Foto: Jakub Stadler

These niche formats include mainly grocery stores with late hours and several chains of convenience stores. One such chain is Žabka, which came to the Czech market from neighboring Poland less than two years ago.

Investment group Penta Investments, the owner of the Žabka chain, this year plans to add 50 to 60 shops to the current network of 100 outlets, Žabka CEO Zdeněk Linhart said last week at a retail summit in Prague. “For us, the important thing is the speed of building up the network of outlets,” Linhart said. Two-thirds of Žabka stores are located in Prague and the chain is not present in Moravia. Less than one-fifth of the stores are located outside the Czech capital and Central Bohemia. Within three years, Žabka’s owners target 250 outlets.

 “We aim to place our stores on the main streets, near public transportation stops,” Linhart said. Žabka stores are open seven days a week, and some even 24 hours. Their sales area is under 300 square meters. Prices on average are 10 percent higher than in hypermarkets. Žabka’s clients are impulse and need-based customers, Linhart said.

Penta acquired Žabka, the largest independent retail chain in Poland, in 2007 for more than €150 million (Kč 3.9 billion). The company operates some 2,000 Žabka outlets on the Polish market. Žabka last year posted Kč 500 million in sales and for 2010 its owners expect revenues of Kč 1 billion, Linhart said.

Maloobchodní síť Bala, a Czech chain of more than 1,000 independent grocery stores, is expanding by signing franchise agreements with shop owners. Bala last year generated sales of Kč 1.2 billion. The chain of Pont stores operated by JPServis is another convenience store format. Its yellow-blue logo is familiar to travelers of state-run railway operator České dráhy since the majority of 22 Pont outlets are located at railway stations. JPServis is now looking for new locations. “The potential of railway stations is more or less exhausted because, unlike abroad, there are only few large train stations in the Czech Republic,” said Bohumír Bárta, board chairman of JPServis.

The first Pont store outside railway stations opened last year in the Park business center in Prague 4. JPServis also operates the entire bus terminal at Florenc bus station in the Prague, which includes a Pont store and Burger King fast food outlet. JPServis was inspired by the success of U.S. store chain 7–Eleven, Bárta said. Pont stores generate some Kč 270 million annual revenues and its sales typically copy passenger numbers of České dráhy. When the railway operator suffered a 7.5 percent decrease in passenger numbers due to heavy snowfalls, Pont stores registered the same drop in sales figures, Bárta said.

Local competition

Linhart said that grocery stores operated by the Vietnamese nationals, another phenomenon on the Czech retail market, are competition for Žabka. “It is an amazing number and clear competition; but we won’t change our strategy because of them,” Linhart said. The Vietnamese community has over the past years been moving from open air stalls to brick-and-mortar stores. In addition to inexpensive apparel, the Vietnamese are increasingly more often focusing on opening fruit-and-vegetable stores and grocery outlets in Prague.

There are some 2,000 convenience stores operated by Vietnamese families in the country, said Nguyen Nam, a senior member of the Association of Vietnamese Entrepreneurs in the Czech Republic. The store owners don’t disclose their sales figures, he added.

Niche retail formats have a growth potential on the Czech market, even though the most popular retail chain with domestic consumers is Kaufland, where 17 percent of Czech households buy food, according to a survey by market research company Incoma GfK. Hypermarkets are preferred for food shopping, with 40 percent of consumers; followed by discounters, with 24 percent; and supermarkets, with 17 percent. Last year, small supermarkets were favored by 15 percent of consumers, an increase from 12 percent a year earlier, according to Incoma’s Shopping Monitor survey.