Retail Summit has just experienced the best-attended event in its sixteen years history. More than 850 participants have most intensively discussed how to overcome the crisis which already fully influences the retail market in Czechia and in other CEE countries.
Did We Already Reach the Bottom?
What is the exact status of the Czech economy now? Can we think about bouncing off the bottom at all or is it more relevant to get ready for continuing fall? Answers to these hot questions where intensively searched for by high number of speakers and most of all by highly representative panel of retailers´ and manufacturers´CEOs, ministers and senior officials of both Czech and European Association of Commerce. The view that the Czech economy is out of the worst now
prevailed. The hurricane is over, also thanks to governmental spending, pointed out well-known macroeconomic expert Tomáš Sedláček
. Nevertheless, there are still quite tough times ahead of us, warned the same expert. His conclusions have been justified also by research published by GfK Czech during the summit: most of the interviewed managers tend to think the crisis will take two or even three years. The same type of respondents mostly believed the crisis will be short when interviewed in June 2009.
Representatives of retail companies have become much more realistic in last six months when it comes to the crisis, the same research proves. It is obviously driven by the fact that macroeconomic recession hit the consumer market with certain delay
. As proven by facts from several European countries presented by Thomas Bachl
(GfK/Europanel) the crisis has been influencing just the trade with consumer durables so far. This segment of the Czech market declined last year by 9%, in Slovakia by 20% and in Romania even by 42%. On the other hand, the consumer demand in the segment of FMCG was quite crisis resistant up to now. The decline of sales was caused much more by falling prices of branded goods and by overall explosion of promotions than by real decline of consumer expenditures. One of the paradoxes is that the sales of private labels and most of all of discount brands stagnated in many countries. This can be nicely explained by quoting one consumer: If I´m not able to buy a new fridge at least the old one must be full of good stuff.
2010 outlook is nevertheless less optimistic.
Macroeconomics of EU, including the Czech one, will restart their general growth but the retail market will be hit by growing unemployment, higher taxes and more expensive industry inputs only now. Growth of prices of fuel and cocoa are the beginning, bullish economy in the Far East and LatAm may lead to explosion of other commodity prices. This may influence strongly the European retail, of course including the Czech market. Extensive analysis conducted by Europanel confirms that the price inflation caused by food commodity cost explosion in 2007-08 had much more dramatic influence on household demand than the „general crisis“ of 2009. Both Rainhardt Freiherr von Leoprechting
, President of EUROCOMMERCE, and Zdeněk Juračka
, President of Czech Association of Commerce (SOCR ČR) pointed out that retailers will play key role in revitalisation of European macroeconomy. They nevertheless need the support at this from governments who have to protect the free competition within the whole value creation chain. This would be the strongest guarantee of best choice, quality and prices for consumers.
The Way Ahead: Together and with More Consumer Insight Should Go Easier
Retail Summit 2010 hosted about a hundred speakers and panellists and conference atmosphere radiated many ideas how to bounce off the bottom. It is far from being easy to summarize all these ideas in short text. Let us start with the keynote speech of Prof. Goetz Werner
, Founder of dm drogeriemarkt, who showed clearly retailers will face major challenges in the coming period. They can cope with them successfully only if they create intra-company environment supporting the identification of employees with their tasks. Prof. Werner believes each person has an innner desire to act independently. Successful retailers may profit out of that and become more entrepreneurial when each employee thinks and behaves like an entrepreneur. More entrepreneurial approach of each employee means higher efficiency and productivity of the whole company. Crucial fact is that retail, compared to many other industries, means constant contact of employees with the customer/shopper. In other words – retail needs personal initiative of each employee, self-sure and authentic.
The years of relatively easy growth are gone as the consumer income will be limited by unemployment, higher taxes and less accessible credits. The solution must be found on the supply side of the market – we cannot rely on continuing influx of money from shoppers. Petr Bena
of Procter & Gamble presented bold vision of 10% sales and profit growth even in today’s stagnating market. Of course this can be done only if we liquidate the un-efficiencies in both retail and manufacturing of consumer goods. This calls for change of several negative phenomena – shops have too many SKUs listed, out-of-stocks are at almost 10% level, about half of shoppers does not like the shop interiors, efficiency of promotions continues to fall... All these challenges can be solved provided we refuse the old paradigm that „it is just about the price“ and „the relation between retailers and suppliers must be antagonistic“. Cooperation of retailers and manufacturers is the base for bouncing off the bottom as it enables the limitation of operations costs and stimulates the sales growth, both through better understanding and satisfaction of consumers.
Also other speakers supported the idea that the recent crisis is the ideal catalyst for speeding up the necessary changes. We talk about them since some time but in last „fat“ years many companies lacked the motivation to implement them.
of Metsä Tissue presented the courage to continue the implementation of the strategy based on deep consumer understanding. This means a/o focus on satisfaction of demand for affordable luxury, health & wellness and „green“ products and last but not least also for convenience. Jan Vojtko
of Telefónica O2 tackled convenience from the different angle when presenting new technological possibilities enabling to make process of consumer contacts more transparent and easy. In the era of growing lack of time this is definitively something both retailers and consumers need. On the top of it new technologies can make these processes even cheaper and friendlier.
All of these great strategies would become useless if they stay just on the paper or on PowerPoint charts. Fourteen discussion panels of Retail Summit 2010 showed that most of the companies not only think how to get out of the crisis but also actively act in this direction. Let us take just one example representing many others. Martin Moravec
of p.k. Solvent concluded within the „Retail & What to Expect“ panel the anti-crisis know-how in the crystal form: The crisis is not the enemy, it is the opportunity for company audit, innovation and acquisition.
External market environment is just the catalyst speeding up the decisions – instrumental is the internal energy of the company and activity of its owners and managers. Let us remember in this context Tomáš Baťa
, one of the big winners of large economic crisis, who said: The most threatening competitor is the dust in your shopping window.
Basic Facts on the Retail Summit 2010
- Retail Summit 2010 has been prepared by the Czech Association of Commerce and Tourism (SOCR ČR), University of Economics in Prague and Blue Events agency and continued the tradition of 15 years of this large retail conference. The summit kept its focus on the Czech market but was important international event as well thanks to highly representative speakers panel and participants from 24 countries.
- This year of the summit welcomed the highest number of delegates in the whole 16 years history
. More than 850 people took part in various parts of the conference representing first of all retailers (30% of participants) and manufacturers (28%). Communication and information companies, public sector, media, financial institutions, schools and expert institutions sent other participants.
- Summit was supported by several tens of companies and institutions. Special thanks of organizers go to expert guarantor SAP, exclusive supplier of mobility Hyundai and to main communication partner Telefónica O2.
For more detailed information contact Barbora Krásná (e-mail: email@example.com
) Latest news on summit is available from www.retail21.cz