Martin Evačić: In the coming years, there will certainly be a reduction in retail locations

When you want to discuss the current situation in domestic retail, Martin Evačić is certainly one of the most relevant interlocutors. As the director of the retail chain NTL and the eponymous procurement association of Croatian traders, he is perfectly familiar with the state of medium-sized retail chains, and as the president of the HUP Trade Association, which he has led for a second term, he is well aware of the circumstances in which both his largest and smallest colleagues operate.

Based on the business results and growth that Croatian retail has achieved in recent years, it can be concluded that retail has never operated under better conditions. We haven’t heard of any trader going bankrupt in a long time.

– Well, it’s good. I think the last bankruptcies in the retail sector occurred during the last crisis, around 2015, but there were no significant bankruptcies in other economic sectors either. We do not count the collapse of Agrokor, which had a large part of its business in retail; that is a special story. Retail requires significant investments, and people have recognized that. All those who invest have survived. Wages have significantly increased in recent years, and purchasing power has been preserved. The worst was during the period from 2010 to 2013 when we only realized two or three years late that there was a crisis, while everyone else was already coming out of it.

Now, more and more retailers are turning towards the Adriatic to capture a larger share of the tourism pie, which is, on the other hand, quite risky. Investing large sums of money in equipment and people for something that generates revenue for only two to three months a year.

– That is a consequence of the accelerated growth of tourism, which I think has somewhat unexpectedly affected us. Many may not agree with me, but due to the pandemic and war conflicts, where people have started to choose Croatia as a safe destination, retail has also turned to the coast, and in the last ten years, significant capacities have been built there that far exceed the needs of the local population. However, during the season, it is evident that retailers operating on the coast, among which NTL is unfortunately not included, have found ways to earn enough in a few months to operate with reduced sales capacity for the larger part of the year. They economize on everything and anything. I would say there is still room for retail on the coast, but I am not sure there is room for significant growth in tourist arrivals because the existing infrastructure can no longer handle it.

Do you really think there is still free space for retail?

– There is still some, although that space is decreasing as everyone enters every environment. We already have a situation where large formats, those over one and a half thousand square meters, are entering villages.

Villages?

– Just because we have called villages with five thousand inhabitants cities does not mean they are cities. That is why I think that space is decreasing and that there will certainly be a reduction in retail locations in the coming years, and it will not be taken for granted that every settlement has a store. When you look at any Western European country, you will see that there is not a store in every settlement because it is simply economically unfeasible. I believe this will happen in Croatia as well, especially in areas that are depopulating. This particularly applies to small formats, from one hundred to two hundred square meters, but it will also be the case with large formats.

On the other hand, we are witnessing a boom in the construction of retail parks across the country. What has already been built, what is planned soon, amounts to about fifty retail parks.

– I may be wrong, but honestly, I do not see space for that. Croatia does not have a total of 50 cities with more than 50 thousand inhabitants, and now every city with 30 thousand inhabitants already has a retail park. That makes no sense.

However, given the crowds around Zagreb shopping centers, perhaps, on the contrary, we should build one shopping center in every smaller place.

– One thing is what the crowds are like, another is what consumption is like. What bothers people the most about non-working Sundays? That they can no longer stroll through shopping centers on Sundays. No one has said they are bothered by the fact that they cannot buy bread on Sundays.

 The entire interview can be read in the new printed and digital edition of Lider