2%
Others 398 3.4% 313 2.7% 336 2.6%
Total 11,821 11,669 13,165
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Comments
Source:
Employment and Wages
The average registered number of employees in the sub-sector has shown significant declines in the last few years, especially after the global
financial crisis of 2008. The average number of employees reached 54,725 persons in 2014, down by 1.5% y/y. At the same time, companies
increased the average monthly gross wage to CZK 23,146 in 2014, from CZK 22,221 in 2012. Wages in this sub-sector are higher than in
others because more qualified workers are employed in it.
Average Number of Employees, Persons Average Monthly Gross Wage, CZK
Statistics office
57,633
57,553
57,509
57,069
55,905
55,856
55,404
55,137
54,812
54,743
54,676
54,670
I II III IV I II III IV I II III IV
2012 2013 2014
Average registered number of employees (actual persons)21,703
22,078
21,743
23,369
21,711
22,371
22,601
23,335
22,272
23,185
23,080
24,048
I II III IV I II III IV I II III IV
2012 2013 2014
Average monthly gross wage per actual person
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VI. E-Commerce
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E-Commerce Highlights
E-commerce has been the fastest growing segment of the Czech retail sector. In 2013, it generated 1.4% of GDP with a turnover of
EUR 2.1bn, up by 16% y/y. The Czech Republic ranked fifth among the Central European countries by e-commerce turnover.
E-Commerce
Online Retail
Internet Retailers
Outlook
Online retail sales have also developed very fast due to technological and social factors. Increasing incomes, decreasing incomeinequality, the growing number of households with computers, and increased internet penetration have together produced a shift in consumer behaviour in favour of online sales. They accounted for 5.5% of total retail sales in 2013. The number of e-shoppers reached 3.5 million in 2013. Internet access in the Czech Republic was among the highest in Central Europe, at 76% in 2013, which was above the penetration in, for example, Poland (65%), Hungary (74%) and Slovenia (74%).
Internet retailers leased over 260,000 sq m of the Czech Republic’s total available warehouse space of 4.9mn sq m in 2014, according
to a report by CBRE. The most attractive locations for the internet retailers were Prague, Brno and Plzen in 2014. The strongest
internet retailers were Amazon, Mall.cz and Alza.cz, which leased a combined 178,000sq m as of end-2014. The high demand for
leased areas among internet retailers can be explained by their need for larger leased premises than traditional retailers – given that
they offer a wider selection of goods and must also have space for supplementary activities such as shipments, distribution, etc.
Internet retailing is expected to maintain its high growth rates in the coming years, driven by technology and changed consumer
behaviour. The segment is anticipated to grow at a CAGR of 8% in sales value (measured at constant 2014 prices) in the period 2015-
2019, according to a forecast by Euromonitor International.
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Source:
Central Europe Ranking
Internet Use, %
Internet Purchases by Individuals, % in the Last 12 Months
E-commerce Ranking of Central Europe byTurnover, 2013
Ecommerce Europe, Eurostat
Country Turnover, EUR mn
Germany 63.4
Austria 10.9
Switzerland 10.2
Poland 5.2
Czech Republic 2.1
Hungary 0.8
Slovakia 0.3
Slovenia 0.1
69
7375 76
81
7173
7577
80
2010 2011 2012 2013 2014
Czech Republic EU28
9
5
810
19 18
23 23
2011 2012 2013 2014
Czech Republic EU28
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Source:
Internet Retailers
Retail Value Sales, CZK bn Company Shares, %, 2014
Euromonitor International
Alza.cz as 12.9%Internet Mall
as 8.7%
HP Tronic Zlin sro 4.6%
CZC cz sro4.6%
TS Bohemia as 2.2%
MironetTechnology
sro 1.8%
Tesco Stores CR as 1.2%
Others 63.9%
38.741.2
49.0
2012 2013 2014
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VII. Major Players
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Source:
Top M&A Deals
Top 15 M&A Deals in the Retail Sector in the Czech Republic in (2014-2015 YTD)
DealWatch
Date Target Company Deal Type BuyerCountry of
Buyer
Deal Value
EUR (mn)
Stake
(%)
10-Dec-14 Palladium shopping mall Acquisition Union Investment Real Estate GmbH Germany565
(Market estimate)100.0
14-Oct-14 AAA AUTO Group NV Acquisition Abris Capital Partners Poland220
(Official data)95.0
5-Aug-14138 petrol-filling stations of Lukoil in the Czech
Republic, Hungary and SlovakiaAcquisition
Magyar Olaj- Es Gazipari Nyrt (MOL);
Norm Benzinkut KftHungary
205.63
(Official data)100.0
10-Mar-14 SPAR's business in the Czech Republic Acquisition Ahold Netherlands118.9
(DW estimate)100.0
4-Dec-14 Futurum shopping centre in Ostrava Acquisition Meyer BergmanUnited
Kingdom
87.6
(Official data)100.0
12-May-15 Feedo Acquisition Windeln.de Germany15
(Market estimate)100.0
10-Mar-14 AUTO Heller sro; AH Nemovitosti sro Acquisition Porsche Inter Auto GmbH Austria12.2
(Official data)100.0
26-Jun-14 ASTRID as Acquisition Sarantis Greece6.5
(Official data)100.0
21-Jan-15 Zoot.czMinority stake
purchase3TS Capital Partners
United
Kingdom
5.48
(Official data)
8-Aug-14 Datart International, a.s. Acquisition Datart foundersCzech
Republic
5
(Official data)60.0
25-Nov-14 KOMA Commercial sro Acquisition Brammer PLCUnited
Kingdom
4
(Official data)100.0
8-Aug-14 Datart International, a.s.Minority stake
purchaseHP Invest
Czech
Republic
1.67
(DW estimate)20.0
14-May-15 Auto Adamek spol sro Acquisition TUkas GroupCzech
RepublicNA 100.0
29-Apr-15 Alltoys spol sro Acquisition Petr Homolka - private investorCzech
RepublicNA 100.0
24-Apr-15 Sparkys sro Acquisition Petr Homolka - private investorCzech
RepublicNA 100.0
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Source:
M&A Activity, 2013-2014
Number and Value of Deals in Czech Republic’s Retail Sector
Number of Deals by Deal Type (%)
Number of Deals by Deal Value, EUR (%)
Number of Deals by Region of Investors (%)
DealWatch
361
801
0 12 131
7 212
877
5
7
34 4
76 6
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
2013 2014
Total value of deals (EUR mn) Number of Deals
Acquisition90.5%
Minority stake purchase 9.5%
Czech Republic45.2%
Poland 7.1%
Russia 2.4%
United States4.8%
Others 40.5%
0-50mn; 19.0%
Undisclosed; 64.3% 50.1-100mn;
2.4%
100.1-500mn; 9.5%
> 1000mn; 0.0%
500.1-1000; 4.8%
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Highlights
Source:
Tesco Stores CR
Sales, GBP mn
Internet Retailing, % Share of Total Company Sales
Tesco Stores CR is active in retail, especially of foods
and beverages. The company is a unit of British retail
giant Tesco, which entered the Czech market in 1996
through the acquisition of six outlets from K-Mart.
Tesco Stores CR offers food and non-food goods –
from fresh and long-lasting foods to family fashion,
sporting equipment, electronics, furniture and toys.
The first Tesco hypermarket in the Czech Republic
was opened in 1998.
In the financial 2014-2015, the sales revenues of
Tesco Stores CR reached GBP 1,175mn (CZK
40.8bn), down by 9.5% year-on-year.
Tesco Stores CR started internet retailing in 2012, by
offering online shopping to consumers in Prague. The
company expanded its online shopping offer to
Central Bohemia later in 2012, to Brno, Hradec
Kralove and Pardubice in 2014 and to Liberec in 2015.
The expansion of Tesco’s online shopping offer to
more cities led to the an increase in the internet
retailing’s share in the total company sales, reaching
1.5% in 2014.
Group’s data, Euromonitor International
1,356
1,298
1,175
2012/13 2013/14 2014/15
Sales, GBP mn
0.60%
1%
1.50%
2012/13 2013/14 2014/15
Internet retailing's % share of total company sales
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Highlights
Source:
Tesco Stores CR
Number of Stores, Units
Space, 000 sq ft
As of the end of financial 2014-2015, Tesco Stores CR
operated 209 hypermarkets and supermarkets,
decreasing its number of stores. The expansion of
online shopping could be considered as the main
factor for the optimisation of the company’s retail
network.
In 2014, the company operated several types of retail
chains: 77 Tesco outlets and Tesco Extra stores in the
hypermarkets segment, 63 Tesco outlets in the
supermarkets segment, 55 Tesco express
convenience stores and six Tesco department stores,
according to the data, provided by Euromonitor
International.
Tesco Stores CR is the only chain in the Czech
Republic, offering 24-hour operations in some of its
outlets.
The space of the company’s stores reached 5,653
thousand sq ft at the end of 2014-15, dropping by
0.9% year-on-year.
The company estimated that its outlets space will
reach to 5,572 thousand sq ft at the end of 2015-2016
financial year.
Group’s data, Euromonitor International
234
211209
2012/13 year end 2013/14 year end 2014/15 year end
Store numbers
5,951
5,7045,653
2012/13 year end 2013/14 year end 2014/15 year end
Space, '000 sq ft
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Highlights
Source:
Ahold Czech Republic
Net Sales, EUR mn
Underlying Operating Income, EUR mn
Ahold is an international retailing group based in the
Netherlands and active in the United States and Europe,
including the Czech Republic.
Ahold Czech Republic is a subsidiary of Royal Ahold NV.
The company was established in 1991. In 2005, it moved to
a new administrative building in Prague 5 Nove Butovice.
In 2014, Ahold Czech Republic was ranked third in the
retail sector in the country, with a market share of 5% by
value, according to Euromonitor International.
The company is expected to become the leading player in
the grocery retail sector as it acquired Interspar/Spar from
Internationale Spar Centrale in the second half of 2014.
Ahold’s brand in the Czech Republic is Albert.
The company’s net sales rose by 5.3% year-on-year to
EUR 1.5bm in 2014. The increased its net sales was mainly
due to the integration of 49 acquired SPAR stores, of which
all 14 supermarkets were rebranded to the Albert brand.
Underlying operating income in the Czech Republic
reached EUR 19mn, down by EUR 11mn year-on-year, due
to the SPAR acquisition, which had a negative impact on
underlying operating income.
Underlying operating profit margin was 1.2% in 2014, down
by 0.9pps year-on-year. Underlying operating profit margin
was 2.3%, or up 0.2pps year-on-year after excluding SPAR
acquisition effects.
Company’s data, Euromonitor International
1,51
6
1,44
5
1,52
1
4.70%
4.40%
4.60%
2012 2013 2014
Net Sales (EUR mn) Contribution to Group Net Sales, %
27
30
19
1.80%
2.10%
1.20%
2012 2013 2014
Underlying Operating Income, EUR mn
Underlying Operating Profit Margin, %
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Highlights
Source:
Ahold Czech Republic
Number of Stores, Units
Sales Area of Own-Operated Stores, sq meters
Ahold Czech Republic has two grocery channels -
hypermarkets and supermarkets.
In 2011, the company started a project, aimed to
update all company’s hypermarkets to a new compact
format.
At the end of 2014, Albert operated 333 stores in the
Czech Republic, 91 of which were compact
hypermarkets, and 242 supermarkets.
In 2014, the Ahold Czech Republic focused on the
integration of the 49 stores following the acquisition of
the SPAR business in the second half of 2014,
including the successful re-branding of 14 SPAR
supermarkets and one hypermarket into the Albert
brand.
In 2014, the company also renovated 15 Albert stores
in part as a result of the continuation of its strategy to
update its hypermarkets.
Company’s data
280 282 284
333
2011 2012 2013 2014
Number of stores, Units
391 393
550
2012 2013 2014
Sales area of own-operated stores (in thousands of square meters)
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Highlights
Source:
Kaufland Ceska Republika
Net Sales, CZK mn
Outlets, Units
Kaufland entered the Czech Republic market in 1997, when it acquired Bremke and Hoester stores. The first Kaufland hypermarket was opened in 1998.
Kaufland is a part of the German retail group Schwarz Gruppe.
As of the end of 2014, Kaufland operated 119 outlets in the Czech Republic, increasing their number by five outlets year-on-year.
Kaufland Ceska Republika continued to modernise its existing stores by concentrating on the modernisation of the shopping environment, new design as well as enlargement of the selling space.
As of the end of 2014, the selling space of the company reached 470.8 thousands sq m.
Kaufland Ceska Republika employed about 10,880 workers as of the end of 2014.
Kaufland expanded the most significantly among all international food chains in the Czech Republic in 2014, according to information provided by the Czech Information Agency (CIA).
Retail chain Kaufland offers over 1,500 types of goods under its private brand, CIA news agency reported. Private brands accounted for about 15% of the firm's revenue in 2013.
Euromonitor International, Company data, Czech Information Agency (CIA)
44,468
47,905
50,709
2012 2013 2014
Net sales, CZK mn
106
114
119
2012 2013 2014
Outlets
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Highlights
Source:
Penny Market
Net Sales, CZK mn
Outlets, Units
Penny Market is discount retail chain. The company
offers over 1,500 products, focusing on a wide range
of grocery products.
Penny Market Czech Republic was established in
1996. The company opened its first store in the
country in 1997.
Penny Market is a unit of Austrian retailer Rewe
Group.
In 2014, Penny Market operated 351 outlets in the
Czech Republic with a total selling space of 243.7
thousands sq m in, according to the Euromonitor
International’s report.
As of the end of 2014, the company employed about
5,145 workers, up by 0.7% year-on-year.
Penny Market and Kaufland expanded the most
significantly among all international food chains in the
Czech Republic in 2014, according to an information
provided by the Czech Information Agency (CIA).
Euromonitor International, Company data, Czech Information Agency (CIA)
344
348
351
2012 2013 2014
Outlets
28,749
29,854
31,678
2012 2013 2014
Net Sales, CZK mn
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Highlights
Source:
Billa
Net Sales, CZK mn
Outlets, Units
Austrian grocery chain Billa entered the market in the
Czech Republic in 1990 and opened its first store in
the country in 1991. The company expanded rapidly in
the years after its entry on the market.
Billa is a unit of Austrian retailer Rewe Group.
In 2014, Billa operated 207 outlets. The company
expanded over the past years due to the takeover of
several brands. In 2008 Rewe group acquired Plus
Diskont and in 2007 took over Delvita.
In June 2014, the company implemented a new
strategy of opening small Billa stop and shop outlets
at the petrol stations of Shell. In 2014, the company
opened five new shops.
Czech products accounted for about 70% of Billa
stores' assortment, CIA news agency reported. The
retailer plans to increase the share of Czech products
to 75% by the end of 2015, the agency reported,
quoting Billa PR manager Lucie Borovivkova as
saying.
Euromonitor International, Company data, Czech Information Agency (CIA)
20,11720,185
20,680
2012 2013 2014
Net sales, CZK mn
205
206
207
2012 2013 2014
Outlets
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Contact:
Corporate Headquarters
Nestor House
Playhouse Yard
London EC4V 5EX
UK
Voice: +44 207 779 8471
Fax: +44 207 779 8224
Americas Headquarters
225 Park Avenue South
New York, New York 10003
US
Voice: +1 212 610 2900
Fax: +1 212 610 2950
Asia Headquarters
Eucharistic Congress Bldg. No.
III
4th Floor, 5 Convent Street
Mumbai 400 001
India
Voice: +91 22 22881123
Fax: +91 22 22881137
Disclaimer:
The material is based on sources which we believe are reliable, but no warranty, either expressed or implied, is provided in relation to the accuracy or completeness
of the information. The views expressed are our best judgment as of the date of issue and are subject to change without notice. EMIS and Euromoney Institutional
Investor PLC take no responsibility for decisions made on the basis of these opinions.
Any redistribution of this information is strictly prohibited. Copyright © 2015 EMIS, all rights reserved. A Euromoney Institutional Investor company.
About EMIS Insight
EMIS Insight is a unit of EMIS that produces proprietary strategic research and analysis. The service features market overviews, industry trend analysis, legislation
and profiles of the leading sector companies provided by locally-based analysts.
About EMIS
Founded in 1994, EMIS (formerly known as ISI Emerging Markets) was acquired by Euromoney Institutional Investor PLC in 1999. EMIS works from over 15 offices
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