Consumers are moving away from supermarkets in favour of convenience and discount retailers.
The Central European grocery market will enter a period of rapid growth, after several years of stagnant growth, according to new forecasts from PMR.
The market analysis company said that the increases would be seen across all regional markets, but qualified that the rates by which markets would increase would vary significantly from country to country. Growth within the region will be driven mainly by Poland, which has the largest share of the regional market at over 50%, and by grocery sales in Bulgaria.
A decline in the popularity of hypermarkets will mark an increase in custom for smaller stores, mainly convenience and discount outlets. This is the result of changing consumer preferences, PMR explained, as consumers continue to seek retail locations close to where they work or live. This trend is already visible in all countries in the region apart from Bulgaria, where hypermarkets are still in the expansion phase. The influence of this trend is stronger in some countries (Czech Republic, Hungary) and weaker in others (Slovakia, Romania) but generally the changes in consumer behaviour will affect all the players active in this channel, PMR said.
In all of the countries analysed, online sales hold a marginal share but is developing rapidly, with the number of online stores offering grocery items increasing. The largest players in all of the markets, PMR said, have started to enter this channel, indicating the potential for growth within online sales.
It continued: “The market’s growth in the next few years will be driven by the top grocery retailers launching internet stores, as well as increasing their range – currently limited to the capital city and some regional cities in most cases.”
But PMR also warned that government intervention might restrict growth in some markets, pointing towards the current situation for retailers in Hungary.
“It already affects retailers’ operations in Hungary,” PMR explained, “where the local authorities introduced such measures as a grocery retail ‘supervisory fee’ and bans on building large retail facilities, Sunday trading, selling tobacco in grocery stores, and selling FMCG products if retailers post losses two years in a row. Moreover, the Hungarian authorities also are considering introducing more laws that would negatively affect the operations of retailers and impose fines on the top, most often international retailers on a regular basis. What is more, there are signs that the new Polish government will also implement similar regulations. Among the proposed laws there are a Sunday trading ban and a tax on the revenues of retailers with large stores.”
In November, PMR published an analysis of the current state and future development prospects of six central European markets; its findings reinforced the general decline in supermarket revenues amid a “consolidation” in the grocery market in Romania, where a cut in the rate of VAT for food had boosted domestic grocery consumption.
© FoodBev Media Ltd 2024