Foreigners are advancing, domestic traders are faltering

While in 2008 there were as many as six domestic traders on the list of the largest, last year the situation turned in favor of foreign retail chains. Instead of Split’s Tommy, the Austrian Spar entered, and Getro changed to foreign ownership

written by Antonija Knežević
[email protected]

Domestic traders are faltering, while foreigners are advancing, is the conclusion that arises at first glance at the list of the 10 largest consumer goods traders in 2009 and 2008. Namely, while in 2008 there were as many as six domestic traders on that list, and in 2007 there were seven, last year the situation turned in favor of foreign retail chains. On the mentioned list, instead of Split’s Tommy, the Austrian Spar entered, and Getro, through the acquisition of Mercator, changed from domestic to foreign ownership, so currently there are six foreign retail chains on the list of the 10 largest traders in Croatia.

Record holders in consumer goods
Foreigners were also record holders in revenue growth in the consumer goods segment – Lidl achieved an organic growth of 41.2 percent, and Spar 35.7 percent. Thanks to this, the German discounter jumped four places on the list of the largest traders, while Spar moved from 12th to 9th place.

However, not all foreign retail chains passed smoothly through the recession year. The worst among them was Mercator, whose revenues fell by almost 13 percent, or about 333 million kuna. Although due to this decline the Slovenian chain is now in third place among the largest traders, thanks to the acquisition of Getro, it will still manage to maintain a good position, behind the domestic Konzum, which firmly holds the number one position (its revenues are equal to the sum of the seven retail chains behind it on the list). Last year was not great for the Austrian Billa either, which has recorded a decline in revenue for the third consecutive year.

Domestic losses
Domestic chains are mostly recording losses – Kerum fell by about five percent, Getro by as much as 27.5 percent, and even the leader Konzum did not manage to go unscathed through the recession. Its revenues, however, fell by only 0.74 percent. When it comes to domestic chains, the biggest surprise is certainly the Rijeka-based Plodine, which achieved a growth of 14 percent and with revenues of around 2.46 billion surpassed Mercator. Double-digit growth of 35.5 percent was also achieved by Diona, but these figures are mostly the result of completing the merger project with Istracommerce, Merkur Raba, and stores from the Puris group.

Rare growth
Due to the decline in purchasing power, it was almost impossible to achieve revenue growth last year without acquisitions or opening new stores. Only those who invested significant funds in investments managed to achieve growth. This is evidenced by the examples of Spar, Lidl, Plodine, but also Split’s Tommy, which achieved an eight percent growth thanks to intensive investment activities. New sales locations combined with low prices were the recipe for success in 2009, and the double-digit growth of Sportina, New Yorker, and Mana Mode proves that this model yielded good results. Good results for some traders came from the collapse of competitors, specifically HG Spot, Pevec, and Vemil. The problems faced by these three traders benefited all others operating in that segment. Bauhaus made the best use of this, increasing revenues from 273 to 402 million kuna, and Konikom, which despite the catastrophic decline in consumer electronics sales in Croatia managed to achieve a growth of six percent.

Easier for the big ones
Overall, the largest companies in the retail sector, 284 of which were on the list of ‘largest’, fared significantly better than the rest of the industry. Namely, the total revenues of these companies decreased by only 2.2 percent compared to the previous year, while the entire retail sector in the country fell by about 15 percent last year. Although these companies paid considerable attention to costs, reducing the number of employees by about five thousand and thus increasing revenue per employee, this did not help them maintain their profits at a satisfactory level. The profit before tax of traders on the list of the largest fell by as much as 55 percent, from 2.7 billion to 1.2 billion.