Minister of Trade of the Republic of Serbia Rasim Ljajić said that the Serbian market of consumer goods is worth 70.6 billion USD. He pointed out that purchasing power in Serbia has decreased in the period 2007-2013: average consumer bill in 2007. was worth 500 dinars (about 4,3 eur), while today it is worth 365 dinars (about 3,14 eur). Participation of small shops on Serbian market in 2003. was 72%, while in 2011. it was 53%. In 2013, small traditional shops are still dominant in Serbia. GfK research agency published the results of a study 'Purchasing power in Europe 2013/2014' in November, which states that the average annual per capita purchasing power in 42 European countries is worth 12,890 EUR, but in Serbia it is three-quarters lower - 3,032 eur. According to the National Bureau of Statistics, average Serbian household has 21,631 dinars (about 185,8 eur) for buying food and beverages on a monthly level.

Additionally, utility bills (electricity, water, phone bill...) become more expensive, as well as the price of approximately 20 basic foodstuffs (increase of 8%) and the price of toiletries, cosmetics, household chemicals and candies (increase of 20%). As stated by the Union of Employers, retailers had to downsize the number of employees as a final measure in order to sustain their businesses.

Forecast for 2014. is not much brighter: Bulletin of the Institute for Market Research (IZIT) states that by the end of 2014. traders can’t count on a positive shifts in Serbian retail, which will require greater efforts by retailers to be more creative in promoting actions, but also to lower their margins in order to attract consumers. All the more so if one takes into account that since the beginning of 2014 VAT for existential products will be increased. Cumulatively speaking, in the first three quarters of this year compared with the same period in 2012 the retail turnover registered a decline of 7.3%. The erosion of purchasing power and unsecure job position, particularly in the public sector, are main causes of negative trends on the Serbian retail market, according to IZIT.

Retail business

Year 2013 marked the entry of one foreign retail chain in Serbia. The French Casino Group, in partnership with the investment company Sodibal, has opened its first shop Casino Supermarché in Belgrade. Company announced that it will have opened 7 supermarkets in Serbia by the beginning of 2014. In addition, company was launched on the Serbian market around 300 Casino PL products, which will be distributed in the entire Balkans.

The long awaited Lidl did not open stores in Serbia this year, but it continued with buying land for markets in cities like Valjevo, Subotica, Novi Sad, Zrenjanin, Niš, Pančevo, Smederevo, Beograd... The French retailer Carrefour is another trader whose entry into the territory of Serbia is expected.  The first hypermarket of this retail chain will be opened in Belgrade in 2015, in shopping centre Delta Planet on Autokomanda, Delta Real Estate announced earlier this year. Delta Real Estate, member of the Delta Holding, has reached an agreement with Carrefour to give them a lease of the space area of ​​10,000sqm in the future shopping centre. Two companies will jointly participate in other locations as well.

In addition to the planned entries into the Serbian market, during the 2013 there was also an exit: Croatian retail chain KTC closed this autumn all of its stores, located in Vojvodina.

When it comes to marketers who have already been doing business in Serbia, there were a lot of shop openings. Belgian Delhaize, which entered Serbia in 2011 through the acquisition of Delta Maxi and who opened 15 new facilities and renovating 18 during the 2012, continued to invest in the 2013. The company has invested 45 million EUR in the development of trade over the year. 17 stores across the Serbia was open in 2013, and Delhaize plans to open three more by the end of the year. 43 shops were renovated. Retail network of Delhaize company in Serbia consists of 380 shops and five retail formats: Maxi, Mini Maxi, Tempo, Tempo Express and Shop&Go. Also, the company did a lot of work on the positioning of its PL. In addition, Delhaize laid the cornerstone for a new distribution center in Stara Pazova in April, in which will be invested 50 million EUR. New distribution center, which will occupy 70,000sqm and have the ability to expand to 125.000sqm in the coming years, will be completed by the end of 2014. In the mid of 2013, Delhaize company opened a new Tempo Express in New Belgrade, with an assortment of 5,000 food and nonfood products. One more Tempo in Belgrade, the first one located in the central city zone, was opened on the 26th November, on 3.400sqm of retail space and with 30,000 products in the assortment.

In the mid of 2013, a consortium of shareholders of Mercator informed the Company Board that the sale agreement has been reached: 53% of Mercator shares will be sold to the Croatian company Agrokor. Shareholders and Agrokor signed the transaction agreement. According to the Tanjug news agency, Agrokor authorities said that they paid 240 million EUR for 53.12% of the shares of the Business System Mercator. Slovenian Competition Commission has approved the acquisition of Mercator. In Croatia, in the meantime, the evaluation is still in the spotlight of the local Competition Commission. Serbian Commission has announced that Serbia continues to examin this concentration and the final decision should be made ​​by the January 3rd 2014. State Secretary at the Ministry of Trade Dragovan Milićević considers that Agrokor, after overtaking Mercator, will control about 74-75% of the consumer goods turnover in Serbia together with Delhaize. Agrokor already operates trade chain Idea in Serbia, and after the takeover of Mercator, Croatian company will hold 32.2% of Serbian market share. Thanks to this acquisition, Agrokor could become the second largest retailer in the Balkans, just behind the Schwarz group.

In the first three quarters of the 2013 Mercator-S (Mercator Serbia), which took over the facilities and staff of Familija Marketi chain in 2011, has operated positively and achieved revenue increase of 2.7% compared to the same period of the last year. Total income during the analysed period has reached 412.96 million EUR, while the profit was 3.69 million EUR. Last but not least, the company which operates in Serbia through banners Mercator and Roda opened multiple business units in 2013.

Idea Company, which took hypermarkets and workers of Slovenian chain Tuš in Serbia, in 2013 continued with the trend of opening small 'neighborhood' shops in Belgrade and Novi Sad, with the sales area of ​​around 100-250sqm. In addition, the company opened a store of 800sqm in Šid in January, opened new shop in the Belgrade (Neimar) with the sales area of over 900sqm in September, as well as several larger stores in Novi Sad.

In the mid of the year, Metro Cash&Carry has issued a statement that, at the moment, more than 1,000 small independent stores across Serbia operate under its project 'Moja radnja' ('My Shop'). Also, Metro Cash&Carry has been active throughout the year when it comes to its own format stores and opened its first discount center specialised in the discount sale of 3,000 items including technique, household appliances, tools, clothing and footwear, sporting and seasonal goods, household chemicals and cosmetics on the September 5th. The company also introduced an improved concept and new assortment in their C&C stores. Among other things, Metro has promoted the new way of exposing the commodities in the store, which is now divided into 'worlds' - units designed for specific activities.

Local Serbian retailers had a successful year. Gomex, which had 94 stores in the network - markets and supermarkets at the very beggining of 2013, has made significant progress during the year. The expansion has continued and the company which had only markets in Vojvodina until recently has signed a Memorandum on business and technical cooperation in early October with Novitas retail company from Šabac town. By the mid-November, Gomex has opened 10 stores, up to 250sqm of retail space, on the territory of Šabac. Gomex plans to open distribution center in Šabac as well and to build and renovate another 50 shops. Šabac will be the base from which Gomex will continue expansion of its retail network in Serbia. In addition, during July the company purchased the land for the construction of a distribution center in Zrenjanin and continued with the opening of new stores in Vojvodina region. Another domestic retailer, Aman, who leased facilities of the former SOS market during the last year, has intensively invested in new shops over 2013, mostly in Belgrade but also in Pančevo.

The largest domestic retailer, Dis Company, opened its first large retail center in Niš on the  April 18th, on 6.000sqm of which 4.000sqm belongs to Dis market that has a label Plus. Label Plus is reserved for the largest stores with the best assortment in Dis chain - only shops in Belgrade and Novi Sad had this label before Niš got it. After Niš, Dis has opened market in Požarevac, on the 22th August, on 4.000sqm, with more than 12,000 items in assortment. At the end of the year, Dis expanded its network on 16 markets, megamarkets and hypermarkets, after openings in Kraljevo and Vršac. The total investment in these two facilities was worth 8 million EUR. Dis Company, beside its own stores, in its franchise system has over 420 active contracts and more than 650 shops.

Local Serbian chain Univerexport in November 2013 increased the number of its stores on 39. The retailer, which operates through the various formats, including e-commerce, also focuses its business mainly on the territory of Vojvodina (one store is located in Belgrade).

Drugstore chain dm drogerie markt is ending this year with 51 stores in Serbia with turnover increase of 21.85% and 9 new stores, while its main competitor on the market, Lilly drugstore opened its 127th shop (117 with the pharmacy in it).

Domesticly owned convenience shop chain Corner Shop celebrated its fourth anniversary. On this occasion, the company launched the new format - Premium Corner Shop, which stores will be located in the exclusive residential and commercial complexes and shopping malls, offering a carefully selected range of the highest quality products to the customer. The company has already had two retail formats - Corner Shop and Corner Market, and its network consists of 106 stores.

Legislative changes

Serbian Parliament adopted amendments to the Trade Law in 2013. One of the novelties is that on the declarations of PL, instead of the manufacturer name, can be written only the name of the retailer (owner of PL). Centre for the Development of Trade is abolished - that centre was supposed to give permission for all commercial stores larger than 2,000sqm. Amendments to the Competition Law are adopted as well, and the most significant change is related to the method of determining a dominant position in the market. Until now it was considered that the dominant position has the company with more than 40% of share in the market, but in the future time it will be only one of the parameters. Financial strength of market participants, technological advances and market structure will be also taken into account. As well as that, it was determined that the deadline of obsolescence and the deadline of conducting the procedures in front of Anti-monopoly Commission should be extended from 3 to 5 years.

In October, new Regulation of labeling and advertising food came into force. Changes in the new Regulations are primarily related to the obligation of nutritional labeling, compliance of daily intake of vitamins and minerals with EU rules, citing chemical composition of vitamins and minerals, font size on labels (can’t be too small), clear and readable formulation of allergic statement, warnings that must appear on the packaging of products containing for instance caffeine, plant sterols etc. The transition period given to the manufacturers to adjust is 18 months.

The National Council for Consumer Protection adopted - at the end of the year - final version of draft for the new Consumer Protection Law, which will be harmonized with the EU practice and law. The law provides the strengthening of the market inspection competence in the process of protecting consumer rights, and improving mechanisms of extra-judicial resolving quarrels in this area.

Serbian Parliament also adopted amendments to the Enterprise Income Tax Law, which provides that the in 2014. tax benefits for companies which invests in machinery and equipment will be abolished. The effective income tax rate for companies that had large investments in equipment and facilities in 2012 was 5%, but in the next two years, with this changes, it will be 15%. Next year should be applied the new reformed fiscal system which controls accounts in real-time and allows immediate access to any cash register to inspectors. Taxpayers will no longer have to keep the fiscal memory, nor to print and keep a copy of the fiscal clipping.

To prevent the estimated loss in the budget of 300 million EUR per year, due to smuggling of petroleum and tobacco products, Serbia will establish the special inspection department whose responsibility will be to control the transport of excise goods. This was announced by the Government of the Republic of Serbia.

At the beginning of 2013 started the reduction or abolition of customs tariffs for importing some consumer goods: some kinds of food, cosmetics, household chemicals, clothing, car, furniture and construction equipment. Serbian Government has deffined on which products, however, importers will pay special taxes in the moment of import: all kinds of meat, sausages, milk, yogurt, butter, margarine, all kinds of cheeses, poultry eggs and potatoes.

PROGRESSIVE Serbia