CCA market investigation: Rise of turnover and more take-over activities for Local and regional retailers

The Croatian Competition Agency (CCA) carried out the Groceries retail market investigation, covering food, beverages and sanitary products for households in Croatia for 2016.

The market investigation involved a sample of 51 undertakings that in accordance with their turnover represent most significant participants in the food retail market.

This market investigation did not include the groceries retailers that carry out their businesses under the Trades Act or the shops whose primary activity is not the selling of food, such as petrol stations or chemists or other specialized stores that sell particular groups of food products, such as bakers and butchers shops etc.

The realized turnover of all the undertakings that were included in the market investigation for 2016 amounted to 33.9 billion Kuna, which actually means that the rising groceries retail turnover trend has been slowing down compared with the previous year. There have been 31 undertakings whose turnover has risen, whereas 19 undertakings recorded a decreasing turnover.

The 2016 market research shows that whereas there has been only one smaller takeover of a direct rival in the market – the one in which Lonia from Kutina took over further 20 outlets of Dinova-Diona, the regional and local retail indicated most dynamic takeover activities. The local retailer Istarski Supermarketi from Poreč took over 28 smaller local retailers’ outlets, Trgostil from Donja Stubica took over eight Zaprešićanka outlets and one Dinova-Diona outlet, Prehrana Trgovina leased for use one outlet, Puljanka concluded a lease with three self-service stores in Istria County, Mlin and bakeries from Sisak took over five outlets of Papuk from Našice and 13 smaller, local ones, whereas NTL d.o.o. acquired 16 outlets (mostly from natural persons and smaller resellers – legal persons).

These transactions consequently increased the turnover of the local and regional resellers that rose significantly more than that of the biggest top-10-retailers. This upward trend from the previous years continues and indicates the “resilience” of the small retailers that are able to sustain in the competitive environment.

In addition, for the first time in seven years the concentration ratio CR10 (the market shares of the 10 biggest retailers in the market) has slightly fallen. The concentration ratio CR10 in 2015 was 82.4 %, which is a moderate decrease if compared with 2016 when CR10 was 82.1 %. The falling trend of the concentration ratio has also been recorded in the top-5-retailers group – CR5 in 2016 was 65.1 whereas in 2015 CR5 amounted to 65.3.

Concretely, the top-5-retailers hold a bit less than two thirds of the market whereas the top 10 hold a bit more than the four fifths of the market.

The figures that indicate the slowing down of the retail turnover increase in 2016, taking into account at the same time the rise in the number of outlets and the increasing retail space both indicate the strengthening of competition and subsequent decrease in the retail prices for final consumers.

In 2016 the top-10-retailers: Konzum, Lidl, Plodine, Kaufland, Tommy, Spar, Billa, Studenac, KTC and NTL, recorded a compound turnover from the groceries retail worth 27.85 billion Kuna, which is a nominal increase of 2.3 % (or 584 million Kuna) compared with the previous year.

The lining up of the leading retailers on the list remained the same as in the year before. However, there have been certain changes in the market shares of the rivals (e.g. the market shares of Konzum and Plodine dropped, whereas NTL, Lidl, Kaufland increased their market shares).

As in the previous year the City of Zagreb recorded the highest turnover form retail in 2016 (19 %), high turnover shares have also been recorded in Split-Dalmatia County (13.2 %), Primorje-Gorski-Kotar County (9.1 %), Istria (7 %), Zagreb County (6.4 %), Zadar County (6.2 %) and Osijek-Baranja County (5.1 %).

In other words, the City of Zagreb and the above mentioned counties realized two thirds of the aggregate turnover from the retail in Croatia in 2016, whereas only one third has been realized in all the remaining 14 counties.

The City of Zagreb as the most important retail market in Croatia had a turnover of 6.4 million Kuna.

Besides Zagreb, the most important retail markets in Croatia are located in Rijeka, Split and Osijek. In these three towns the market leaders – Plodine, Tommy and Konzum, kept their positions holding somewhat lower market shares than in the previous year, whereas Lidl was the one of the leading retailers whose figures rose most significantly of all.

Compared with the previous year the number of retail outlets increased by 2 % or by a total of 72 outlets. There have been 51 new small shops, 16 supermarkets and 4 hypermarkets. The consumers significantly prefer big format shops. The results of the market investigation indicate that 70 % of the turnover was realized in large format stores, it was the supermarkets that realized the turnover of 47 % and the hypermarkets of 23 % of the total retail. This trend has remained unchanged in the recent years.

The turnover has risen in all four shop formats, whereas the most significant rise of 5 % has been recorded in small shops that use no shopping baskets with less than a hundred square meters retail space which hold the highest share in the total number of retail outlets. The turnover in supermarkets rose by 3 %, in hypermarkets 2 %, compared with the previous year.

Finally, in spite of the fact that hypermarkets and supermarkets had recorded turnover growth in 2015, the year 2016 brought about the rising trend in the convenience stores around the corner that are the consumers’ first choice. That said, it must be noted that the net sales space increased in 2016 principally in small shops and supermarkets, whereas there has been a slightly falling trend in the footage of the self-service markets and, even less noticeable, in hypermarkets.

The full version of the CCA’s Groceries retail market investigation, covering food, beverages and sanitary products for households in Croatia for 2016 is available in Croatian here.