The Serbian Commission for the Protection of Competition has published on 29 May 2018 the results of the first phase of its retail sector inquiry, commenced one year ago. The first round of the inquiry included indicators of the development of the retail market, the market structure and an overview of the most important market players on the basis of different criteria. The inquiry encompassed over 500 market players and more than 5,500 retail stores over a period from 2014 to 2016.

Key findings

The results show that in 2016 Delhaize (21%) and Mercator (16%) had the biggest market shares based on revenues. Top eight remaining players had market shares in the 1% - 3.6% range. As far as retail space in 2016 is concerned, Mercator was leader with market share of 21%, whereas Delhaize held 17.5%. All other players were significantly lagging behind - Aman with 7% (a jump of 3 pp compared to 2014 as a result of a series of acquisitions), Univerexport and Metro with approximately 4% each.

Retail space, size and revenues

In 2016, ten biggest retail chains generated 55% of the entire revenue on the retail market, while all other market players individually held a market share of less than 1%. The overwhelming majority, i.e. 80%, of retail stores are classic (mini-market) stores with up to 200 m2, while hypermarkets (size over 2,000 m2) occupy only 1% of the total number of retail stores. Supermarkets (size 400 - 2000 m2) occupy most of the total space (34%), followed by classic stores (28%) and hypermarkets (24%). Classic stores and supermarkets are almost equal, with 36% and 33% of the whole retail industry revenues, respectively.

Great regional difference

Consumers spend 25% more in retail in Belgrade, compared to the rest of the country.

In Belgrade, the market share of Delhaize based on revenues was 40% in 2016, followed by Mercator (16%), Aman (7.5%) and DIS (3%).

In Vojvodina (northern province of Serbia), Mercator had the biggest market share based on revenues in 2016 (21.5%), followed by Univerexport (10%) and Delhaize (9%). In smaller cities in Serbia, local retail chains are particularly important with classic (mini market) concept being the prevailing format.

Barriers to entry

The main hurdles for retail market development are low consumers buying power and lack of available retail space.

What to expect

Market shares of top players are high and there is a huge gap between them and smaller competitors. The Commission concluded that the retail market is rising steadily (there is a surge in the number of active retail stores and size of retail space) and is open for entry of new players. For the time being, only Lidl has announced its intention to open its shops in Serbia. The Commission projected Lidl's market share to be between 5-7% in 2019.

The second stage of the inquiry is expected to be finished by the end of the year and will focus primarily on the relations between retailers and their suppliers (i.e. rebate policies, payment conditions and deadlines, bargaining power). Final results of the inquiry will enable the Commission to conduct ex post evaluations of mergers in retail sector.