They tried hard, but inflation & Covid couldn’t kill retail growth in 2021

Robert McLean

#cee, #proptech, #development a #architecture

Following strong-o-y growth in October (6%), Czech retail revenues shot up another 13.2% in November. It’s being described as the biggest surge in spending for 20 years by some, but the horrendous results from 2020’s lockdown infested year clearly had an impact on this. What’s remarkable is the continuing demand for consumer goods despite rising inflation. The Czech Statistics Office reports that Czechs spent the most on fashion and clothes, where revenues were up 285%. Sporting goods sales grew a respectable 48%, while household items lagged behind with an uptake that barely reached 33%. On the negative side, care sales fell by 1.5% thanks to supply chain problems with a variety of components, such as chips.

So, why hasn’t the current inflation rate of 6.6% in the Czech Republic put a damper on things? One reason seems to be the low unemployment rate. Not only do people still have jobs, but they’re confident that if they lose one job, they can always find another.

A fantastic graphic by E15 showing non-auto retail sale volumes since 2000. Source: https://bit.ly/3qoMqd4

But consumers do appear to be shifting their shopping habits. A new study by Colliers finds that discount retailers have picked up on the “value for money” approach to shopping. The short version of that philosophy seems to be a shameless lack of loyalty to brands, but total commitment to “sales” and “specials”. The study (“ExCEEding Borders | Discount Retail Markets in CEE-16”) claims there are 30 food discount stores in the region. Traditional grocery stores are fighting back by competing hard on price. All of which explains why you can’t buy so much as a candy bar without being offered a membership card or the store’s app.

“Due to the fact that the long-term impacts of the pandemic are still unknown, the growth in importance of smaller shopping center formats and retail parks has strengthened,” says Kevin Turpin (Colliers). “The multiple number of schemes under construction or in advanced stages of planning confirm this trend.” Colliers identified over 45 non-food discount chains in the CEE region, led by Pepco (2,500 stores in 11 countries!!) and then KiK and Avrora.

It really will be interesting to find out in a couple of years what the real impact of the pandemic was on retail. Because I really don’t know what to make of the fact that 38 new brands and concepts arrived in the Czech market last year. Unless it’s that stores killed off by lockdowns resulted in spaces opening up that would have otherwise been filled. The silver lining of opportunity to the dark clouds of Covid.

Cushman & Wakefield say the influx of new brands is the highest in three years, including Versace (Pařížská Street), Anson’s and Falconeri (Westfield Chodov) and Manuel Ritz (Myslbek), Sugarbird (Černá Růže passage), and German Hiltl in the Premium Outlet Prague Airport.

“Physical shopping remains an important part of the retail environment despite all the problems and changes that the coronavirus crisis has brought,” says Jan Kotrbáček (Cushman & Wakefield). “Czechia is still the key market for the entry of international brands into the Central and Eastern European region – the local purchasing power has been consistently high, and retailers’ long-term plans count on international visitors returning in similar numbers as before, since they are an important part of the customer base in the Czech Republic – in particular in Prague and other tourist regions.”

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