In a recent financial analysis of the food and beverage retail sector in Croatia, it has been revealed that Croatian consumers are increasingly turning to originally foreign retail chains. The analysis was presented at the "Economic Coffee" conference organized by the Croatian Employers' Association.
The study, conducted by Andrej Grubišić from the firm Grubišić&Partneri, delved into the operations of the 30 largest retail chains in the food and beverage segment over the past six years. These chains were categorized into several groups, including national, regional, foreign, domestic, originally foreign, and domestic retail chains that had been acquired.
One of the standout findings of the analysis was the significant growth in market share for originally foreign chains such as Lidl, Spar, Kaufland, and Eurospin. Their combined market share has increased by three percentage points compared to six years ago. In contrast, domestic chains that were subsequently acquired have seen a slightly smaller market share, while domestic regional chains recorded a market share nearly two percentage points lower.
Which supermarkets in Croatia have highest margins?
When examining gross margins, it was noted that Konzum, one of Croatia's largest retail chains, had a lower gross margin in recent years compared to the national average. On the other hand, Lidl typically maintains a slightly lower margin. Spar and Plodine have above-average margins, while Kaufland generally has a slightly lower one. Tommy and Studenac boast higher margins, while Eurospin, as a hard discounter, predictably maintains a lower margin.
In terms of revenue per employee, Lidl stood out with over 300,000 euros per employee in the past year, whereas Lonia reported 72,000 euros per employee. The overall average for all national retail chains was 166,000 euros, with regional chains averaging 105,000 euros.
Compared to six years ago, Lidl's revenue per employee has seen a total increase of 11 percent, while Kaufland's soared by nearly 40 percent, on par with Studenac's revenue per employee.
Over the past five years, approximately 32.5 billion euros were distributed to stakeholders within Croatia's top 30 retail chains. Of this amount, a significant 86 percent went to suppliers.
The analysis highlights the diverse interests at play in the retail sector, extending beyond the perspective of just the owners. Suppliers consistently hold the dominant position, followed by the state, and employees come in third, while investors occupy the last place.
The assertion that inflation impacts gross profit margins was refuted by the analysis. It emphasized that price increases in some sectors are often wrongly attributed to inflation, whereas inflation itself is a reflection of price increases. Addressing the root causes of inflation is crucial for its reduction.
Croatia's profitability low
HUP's Chief Economist, Hrvoje Stojić, noted that Croatia's profitability remains relatively low according to international comparisons. Croatia is among the six least profitable economies in the EU. Factors contributing to this low profitability include high taxation and inefficiencies within the judicial system.
Stojić highlighted that due to a high tax burden, Croatia is uncompetitive in terms of wages in Eastern European terms, even when considering a gross wage of two thousand euros.
The analysis also shed light on Croatia's increasing trade deficit in food products, beverages, and tobacco products. The trade deficit grew by about 56 percent compared to the previous five-year average, reflecting a significant increase in the deficit to approximately 1.7 billion euros.
This analysis offers valuable insights into the evolving retail landscape in Croatia and the factors influencing consumer preferences and profitability within the sector.