With about 12,500 employees, Konzum is one of the largest employers in Croatia.
Among the retail chains in Croatia, the number one position has long been held by Konzum. With about 12,500 employees, it is also one of the largest employers in Croatia. The chain, whose retail network comprises of around 700 shops of various formats which are frequented by up to 650,000 customers every day, entered 2017 as an unquestioned market leader, reports Poslovni.hr on September 17, 2017.
However, the recent crisis in Agrokor group, which owns Konzum, has substantial effects on the operations of the retail chain. It is likely that the restructuring process will bring the closure of about one hundred Konzum’s unprofitable outlets. Due to all these problems,
nine months into the year we still do not know what the financial results of Konzum were in 2016. Its financial statements are being audited and we can only estimate how much of the market share did Konzum’s competitors take last year.
In such circumstances, an intense struggle for market dominance is taking place. The offensive is led by several foreign-owned chains. The total retail sales grew by 4.4 percent in 2016, and the top 10 leading retailers mostly recorded revenue growth.
In absolute terms, Lidl did the best, increasing its revenues by about 290 million kunas. In its tenth year of doing business in Croatia, it reached the second place by revenue. After 3.71 billion kunas a year earlier, last year they reached four billion kunas. It managed to overtake Plodine, which remained at about 3.9 billion kunas, roughly at the same level of revenues as in 2015, although its profit grew from 35 to 76 million kunas.
Kaufland increased its revenues by more than five percent to 3.37 billion kunas, so the Schwartz group in Croatia (which includes Lidl and Kaufland) reached nearly one billion euros in revenue. At the same time, Spar Croatia achieved nearly 2.6 billion kunas of income in 2016. After a nearly 15-percent increase in 2015, this was a relatively modest growth of two percent. However, Spar was simultaneously dealing with the takeover of Billa, whose revenues exceeded 1.7 billion kunas. That helped the Austrian retailer strengthened its position behind the Schwartz group in the Croatian market. In addition to this acquisition, Spar continues to invest heavily in the expansion of its sales network, with a focus on the Adriatic coast
Metro Cash & Carry has been focusing on the HoReCa market for three years now, and after two years of double-digit growth and a 15 percent increase last year, it is currently the leading wholesaler in this segment. In the last calendar year, it had revenues of 1.8 billion kunas, but the crisis of Konzum and its sister company Velpro was an opportunity to strengthen further its position in the HoReCa channel, which it certainly did not miss.
Many of the locally-owned retailers also managed to increase revenue in 2016, some even by more than five percent. Tommy, a retailer from Split which has concentrated its network on the coast and the islands, increased revenues by 100 million kunas to 2.36 billion kunas. Mostly positive results were also achieved by other smaller chains, such as Studenac and KTC.
Just like the year before, locally-owned companies mostly posted profits, while foreign retailers had losses, mainly as a result of investments, with Lidl being an exception. In 2016, its profit was 242 million kunas, which was 57 million or 30 percent more than the year before.
The most interesting question for the future of Croatia’s retail sector is what will happen with Agrokor and its Konzum. In recent months, it has recorded a gradual recovery of the turnover, according to its management. Even if this is true, it is likely that the difference between Konzum and its major competitors will continue to decrease in the conditions of continued market growth this year. Therefore, significant changes in the market are expected next year, even the possibility of an entry of a new major player in the market.
Translated from Poslovni.hr.
