The Prague Post
http://www.aaaradiotaxi.cz/index.php?xSET=lang&xLANG=2
July 7th, 2008
Reader's SurveyNEW     Endowment Fund     Book of Lists ONLINE      Reservations      Classifieds    Subscriptions
Prague accommodation
Prague Art & Antiques Prague Art Prague Antiques

Home » Archives » Business

Retailers neglect rural supermarket shoppers

Ignored by multinationals, stagnant countryside ripe for successful 'Flop' stores

By Victor Velek
Staff Writer, The Prague Post
October 17th, 2007 issue

While shopping opportunities in large cities have rapidly expanded over the last few years, rural areas have been stuck in a time warp, seeing little progress since 1989. Not only do villages lack retail competition; some lack any stores whatsoever.
However, there are signs of change — at least, as far as food is concerned.
The Czech firm Flosman, with its inauspiciously named grocery chain, Flop, is one of the first retailers to explicitly target the countryside.
“There is still so much space for food stores in the countryside,” says company head Pavel Flosman. “Competition is badly needed there and we want to bring it.”
In the following years, Flosman plans to build some 150 small supermarkets, each with space between 150 and 200 square meters.
Today, Flosman owns three wholesale stores and more than 30 retail stores, located mostly in south Bohemia, where the company is headquartered. In addition, the company leases or franchises more than 200 Flop mini-markets. The firm’s annual sales amount to about 3.5 billion Kč ($180 million).
Flosman kicked off its expansion project last year by opening the first new supermarket in Nová Včelnice, south Bohemia. Earlier this year, the second supermarket was opened in Studená, in the same region, and another Flop should be added by year’s end.
To speed its expansion, Flosman is negotiating with banks and developers. Without a financial boost, the company is able to build only five new stores a year — and that’s not enough, according to Flosman.
“We’re not the only company interested in the country and if we don’t speed up the expansion, other players will come to the sector,” he says.
Although Czech food retailing is dominated by multinational players like Schwarz, Ahold or Tesco, some retail research specialists see a future for small retailers.
“Small-format food retailers have great development potential,” says Zdeněk Skála, retail research director at Incoma Research.
Groceries should focus on services and needs not covered by existing large food retailers, such as impulse food shopping and convenient, close-to-home retail shops, Skála says.
Country allure
As the large-scale retail food market in cities becomes saturated, chain stores are getting smaller and showing interest in towns. In recent years, the British retailer Tesco has expanded beyond the confines of its base in cities, building a network of smaller stores.
While the smallest town boasting a Tesco hypermarket — Klášterec nad Ohří, northwest Bohemia — is home to about 12,000 residents, Tesco supermarkets set the bar even lower, says the company’s corporate affairs manager, Jana Matoušková.
“The smallest towns with our supermarkets have as few as 5,500 or 6,000 residents,” she says.
This is the same population size targeted by discount supermarket chains in their expansion. For example, Lidl — one of the country’s discount leaders — is interested only in towns with more than 5,000 residents; towns smaller than that are out of luck.
Flosman plans to profit from this neglect. Both new Flop stores are located in towns with about 2,500 residents, and the firm wants to go even deeper into rural areas. One grocery will be erected in Habry, a town with some 1,300 residents, according to Flosman.
So far, the stagnant food retail market in rural areas has been occupied by individual grocers, domestic chains similar to Flosman and by cooperatives. These cooperatives are also realizing the opportunities available and planning new projects. The consumer cooperative in Kaplice, for example, is building a new supermarket in Lipno nad Vltavou, south Bohemia.
Czech cooperatives want to be competitors to international retailers, says Zdeněk Juračka, head of the Union of Bohemian and Moravian Consumer Cooperatives (SČMSD). That’s why earlier this year they decided to unite the brands of more than 3,000 cooperative groceries throughout the country under the single brand name “COOP,” he says.

Victor Velek can be reached at vvelek@praguepost.com


survey banner


Other articles in Business (17/10/2007):

Browse the Current Issue

If you enjoyed this article, why don't you subscribe to the print version!
We accept secure online transactions provided by PayPal and Moneybookers

Be the first to add a comment!


Full Name: *
City: *
E-mail: **
This comment can be published in the print version of The Prague Post
Enter the text on the right:
 visual captcha
Comment: *
* Required field. In order to be approved for display, comments must have a first and last name and a city.
** E-mails are required and will only be used for internal purposes.

Most visited in Book of Lists

Hotel booking
The Prague Post Online contains a selection of articles that have been printed in
The Prague Post, a weekly newspaper published in the Czech Republic.
To subscribe to the print paper, click here.
Unauthorized reproduction is strictly prohibited.