Hoping for improvement

The Czech Republic is not an easy place to be for any of the five DIY companies involved in the country (Obi with 32 outlets, Baumax with 24, Globus with 15, Hornbach with 8 and Bauhaus with 7). Consumer spending has been falling here for years: by 3.5 per cent in 2012. Whereas Obi (+2) and Bauhaus (+1) opened new stores in the Czech Republic in 2012 despite the adverse economic and consumer prospects, Globus went in the opposite direction. It closed one store down. At present the company has 14 DIY retail locations in the Czech Republic with a total sales area in excess of 67 000 m². While Globus comes third in terms of store numbers, the retailer ranks last when it comes to DIY sales area. This points to the fundamental problem of Globus in the Czech Republic: its stores average around 1 351 m² in size, which means they are too small. Moreover, in this country Globus is represented by no more than three stand-alone DIY stores. Otherwise eleven of the total of 15 Globus outlets are simply superstores with integrated DIY departments. As a result Globus is, firstly, not really perceived as a brand; secondly, the DIY ranges are carried more or less as an ‘appendage’ to the much greater superstore product offer; and thirdly, last year’s average sales/m² are very low at € 819. The Germans responsible for DIY retailing in Völklingen are not particularly happy with this state of affairs or with the developments of the past few years. However, while they have direct operational access to the outlets in the company’s second foreign market of Luxembourg, that is not the case for the Czech Republic, where the stores are under the management of the holding company in St. Wendel. The DIY retail managers in Germany also feel depressed when they observe the performance of the sales figures reported from the Czech Globus stores. These fell by nearly € 45 mio from 2011 to 2012 and, by the end of the year, came to no more than around € 55 mio. At the same time the prospects for the country are still not looking good, so there is still no improvement in sight. Experts at the Bavarian state bank believe that GDP will suffer a significant deficit this year (-0.7 per cent). The country’s current account balance is expected to be -2.4 per cent still in 2013 and -2.5 per cent in 2014. A slight shimmer of hope is provided by the figures for the consumer price trend, which is expected to rise by just 1.7 per cent in 2013 and 1.6 per cent in 2014. This could also be to the benefit…