Market Report, "Czech Republic Retail Report Q2 2013", published

From: Fast Market Research, Inc.
Published: Sat Apr 20 2013

The Czech Republic Retail Report examines the long-term potential of the local consumer market but flags short-term concerns about the impact on the country's economic outlook of the government's continued commitment to fiscal austerity. The report examines how best to maximise returns in the Czech retail market while minimising investment risk, and also explores the impact of uncertainty regarding the eurozone's economic outlook on the Czech consumer and on the ability of producers and exporters to realise returns in the short term. The report also analyses the growth and risk management strategies being employed by the leading players in the Czech retail sector, as they seek to maximise the growth opportunities offered by the local market.

The Czech Republic comes third (out of 10) in BMI's Central and Eastern Europe (CEE) Retail Risk/ Reward Ratings, and notably outperforms for Risk. Among all retail categories, mass grocery retail (MGR) will be the outperformer through to 2017 in growth terms, with BMI forecasting sales to expand by almost 34%, from US$14.54bn in 2013 to US$19.44bn by 2017. Through to 2017, we expect the proportional contribution of supermarkets and hypermarkets to remain dominant, with premiumisation momentum expected to pick up in line with the pre-crisis trend. In the competitive arena, BMI sees upside potential in the fact that the Czech Republic, which joined the EU in May 2004, has a reasonably open economy compared with some neighbouring CEE markets, and some companies from outside the region continue to transfer part of their business to the Czech Republic to reduce costs and take advantage of the domestic market.

Full Report Details at

Over the last quarter, BMI has revised the following forecasts/views:

BMI expects the Czech economy to return to mild growth in 2013 of 0.5% in real GDP terms following a 1.2% expected contraction in 2012. The government's commitment to fiscal consolidation measures will restrain household and public consumption in 2013, but a loosening of austerity measures the following year will see a gradual recovery in public- and private-sector spending in 2014.

Household consumption is set to experience its worst contraction in real terms since 1992 in 2012, when we forecast -3.3% growth for this component of GDP by expenditure. BMI also expects household spending to contract in 2013 by 1.0% in real terms as a result of continued fiscal austerity measures. Data for the first half of 2012 show that private consumption fell by 2.9% year-on-year (y-o-y), one of the worst prints on record.

Weakening retail trade figures are reflective of negative trends in the household sector - real retail trade dipped by 3.3% y-o-y in September 2012, down from a 0.8% drop in August 2012. A persistent fall in the consumer confidence survey carried out by the Czech Statistical Office indicates that a recovery in household spending is off the cards until 2014 at the earliest.

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