Modern Grocery Retailers in Slovenia

PROSPECTS

Modern grocery retailers keeps pace with economic optimism

A solid performance by modern grocery retailers continued in 2018 and was largely connected to the overall economic optimism and increased consumer confidence with growing disposable incomes. Modern store formats dominate grocery retailers in value sales terms.

Private label lines at lower prices push forward

Retailers have become increasingly effective in executing their marketing campaigns targeted at specific demographics and focused on retaining existing consumers amidst diminishing loyalty. While pricing strategies remain the key lever, operators devised new ways of lowering their costs by optimising supply chains and focusing on local suppliers and producers, while expanding their respective private label lines.

Nearing saturation levels of per capita outlet coverage

On the other side of the spectrum, convenience stores appeared to be less suitable for local consumers over the review period and serve only small-scale purchases of essential household products. Narrower product mixes and typically higher prices are encouraging consumers to visit larger store formats including supermarkets and discounters.

COMPETITIVE LANDSCAPE

Leadership of big chains challenged

Poslovni Sistem Mercator managed to retain its leading position of modern grocery retailers in 2018. Its leadership comes as a result of the company’s early success with rapid retail network growth in the 1990s behind the slogan “A Mercator for every village” and “The best neighbour”.

Delivery services still not catering to consumer convenience

Spar joined food and drink internet retailing at the beginning of 2018 and is now contesting the previously held monopoly by Poslovni Sistem Mercator. There are however limitations in terms of distribution coverage nationwide for both players and further development of this channel including independent producers and suppliers of fresh produce emerging online albeit with severely limited scope, is yet to be seen.

Discounter challenges big retailers among leading three players

Among the leading three players, Hofer, the leading discounter, managed to gain value share in modern grocery retailers in 2018. Its success is linked to the building of a trustworthy brand and private label portfolio during the previous decade of reduced purchasing power and a shift towards lower-priced products combined with a well-executed outlet expansion and refurbishment plans during the review period.

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