Grocery retailing in Eastern Europe is growing moderately. A major structural change is being seen, as evidenced by the dramatic decline of traditional grocery retailers, which is giving way to large modern grocery retailers. As the market transitions towards consolidation and maturity, the largest players will experiment with new store concepts and digital innovations.
In the last few years, the largest Russian retailers, such as X5 Retail Group and Magnit, were opening hundreds of stores each year; thus penetrating regions with virtually no presence of modern grocery retailing. This is a good example of the situation in the region, where independent retailers are dramatically losing against big players.
Discounters have been a hit among consumers in many Eastern European countries, such as Poland, Romania and the Czech Republic. At the same time, discounters have no presence in Russia and Ukraine, where value-seeking consumers would receive the new format well.
In almost all Eastern European markets the landscape is dominated by modern grocery retailers. Modern grocery retailers are rapidly cannibalising the sales of traditional grocery retailers, mainly due to greater economies of scale and higher value for shoppers. This trend is expected to continue in those markets where the share of traditional grocery retailers is still high.
Eastern Europe is not at the forefront of environmental consciousness among consumers, unlike Western Europe. Yet themes of sustainability are becoming ever more important for consumers in Eastern Europe. Grocery retailers will need to respond accordingly by offering recycled packaging, lowering CO2 emissions in their operations, and participating in various other sustainability initiatives.
As more and more Eastern European consumers are connected to the internet, retailers are able to reach out to them using various digital channels. This provides great opportunities for interaction and offering personalisation.
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