No more shopping centers, instead several retail parks, the expansion of some retailers and the arrival of new brands, mostly based on franchises. Consolidation and retailers' tense expectations will characterize the retail market in the Czech Republic in 2011 according to international consulting company DTZ.
Zero growth of shopping center space in the coming year caused developer Develon to postpone the completion of their project Breda & Weinstein in Opava to 2012. "Mainly in Moravia we will see the completion of several new retail parks and the expansion of existing parks next year. We expect around 56,000 m² of new supply, which will be the second smallest volume since 1997. With regard to market development and construction flexibility, however, there may still be further corrections," added DTZ analyst Lenka indelářová.
Although the preceding period's downturn and subsequent economic stagnation affected the retail market, the flow of new brands heading to the Czech Republic has far from dried up. Thanks to franchising concepts domestic customers in recent weeks have been able to shop for brand names such as Brand New Products, iBlues, Jamie Sadock and Nicole Cosmetics. "At a time of prevailing nervousness among retailers whether and how to change shoppers' behaviour, betting on an established brand through franchising is a logical step," adds Lenka indelářová.
Along with furniture companies, expansions were also announced by brands such as Hot Labels, Husky, Starbucks, fashion brands Ulla Popken, CCC shoes and KappAhl, as well as Dr. Max pharmacy, dm Drogerie and toy outlet Dráčik.
Although the current results of the pre-Christmas sales are exceeding economists' and retailers' own forecasts, expectations for next year are not so optimistic. The reason behind this forecast is the massive cuts in the public sphere, which will have an impact on consumers. For example, according to forecasts by Oxford Economics, after the Christmas boost consumer demand will return to previous, relatively low levels. The situation should improve in late 2011 and an increase in consumer expenditure in the CR is estimated at 2.5%.
The year 2010 will end with a balance of 154,000 m² of completed new supply of shopping centers and retail parks, which is 21% less than last year. The last quarter of this year saw an increase of nearly 30,000 m². As mentioned, seven retail parks will be opened or expanded in the coming year, mostly in Moravia. In addition, the reconstruction of the Diamant department store in Prague should be finished by developer Mustela.
In the case of retail parks the largest will be Centro Ostrava Retail Park by developer Discovery Group. The average sizes of retail parks range between 4,000-6,000 m² and the center point is usually a supermarket or discount grocery store. Typical tenants of retail parks include such brands as KIK, Lidovka, Takko Fashion, dm Drogerie, Okay elektro, SuperPET and others.
"It is a simple construction and marketing concept guaranteeing a stable income for tenants, and thus the owner as well. We will be seeing an emphasis on affordable commodities more and more in the Czech retail market," added Lenka indelářová.