Czech shopping mall boom looks set to continue

05-06-2008

The Czech Republic has seen a massive increase in the number of shopping malls in recent years, with around 60 of them dotted around the country. Rare a decade ago, large shopping centres are now part of the everyday lives of millions of Czechs. And while the number of malls keeps on growing, some major retailers are also making inroads into the corner shop market.

In the centre of Prague you will find Palladium, one of the latest and, with 170 shops, biggest shopping malls in the Czech Republic. The explosion in shopping centre building began only a decade ago, but has become a real phenomenon. I asked a few people in front of Palladium for their views on that development.

Woman: “For those who don’t have much time, say people who are at work all day, it’s practical – they can find everything under one roof. But on the down side, they’re bad for small businesses – they swallow them up.”

Second woman: “I don’t like them, because I don’t like really crowded places – I get kind of overwhelmed. And they’re all the same – the same shops, the same people, nothing new.”

Man: “I think they’re great, because they make it possible to buy everything in one place and they increase competition. They’re great.”

Tomáš Drtina is the head of INCOMA Research, who are experts in the retail field in the Czech Republic:

“One of the reasons why we have that many shopping centres here is that our regulations are not as strict as for example in the Netherlands of the UK. Which enables developers to, let’s say, introduce more projects.”

Mr Drtina tells me the Czech Republic probably has more shopping malls per head than any other country in the central and eastern Europe region – and traces developments over the last decade.

“In the very first wave, in the late ‘90s, there were mainly edge-of-town projects, large shopping centres, usually looking like a hypermarket plus a simple shopping mall. Now the structure is much more differentiated. We have retail parks, we have inner-city shopping malls, we have the first outlet centres…so we have a, let’s say, interesting offer for all kinds of customers.”

And some of the biggest players are hoping to increase their market share – by opening relatively small stores. Travel a short distance from the tourist-filled centre of Prague and you’ll find one of the first branches of Tesco’s Expres chain of small shops, which follow a model that has proven successful in the UK. Tesco, the Polish chain Zabka and others are slowly but surely making inroads into the Czech local retail segment. Tomáš Drtina:

“Most of the big international retailers would like to introduce smaller concepts now – not just big hypermarkets but also small supermarkets or even smaller stores. Different types of customers prefer different types of store formats. But it takes time and it’s really important to use good locations, and there are not that many good locations. Definitely their networks will be larger in the future, but it will really take many months and years.”

In the meantime, the boom in big shopping malls looks set to continue: on top of the 60 or so already in the Czech Republic, Tomáš Drtina says there are plans to build another 50 in the coming years.

05-06-2008