Retail Sale in Non-Specialised Stores in the Czech Republic

The analysis of retail sales in non-specialised stores was carried out from 2005 to 2021. The market share of the six most important competitors (by ownership structure) was 75% in 2021. There has been a gradual increase in market concentration over the long term. The market structure can be characterised as an asymmetric oligopoly, the most common market structure within the European Union. Regarding the number of significant firms and the degree of concentration, the Czech market has a structure similar to the retail markets in Estonia, Germany, and the UK. Within the European comparison, the Czech retail market reaches a medium level, as evidenced by the fact that there are markets with a lower (Hungary and Poland) and higher degree of concentration (Austria and Slovakia) among the neighbouring countries. According to the Herfindahl-Hirschman Index, this market changed from an unconcentrated to a moderately concentrated market after 2013. There were 15 mergers and acquisitions in the period under review. However, only one (the merger of REWE Group with PLUS - DISCOUNT in 2008) was likely to lead to a significant increase in market share (by 3.5 percentage points to 13%), i.e., an increase in market concentration. The market development was very successful for the two foreign owners, the Schwarz-Gruppe (Kaufland and Lidl) and the REWE Group (Billa and Penny), whose subsidiaries had the highest market share growth. At the same time, these four companies include hypermarkets (Kaufland), supermarkets (Billa) and discount stores (Lidl and Penny). The Schwarz-Gruppe's share increased from 13% to 28%, and REWE's rose from 7% to 15%. Trading margins have been relatively stable since 2005; the average level of these indicators has increased slightly, especially from 2015 to 2021. Gross profits and gross operating margins of the largest companies have increased over time. From a company-by-company perspective, gross margins have (with minor exceptions) ranged from 1-4.5%. Sales and gross profits of the largest companies grew faster than inflation, with gross profit growth outpacing sales growth. The evolution of the market for retail sales in non-specialised stores, showing a change in market shares and the relatively low average gross margins of individual market players and their changes, clearly show this is a competitive market.