Retailers in Czech Republic expand non-food goods to offset low food margins

Major retail chains in the Czech Republic, including Lidl, Albert, Billa, and Penny Market, are significantly expanding their non-food product ranges. This segment, which includes items such as household goods, tools, garden equipment, and school supplies, now accounts for up to 15 percent of the assortment for some retailers.

According to Tomáš Prouza, President of the Trade and Tourism Union, the shift is driven by the inflationary crisis, which has squeezed profit margins on essential food items. Some staples, such as butter or poultry, are sold at near-zero or even negative margins to maintain sales volumes. Retailers are using higher-margin non-food goods to compensate for these losses and to increase the average basket value per customer.

Lidl, part of the German Schwarz Gruppe, is noted as one of the most active players in this strategy, offering a wide variety of goods ranging from air fryers to mattresses. The retailer's DIY brand, Parkside, was identified by Euromonitor as a top-selling brand in its category in 2022.