Home » Business » The e-shop superpower has been caught up in a crisis. Online stores have decreased, they are facing a battle for customers

The e-shop superpower has been caught up in a crisis. Online stores have decreased, they are facing a battle for customers

While in the past, Czechs mainly bought large appliances and electronics online, today they buy almost anything there, from clothes to food. Even so, e-shops recorded a premiere last year – their turnover decreased year-on-year for the first time. Their number also decreased. According to the shopping guide Heureka.cz, this year the trend will continue and e-shops will merge in order to withstand the competition of big players.

Until the year before last, Czech e-commerce was growing. But last year came a turning point. The energy crisis forced customers to save, so people spent less than 200 billion crowns in online stores, 12 percent less than the year before. The growth of internet sales from the covid era is thus now slowing down.

“We are behind an exceptional period of the pandemic, which was replaced by an energy crisis and high inflation. Consumers were especially cautious in the first half of last year,” declares Jan Vetyška, executive director of the Association for Electronic Commerce. “The fourth quarter was marked by a noticeable cooling of spending during October, when people expected new advances and postponed spending,” adds Tomáš Braverman, director of Heureka Group.

The Czech Republic is referred to as an e-shop superpower; in 2020, according to data from Colliers, it had the most online shops per inhabitant in Europe. Although there are around 50,000 of them, the market is dominated by one percent of them, led by Alza and Mall.cz.

“The reason for stagnant sales is the war in Ukraine, the related energy crisis and rising food prices,” says Petr Bena, vice chairman of the board of directors of Alza, the leader of the Czech online shopping market. The company will announce the results for 2022 in the coming weeks.

Other online stores express themselves similarly. Mall.cz’s spokeswoman Pavla Hobíková points to the impact of global problems as number two on the Mall.cz market. The company has been part of the international Allegro group since April last year, so the ongoing integration will also have an impact on the results. Spokesperson Lutfia Volfová mentions the effects of price increases for the online supermarket Rohlík, which gained customers during the coronavirus lockdowns.

Last year, the number of e-shops also fell for the first time on the Czech market, by 885 to 50,100. The reason was high operating costs and rising inflation. In order for smaller e-shops to survive in the environment of big players, they started to merge. In this context, experts talk about market consolidation. They predict it will continue.

“We expect a larger decline in e-shops mainly in the first half of this year,” says Braverman from Heureka.cz. “Increased energy and transportation costs will most likely be reflected in the prices, which may cause existential problems for some stores,” he adds.

According to him, the market will handle the incoming wave. Already because of the wide selection of goods that Czechs buy online. Household equipment, electronics, clothing, food or building materials. The Ostrava company Shopsys, which develops systems for e-shops, predicts growth especially in the online offer of large brick-and-mortar stores. A few years ago, they sold goods on the Internet rather as a supplement, today it is a large part of their turnover.

“Sales of e-shops of large brick-and-mortar players grew by 15 percent last year compared to 2020. In the long term, these e-shops grow faster than the rest of the market and are gradually starting to take back what was taken from them online,” says Matěj Kapošváry, executive director of Shopsys.

In addition to the decrease in sales, last year was characterized by the expansion of the offer of online stores. External circumstances also had a significant impact on shopping. “Goods that would have been hard to imagine in previous years have become among the best sellers,” Jan Mayer, head of the Czech Heureka, describes the changes.

Interest in garden greenhouses jumped by hundreds of percent in the spring, support for Ukraine, which was hit by the invasion of Russian troops in February, in turn increased sales of power plants and medical equipment. As a result of the energy crisis, purchases of stoves, solid fuel stoves or oil radiators have increased. “Interest in fireplaces and stoves has tripled,” says spokeswoman Hobíková for Mall.cz.

Alza also noticed the reaction. “Especially for goods related to the energy crisis and the war in Ukraine. That is, for direct heaters, stoves and fireplaces, canisters, power plants or charging stations,” says board member Bena. Orders for outdoor equipment and Czech flags also grew.

On the other hand, interest in the previously popular white goods, as large household electronics are referred to, was weaker. Especially at the end of the year, it stagnated or even fell. For example, robotic vacuum cleaners saw a drop of 42 percent, tumble dryers 39 percent.

“The Internet is no longer just for buying electronics, the share of furniture, home and garden equipment or hobbies is growing. As the range of e-shops expands to include these things, the willingness of customers to buy them online is increasing,” says Mayer from Heureka. The share of electronics fell last year from 21 percent in 2020 to the current 19, hobby goods increased from 6.6 to the current 8.3 percent.

However, the weaker year does not only concern the online environment. According to November figures, sales at all retailers fell for the seventh month in a row. This trend is likely to continue for some time. Shop owners in shopping malls are at risk of rent hikes due to high inflation. This could be reflected in the prices of goods in their stores.

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