The Economy of Retail Chains in the FMCG Sector: The Case of Czechia
Abstract
The article deals with the analysis of the economy of the largest retail chains operating in the highly competitive Fast-Moving Consumer Goods market in the Czech Republic; the analysis of the relationships between selected economic indicators and key national economic variables. This research used data from annual reports and the audited financial statements of firms operating individual retail chains from 2005 to 2020. The research includes nine commercial companies and focuses on the development of sales, costs and cost ratios, profit and profitability, and assets and resources. The relationships between the indicators are evaluated using correlation analysis, and the similarity of trade chains using cluster analysis. From the point of view of retail formats, discounters are particularly successful, which, together with medium-sized supermarkets, are growing at the expense of hypermarkets and large supermarkets. Success and dominance in the Czech market are related to high labour productivity and low unit costs. The combination of price promotions and a wide range of private products, characteristic of discount chains, is very attractive to customers and, together with low unit costs, creates the potential for increasing the market share of discounters. Hypermarkets and large supermarkets will face further stagnation and pressure to downsize stores, automate and use other cost-cutting methods. The article brings new insights into the economics of FMCG chains operating in the Czech market, emphasising the differences between trade formats in perspective from 2005.
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