SPAR Turns Into Major Player in Croatia’s Retail Market

Total Croatia News

With the takeover of Billa, SPAR will become one of the largest retailers in Croatia.

Billa retail chain is celebrating its 17th birthday in Croatia. It will also be its last. Its 62 stores and a logistics centre will soon be taken over by SPAR, which will thus become the second largest retailer in Croatia and push Plodine to the third place, reports Jutarnji List on December 25, 2016.

Billa was the first foreign retail chain which entered the Croatian market. Before the economic crisis began, in 2008, it was the fifth largest retailer of consumer goods in Croatia by revenue, behind Konzum, Plodine, Mercator and Kaufland. However, according to the latest data available, Billa is now the eighth largest retailer, even after taking into account that Mercator has been taken over in the meantime by Konzum. Moreover, according to revenues, it is the lowest ranked among all major foreign retail chains in Croatia. Although Billa continuously opened new stores, others were obviously more aggressive and successful.

The price which SPAR will pay for Billa’s stores in Croatia has not been announced. After the acquisition is completed, SPAR will have nearly 120 stores and 5,000 employees, but before the transaction is executed it must wait for the approval from the Croatian Competition Agency, although it is unlikely there will be any major objections.

SPAR Croatia is part of the SPAR Austria group, which also operates stores in northern Italy, under the Despar brand, Slovenia and Hungary.

The owner of the Billa Group, Rewe from Germany, will keep in Croatia its drugstore chain Bipa, while it will withdraw the Billa brand since it realized that it could not achieve a strong market position. “Our strategic objective in countries where our stores are present is to achieve the leading market position. Despite targeted investments, in the past that was impossible to achieve in Croatia, and according to our current assessment it will not be feasible in the foreseeable future as well”, said Rewe Group in a statement.

Last year, Billa had total revenues in the amount of 1.68 billion kuna, with the annual growth of 2.8 percent, which was modest compared to other major competitors. Among the large chains, only Metro Cash&Carry had slower growth, while Spar, for example, last year increased its revenues by 15 percent to 2.53 billion kuna. In the last five years, Billa’s revenues increased by about 20 percent, compared with a 30 percent gain for Kaufland, Plodine and SPAR, and even larger gains for Lidl and Tommy.

Billa in Croatia had operating losses which last year amounted to 83.2 million kuna. However, that is not anything unusual for foreign supermarket chains. Last year, SPAR had a loss of over 120 million kuna. Among the ten largest retailers, only Croatian chains managed to operate with a profit each year between 2011 and 2015.

CEO of SPAR Croatia Helmut Fenzl said earlier that his company would expand aggressively, especially in the coastal areas. According to him, annual investments in the amount of between 35 and 40 million euros were expected to be increased in 2017 and 2018 to over 50 million euros. However, it is not clear whether the takeover of Billa’s stores will change these plans.

With the latest development, SPAR has turned overnight into one of the strongest players in the Croatian market, joining Konzum, Plodine, Lidl and Kaufland. The largest retailer, Agrokor’s Konzum, is still far ahead of the competition: its overall revenues last year amounted to almost 15 billion kuna.

It is clear that the Croatian market is controlled by several major companies: according to the Croatian Competition Agency, the five largest retailers last year had about 65 percent of the market, and the largest ten accounted for more than 80 percent.

In the meantime, retail trade in Croatia is recovering for the third year in a row. According to the Central Bureau of Statistics, the real trade growth in 2014 amounted to a modest 0.4 percent. Last year, it reached 2.4 percent, while in the first ten months this year it increased further to 4.3 percent.


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