Central European Business Review 2016, 5(3):5-24 | DOI: 10.18267/j.cebr.155

Market Concentration and Profitability of the Grocery Retailers in Central Europe

Jindřich ©pička
doc. Ing. Jindřich ©pička, Ph.D., Department of Strategy, Faculty of Business Administration, University of Economics, Prague, W. Churchill Sq. 4, 130 67 Prague, Czech Republic, jindrich.spicka@vse.cz

The aim of the article was to internationally compare the market concentration of grocery retailers in the six countries of Central Europe - Austria, Czech Republic, Germany, Hungary, Poland and Slovakia. The market concentration was measured by CR4 ratio, Herfindahl-Hirschman Index and the GRS index. Data covered the period 2010 - 2015. The secondary data came from the Euromonitor International and Bureau van Dijk databases. The results showed that the market structure of the Central European grocery retailers has mostly a character of asymmetric oligopoly. The pairwise correlation did not reveal any strong relationship between the market power and profitability of the grocery retailers. The Central European grocery market is controlled by strong national retail chains and multinational companies which operate modern grocery retail formats. However, traditional grocery retailers are still popular in Hungary while traditional individual grocers in other countries are disappearing or gradually joining the networking system based on franchising.

Keywords: Market concentration; grocery retailers; Central Europe; oligopoly; profitability
JEL classification: D40, M10

Received: July 25, 2016; Revised: September 1, 2016; Published: September 30, 2016  Show citation

ACS AIP APA ASA Harvard Chicago Chicago Notes IEEE ISO690 MLA NLM Turabian Vancouver
©pička, J. (2016). Market Concentration and Profitability of the Grocery Retailers in Central Europe. Central European Business Review, 5(3), 5-24. doi: 10.18267/j.cebr.155
Download citation
  • BibTeX (.bib)
  • Bookends (.ris)
  • EasyBib (.ris)
  • EndNote (.enw)
  • EndNote 8 (.xml)
  • ISI WoS (.isi)
  • Medlars (.medlars)
  • Mendeley (.ris)
  • MODS (.xml)
  • Papers (.ris)
  • RefWorks (.txt)
  • RefManager (.ris)
  • RIS (.ris)
  • MS Word (.xml)
  • Zotero (.ris)
    • Open full article

    References

    1. Bouąková, M. (2014). Maloobchod ovlivňují velké podniky. STATISTIKA&MY, 4(5), 18-20.
    2. Bureau van Dijk (2016). Amadeus - a database of comparable financial information for public and private companies across Europe (not available for free).
    3. Appelbaum, E. (1982). The estimation of the degree of oligopoly power. Journal of Econometrics, 19(2), 287-299. Go to original source...
    4. Bloom, P. N., & Perry, V. G. (2001). Retailer power and supplier welfare: The case of Wal-Mart. Journal of Retailing, 77(3), 379-396. Go to original source...
    5. Cherry, R. (2000).The Dominant Firm Model Revisited. ReviewofIndustrialOrganization, 16(1), 89-95. Go to original source...
    6. Dixit, A., & Stiglitz, J. (1977). Monopolistic Competition and Optimum Product Diversity. American Economic Review, 67(3), 297-308.
    7. Dobson, P. W., Clarke, R., Davies, S., & Waterson, M. (2001). Buyer Power and Its Impact on Competition in the Food Retail Distribution Sector of the European Union. Journal of Industry, Competition and Trade, 1(3), 247-281. Go to original source...
    8. Euromonitor International (2016). Passport - electronic marketing information system (not available for free).
    9. Eurostat (2016). National Accounts aggregates by industry (nama_10_a64).
    10. Fofana, A., & Jaffry, S. (2008). Measuring Oligopsony Power of UK Salmon Retailers. Marine Resource Economics, 23(4), 485-506. Go to original source...
    11. Ginevicius, R., & Cirba, S. (2007). Determining market concentration. Journal of Business Economics and Management, 8(1), 3-10. Go to original source...
    12. Ginevicius, R., & Cirba, S. (2009). Additive Measurement of Market Concentration. Journal of Business Economics and Management, 10(3), 191-198. Go to original source...
    13. Grant, R. M. (2012). Contemporary Strategy Analysis: Text and Cases (8th Edition edition). Chichester, West Sussex, United Kingdon: John Wiley & Sons.
    14. Hall, M., & Tideman, N. (1967). Measures of Concentration. Journal of the American Statistical Association, 62(317), 162-168. Go to original source...
    15. Häni, P. K. (1987). Die Messung der Unternehmenskonzentration: eine theoretische und empirische Evolution von Konzentrationsmäβen. Verlag Rüegger.
    16. Hart, P. (1971). Entropy and Other Measures of Concentration. Journal of the Royal Statistical Society Series a-General, 134, 73-85. Go to original source...
    17. Hirschman, A. O. (1964). The Paternity of an Index. The American Economic Review, 54(5), 761.
    18. Horvath, J. (1970). Suggestion for a Comprehensive Measure of Concentration: I. Why Another Index? Southern Economic Journal (Pre-1986), 36(4), 602. Go to original source...
    19. Johnson, G., Scholes, K., & Whittington, R. (2007). Exploring Corporate Strategy. Financial Times/ Prentice Hall.
    20. Lovreta, S., Koncar, J., & Stankovic, L. (2015). Effects of Increasing the Power of Retail Chains on Competitive Position of Wholesalers. Acta Polytechnica Hungarica, 12(3), 213-228. Go to original source...
    21. McConnell, C. R., Brue, S. L., & Flynn, S. M. (2011). Economics: Principles, Problems, and Policies, 19th Edition (19th edition). New York: McGraw-Hill Education.
    22. McCorriston, S. (2002). Why should imperfect competition matter to agricultural economists? European Review of Agricultural Economics, 29(3), 349-371. Go to original source...
    23. Meza, S., & Sudhir, K. (2010). Do private labels increase retailer bargaining power? Quantitative Marketing and Economics, 8(3), 333-363. Go to original source...
    24. Naldi, M., & Flamini, M. (2014). The CR4 index and the interval estimation of the Her ndahl-Hirschman Index: an empirical comparison. St. Louis, United States: Federal Reserve Bank of St Louis. Go to original source...
    25. Peitz, M., & Shin, D. (2013). Upstream Market Power and Wasteful Retailers. Scandinavian Journal of Economics, 115(1), 234-253. Go to original source...
    26. Porter, M. (1979). How Competitive Forces Shape Strategy. Harvard Business Review, 57(2), 137-145.
    27. Robinson, J. (1933). The Economics of Imperfect Competition. London: Macmillan.
    28. Sckokai, P., Soregaroli, C., & Moro, D. (2013). Estimating Market Power by Retailers in a Dynamic Framework: the Italian PDO Cheese Market. Journal of Agricultural Economics, 64(1), 33-53. Go to original source...
    29. Sutton-Brady, C., Kamvounias, P., & Taylor, T. (2015). A model of supplier-retailer power asymmetry in the Australian retail industry. Article in Press. Go to original source...
    30. Vrbova, J. (2010). Opportunities and Threats of concentration of retail market. Ekonomika a Management, 4(1), 14 p.

    This is an open access article distributed under the terms of the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License (CC BY NC ND 4.0), which permits non-comercial use, distribution, and reproduction in any medium, provided the original publication is properly cited. No use, distribution or reproduction is permitted which does not comply with these terms.


    Return to the content