You just ordered groceries for the weekend or went to your usual supermarket around the corner, not suspecting that this sign might soon disappear forever. A British retailer, which has been operating in the Slovak market for almost 30 years, is preparing for a large-scale sale of its assets in Central Europe.
According to recent information from the Financial Times, the company's management is currently consulting with bankers about the possible sale of its business in Slovakia, the Czech Republic, and Hungary. For over 22 thousand employees in these three countries, this creates a risk of layoffs during the change of ownership. In Slovakia, the company is one of the largest private employers, so a potential deal will directly affect thousands of families. For ordinary shoppers, the event will mean the likely closure of some hypermarkets and a complete change in the usual range of goods.
Why the British are leaving the local market
The decision for a possible sale is driven by money and tough competition. Although 561 stores still operate in the three European countries, the financial performance of this region remains very low compared to the company's overall revenue.
Last fiscal year, the operating profit of the Central European division was £115 million. This is only about 4% of the entire group's total profit. At the same time, it is becoming increasingly difficult for the chain to maintain its position in Slovakia. For a long time, the brand was a market leader, but later it lost first place to discounters Lidl and Kaufland. The situation is complicated by the aggressive pricing policy of competitors and the imminent entry into the Slovak market of the Polish chain Biedronka, which plans to attract customers with cheap basic goods. The habits of Slovaks are also changing – huge hypermarkets on the outskirts of cities are losing popularity, giving way to smaller and more convenient neighborhood stores. Therefore, the company is considering the possibility of selling the business and focusing entirely on the markets of Great Britain and Ireland, where its positions are strongest.
The end of a thirty-year empire
The company was founded in 1919 in Britain and for a long time built a global retail network. The first store in Hungary opened in 1994, when Western brands were massively entering the post-Soviet space. The brand entered the Czech and Slovak markets in December 1996.
However, since 2014, after a series of internal financial problems, the strategy has changed dramatically. As observers write, the company is systematically scaling back its foreign presence. The British have already sold their assets in Asia (South Korea, Thailand, Malaysia), exited the USA and Turkey, and in 2020, they finally parted ways with Poland. Slovakia, the Czech Republic, and Hungary are currently the last major foreign assets of a once-powerful empire.
What will change for Ukrainians in Slovakia
If the sale happens, it will significantly affect several key aspects of daily life and employment:
- Change of employer. For those working in warehouses, in 6 logistics centers, or directly in supermarkets, the deal means a transfer to a new owner. Usually, the staff is taken over, but it is extremely difficult to avoid corporate optimization and targeted layoffs.
- Disappearance of private labels. Local manufacturers who produce goods under the Tesco private brand will suffer serious financial losses. The disappearance of these contracts will change the offering of inexpensive basic products and F&F clothing on the shelves.
- Delivery reformatting. The chain is one of the largest providers of home grocery delivery in most regions of Slovakia. If the new owner does not want to maintain their own logistics and hundreds of couriers, this service may become unavailable or significantly more expensive.
The company officially refuses to comment on the news, calling it rumors. While negotiations with potential buyers are ongoing, the supermarkets continue to operate as usual, so no drastic changes are expected in the immediate future.
