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.
This report comes in PPT.
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.
Retail is the sale of new and used goods to consumers from a business for personal or household consumption from retail outlets, kiosks, market stalls, vending, direct selling and e-commerce. Retail is the aggregation of Retail Offline and Retail E-Commerce. Excludes specialist retailers of motor vehicles, motorcycles, vehicle parts. Also excludes fuel sales, foodservice sales, rental transactions, and wholesale sales (e.g. Cash and Carry). Sales value excluding or including VAT/Sales Tax. Retail also excludes the informal retail sector. Informal retailing is retail trade which is not declared to the tax authorities. Informal retailing encompasses (a) sales generated by unregistered and unlicensed retailers, i.e. retailers operating illegally, and (b) any proportion of sales generated by a registered and licensed retailer that is not declared to the tax authorities. Unregistered and unlicensed retailers operate predominantly (although not exclusively) as street hawkers or operate open market stalls, as these channels are harder for the authorities to monitor than permanent outlets. Activities in the illegal market, which is usually understood to refer to trade in illegal, counterfeit or stolen merchandise, are included within our definition of informal retailing. Activities in the “grey market”, which is usually understood to refer to trade in legal merchandise that is sold through unauthorized channels – for example cigarettes bought legally in another country, legally imported, but sold at lower prices than in authorized channels – will be included as informal retailing if no tax is paid on sale by the retailer. However if the retailer pays tax – for example on cigarettes bought legally in another country but sold at a lower price than standard – the sale is included within formal retail.See All of Our Definitions
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