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STATUS REPORT ON TRADE DEVELOPMENT IN CHERNIVTSI CITY
Kiev, 2011
Irina Bryzhan
Contents:
1. General characteristic of trade
2. Retail trade in Chernivtsi city
2.1. General characteristic of retail trade
2.2. The structure retail trade turnover of enterprises
3. The city trade network
4. The development of markets in the Chernivtsi city
5. Conclusions and suggestions
1. GENERAL CHARACTERISTIC OF TRADE
Chernivtsi with its close borders to Romania and Moldova and relative close distance to Central
European Member States plus Chernivtsi as centre of agricultural production has developed over the
past 20 years into a market place with importance for Western Ukraine. Moreover, a utility enterprises
"Kalynovs’ky market" has been successfully developing in the city for more than 20 years. The average
daily number of visitors to the market makes 50 thousand people and over 100 thousand people before
holidays. Therefore, wholesale and retail trade has been successfully developing in Chernivtsi.
Chernivtsi has long been a city of traders and smugglers. Priority area in Chernivtsi has always
been trade. Having become a part of Moldavia in the middle of the XIV century, Chernivtsi
remained for a long time a major customs point on an important trade route from Lviv to
Suceava.
Trading activity significantly affects the economic development of the city, as a vast number of jobs
(over20%) is being created in this field. About 20.000 - 25.000 jobs if not more have been created in this
sphere, and the City largely benefits from tax income of the trade sector. In 2010, more than 2,050
enterprises and organizations out of 9,371 registered businesses (22.2%) operated in the field of trade,
car repairs, household and personal goods.
In 2010the total trade turnover amounted to more than 7 billion UAH including almost 2.3 billion UAH of
wholesale trade turnover of the enterprises and over 4.7 billion UAH of retail trade turnover. Total retail
trade turnover includes retail trade turnover of the enterprises, as well as sales of goods in the markets
and by physical entities entrepreneurs.
(Exact statistical data on the total retail trade turnover of Chernivtsi is not available, so the above
information is taken on the basis of statistical data on Chernivtsi region, provided that the share of the
city in the total turnover of the trading network of private entrepreneurs is 65%. Though the figure can
be considered as set too low because the city has Kalynovs’ky market that provides most of the trade
proceeds).
Structure of the retail trade turnover in the Chernivtsi region
Retail trade turnover
Retail trade turnover of the enterprises
Turnover of the trading network of private
entrepreneurs
including
Turnover of the organized markets
(without agricultural products)
Turnover of shopping centers
Turnover of separately located network
Turnover of the organized markets selling
agricultural products.
Turnover of informal markets
2008
2009
2010
Mio.UAH
%
Mio.UAH
%
Mio.UAH
%
6871,2 100,0
6911,3 100,0
8024,8 100,0
3598,9
52,4
3520,1
50,9
4032,0
50,2
2846,3
41,4
2951,2
42,7
3414,3
42,6
1885,8
55,0
905,4
27,4
0,8
13,2
1850,2
71,9
1029,1
26,8
1,0
14,9
2114,8
77,6
1221,9
26,4
1,0
15,2
192,1
233,9
2,8
3,4
203,8
236,2
3,0
3,4
305,2
273,3
3,8
3,4
Status report on trade development in Chernivtsi city
2
2. RETAIL TRADE IN CHERNIVTSI CITY
2.1. General characteristic of retail trade
In 2010 retail trade turnover of enterprises in Chernivtsi was more than 35% of the total sale of the
enterprises of the city. (For reference, in 2005 wholesale and retail trade made more than 64% of total
sales, 21.6% of workers were employed in trade and services).
In 2010, the volume of retail trade turnover of the enterprises engaged in retail trade, amounted to
2,686 million UAH.
Sales of consumer goods through retail outlets in Chernivtsi averages 66-70% of the trade turnover of
the retail chain of the enterprises in the Chernivtsi region.
The turnover of enterprises in Chernivtsi city 2005 -2010 years
Wholesale trade turnover of enterprises,
million UAH.
Share in the wholesale trade of enterprises in
the Chernivtsi region
Retail trade turnover of the enterprises,
million UAH.
Share in retail trade enterprises of the region
Index of retail trade turnover (considering
inflation), % yoy
2005
2006
1561,9 1517,8
2007
2314,4
2008
2670
2009
2224,5
2010
2295,7
78%
73%
78%
79%
89%
91%
966,1
1172,4
1876
2648,2
2399,7
2686
(69%)
109,7
(66%)
112,0
(71,5%) (73,6%) (68,1%) (66,6%)
150,4
119,1
79,4
101,5
In 2005 retail trade turnover of trading enterprises in Chernivtsi started zooming, which can be
explained by the emergence of new trade formats (supermarkets, hypermarkets and shopping centers)
and increase of incomes. Outburst of trade center activity in Chernivtsi resulted from:
 Over saturation of the capital and major cities with supermarkets, hypermarkets and shopping
centers;
 Relatively high quality of life in Chernivtsi: due to this indicator the city took the fifth place in
Ukraine, primarily owing to the money earned by the Ukrainians abroad;
 Lack of trade facilities compared to other cities (up to 2005 there were artificially created obstacles
to entry into the city supermarkets, hypermarkets and shopping centers in order to maintain
Kalynovs’ky market).
Starting with 2007 the supermarkets started to more actively open in the city, as the city once lagged
behind in these processes, as compared, for example, with neighbouring Ivano-Frankivs’k. Meanwhile,
the population of the city and adjacent areas had a high income level, and the owners of newly-created
supermarkets saw success and good sales results in "Sil’po", "Foxtrot". The Chernivtsi units of these
supermarkets took the first positions in sales among all regions.
Turnover per capita in Chernivtsi is 1,7-2 times higher than the national average - in 2010 the volume of
retail turnover per capita was 10,846 UAH. But this figure is lower in the neighboring cities of the
Carpathian region - Uzhgorod (16,840 UAH), Lviv (12,055 UAH), Ternopil (11,308 UAH) and Khmelnitski
(11,614 UAH).
2005
Turnover per capita in Chernivtsi, UAH
National average of turnover per capita in
Chernivtsi, UAH
Including in towns
Turnover per capita in Chernivtsi region, UAH
Status report on trade development in Chernivtsi city
2006
2007
2008
2009
2010
4089
4916
7750
10818
9736
10846
2003
2777
3832
5338
5015
6123
2717
3750
5187
7234
6722
8154
1578
1991
2960
4052
3974
4558
3
2.2. The structure retail trade turnover of enterprises
In 2010 non-food items constituted 63% of the
retail trade network turnover (1692,9 mln. UAH).
Compared to 2009 the volume of non-food items
sales increased by 4.9% and their sale per capita
was 6,697 UAH.
In 2010, sales of food products by the city
enterprises decreased by 5.6% and made 993.0
mln. UAH, their sale per capita was 3,928 UAH.
The
The structure
structure of
ofretail
retailtrade
trade turnover
turnoverof
of
enterprises
enterprises
years
years
2010
2010
37
37
63
63
2009
2009
38,8
38,8
61,2
61,2
Most of the products sold through the sales
network ofthe city enterprises, including 84.5% of
food and 49.8% of non-food products, were made
in Ukraine.
0%
0%
20%
20%
40%
40%
60%
60%
80%
80%
food
foodproducts
products
100%
100%
nonfoods
nonfoods
Dynamics of retail trade turnover
1826,3
thousand UAH
2000
1692,9
1469,9
1500
1000
foodproducts
550,5
500
821,9
929,9
993
2008
2009
2010
non-foods
440,6
0
2007
The leading place in the structure of retail trade sales of food products as in the previous years,
belonged to tobacco products (in 2010 - 22.5%, in 2005-12.7%) and alcohol (in 2010 - 17.1%, in 200525%). Also very large in the sales volume of food products was the proportion of meat and meat
products (12.8%), confectionery (7.8%), dairy products (3.6%), soft drinks (3.1%), fish and fish products
(3.8%), fruits, berries and nuts(2.8%).
The structure of retail turnover of food products
25
%
22,5
20
17,1
15
12,8
10
7,8
3,6
5
3,1
3,8
2,8
0
Tobacco
products
Alcohol
Meat and
Confectionery Dairy products
meat products
Status report on trade development in Chernivtsi city
Soft drinks
Fish and
Fruits, berries,
fishproducts
nuts
4
The biggest sales volumes within the structure of
non-food products were constituted by building
materials (13.7%), gasoline (12.9%), diesel (10.3%),
pharmaceutical products (11%), automobiles and
autosupplies
(11,7%)
and
household
appliances(5.6%).
The structure of non-food products in 2010
29,1%
9,1%
9,3%
41,1%
Light petroleum
product
Building materials
Automobiles and
autosupplies
Pharmaceutical
products
Other
11,4%
THE CITY TRADE NETWORK
In early 2011, retail sales network of the city was represented by 426 commercial establishments. Most
of them (348units -85%) are shops, and 15% - are semiportable trade facilities (kiosks, stalls, petrol
stations).
Today 7 supermarkets and 3 hypermarkets, such as Caravan, Sil’po, Epicenter, METRO Cash & Carry and
large trade-entertainment centers - «DEPOt» (18,500 square meters), "Boyanivka" (30,000 square
meters), Citypark, Maidan, Equator operate in the city.
Total number of retail trade facilities
Including
Kiosks, stalls
Food stores
with a universal range of products
including
grocery stores, supermarkets and hypermarkets
Specialized food stores
Non-food Stores
The number of retail trade facilities per 10
thousand capita (Chernivtsi city)
The number of retail trade facilities per 10
thousand capita (Chernivtsi region)
The number of retail trade facilities per 10
thousand capita (national average)
Trade space, m2
2008
2009
2010
2008
Units
2009
2010
453
417
426
75
125
88
54
117
79
40
122
79
30042
28473
31075 32512
29138 39563
10
37
220
9
38
211
10
43
226
20393
1569
42843
21731 22968
1937
1949
43468 49005
18
17
17
12
11
11
15
14
Chernivtsi took the first place in Ukraine by the number of retail space per capita. Today, a thousand
residents of Chernivtsi share about 321.2 square meter space in retail stores. The average size of a
shopping center in Chernivtsi today is 12-18 thousand square meters. The trade-entertainment center
"Boyanivka” is the leader in this area. This trade-entertainment center is having an area of
approximately 120 thousand square meters (the size of about 17 football pitches) with 200 shops,
boutiques and parking area for 4,000 cars, is one of the largest in Ukraine, the second largest after
"Brovars’ky" in Kiev.
Status report on trade development in Chernivtsi city
5
2005
Number of retail space per thousand residents , m2
(Chernivtsi city)
Number of retail space per thousand residents ,
m2 (national average)
Number of retail space per thousand residents ,
m2 (national average – In towns)
Number of retail space per thousand residents ,
m2 (Chernivtsi region)
2006
2007
2008
2009
164,9
153,5
290,2
292,1
296,0
135,5
146,8
161,6
1 75,3
174,4
2 26,0
225,1
86,5
79,7
2010
321,2
116,7
Information from media
Rate of development of modern forms of trade in Chernivtsi differs from other regional centers with the
population as in Chernivtsi, and actually corresponds to major cities. The number of retail space per
thousand residents is higher than in Dnipropetrovsk, Lviv, Kharkiv and even Kyiv.
At the end of 2008 at least six Ukrainian cities approached the average Eastern European indices by the
number of trade areas: Mykolayiv and Ternopil (more than 260 square metres per thousand inhabitants),
Chernivtsi (480), Simferopol (260), Cherkassy (300 ) and Rivne (about 320).
The number of retail space per thousand residents , m2
In 2010 Chernivtsi was recognized as the leader among Ukrainian cities for the level of saturation with
retail space. There are about 520 square metres of retail space for 1,000 residents. The second place, by
the way, belongs to the three times bigger Mykolayiv (300 square metres of retail space for 1,000
inhabitants). http://vidido.ua/index.php/pogliad/article/u_chernivcjah_podeshevshala_orenda_komerciinoi_neruhomorsti/
Status report on trade development in Chernivtsi city
6
DEVELOPMENT OF MARKETS IN THE CHERNIVTSI CITY
Trading activities significantly affect the economic development of the city by providing a vast number
of jobs. Markets occupy an important place in this sphere. By January 1st 201125 markets and micromarkets, as well as trading platforms, including 14 food, 6 nonfood, 3 mixed and 2 flower ones,
operated in the city. In 2008 – 2009 6296 jobs were created in this field, representing nearly 48.3% of
the total number of newly created jobs in the city during this period.
On the whole, the city markets provide the sellers with 15.500 retail locations, including nearly 3,000
common use locations on the tables, shelves, meat and dairy pavilions, 2,000 of which are allocated for
selling agricultural products.
In 2010 owing to the market and micro-market dues the city budget received 25.829,6 UAH which
makes 105.2% of the forecast calculations (+ 1.284,1 UAH) and 3437,2 more than in 2009.
Total
Indicates
The number of markets
The number of trade places on the markets
Roofed markets
The number of trade places on the roofed
markets
Pavilions
The number of trade places on pavilions
Roofed and opened tables
Shops
Kiosks ( containers), units
places
Trays (stalls)
The places for trade from vehicles
The total space of markets , м2
Trade space, м2
including for sale
agricultural
products
26
15847
2
57
1749
2525
5351
255
6751
7177
141
596
505073
218688
Food products
Non-food items
2205
1
26
1454
1
9
12188
1
22
14
428
1471
6
48
48
125
225
330
41
887
887
3
-
1612
1872
3550
208
5816
6242
138
364
232
The biggest market in the city of Chernivtsi is the utility enterprise "The city shopping complex,
"Kalynovs’ky market ", which is one of the five largest clothing markets in Ukraine. It gives the city a
hefty revenue due to the market place fees on the" Kalynovs’ky market" introduced by the City Council.
The market is owned by the local community of Chernivtsi. It covers an area of over 30 hectares, and
forms the major part of the city budget. For many years this company has been the largest taxpayer in
Bukovyna. In fact, only for the last 10 years "Kalynovs’ky market" filled up the budgets of all levels with
over 100 mln. UAH).
Good location, the nearest of all major markets of Ukraine to the western borders of our country, at the
crossroads of major transport routes gives the company significant advantages. Now here runs a regular
bus route "Chernivtsi-Lodz", and in general the list of foreign partners of "Kalynka" includes dozens of
countries, including not only all European countries but also China, Syria, India, Arab Emirates and many
others.
Entrepreneurs engaged in trading activities in the shopping center "Kalynovs’ky market" pay 20
thousand UAH for a 20-ton container; 9.4 thousand UAH for a 5-ton container, 5 thousand UAH for a 3ton container; 400 UAH per 1 square meter in the pavilion with footing, built by the "Kalynovs’ky
market". The City Administration uses the raised money for the development of the city social
infrastructure and to support the development of the public utility "The city shopping complex
"Kalynovs’ky market". 30% of these funds will be transferred to the current account of the UE
"Kalynovs’ky market", and 70% - to a special purpose fund of the city socio-economic development. The
public utility "The city shopping complex "Kalynovs’ky market" numbers over 9 thousand retail locations,
Status report on trade development in Chernivtsi city
7
more than 18 thousand entrepreneurs do business on the market (this statistic data don’t take into
account shadow employment in the markets). The average daily number of visitors to the market is 50
thousand people.
Total gross revenue in 2010 amounted to 68.95 million UAH. It is almost 5% higher than planned and
44% more than in 2009.
The big share of the gross income of the "Kalynovs’ky market" comes from the sales of the market
services (more than 61.5 million UAH), including market fees, parking fees, and fees for the advertising
(over 18.2 million UAH). Other income of the utility enterprise amounted to more than 7.4 mln UAH.
Profitability of the market in 2010 exceeded 11%.
In the first six months of 2011 the gross income amounted to 29.8 mln UAH (the market fee was
cancelled). The share of revenues from the sale of tickets in the revenue structure has substantially
increased. The enterprise "Kalynivs’ky market" provides this service to the sellers who do not constantly
work in the market, and come from time to time to sell their stuff and take up with the temporary
trading places. In addition, tickets are sold as payment for car parking lots. The share of revenues from
the sale of tickets has grown fourfold and now accounts for one fifth of the enterprise total gross
revenue, while a year ago it did not exceed 5%.
Results of work of utility enterprise "Kalynivs’ky market"
Gross income, mln. UAH
Paid taxes to the budgets of all levels , mln. UAH
Including to the city budget, mln. UAH
Net profit, mln. UAH
2008
48
7,7
2009 2010
38,6
68,95
29,5
38
23,5
6 month of 2011
29,8
13.3
4, 65
2,4
The development and expansion of trade in the markets of Chernivtsi at the present stage is
characterized by the following factors:
 Trade in the markets is the most democratic form of sales which is due to virtually unlimited range
of both sellers and buyers, and minimization of the government intervention into pricing process;
 Development of trade in the markets contributes to the relative savings of the population for
purchasing goods, which is essential for the poor;
 Trade in the markets under current conditions is a place of employment for many people and a
chance to survive in difficult economic conditions (including shadow employment) .
Key directions of implementations of trade provisions in the markets are:
 Improving the existing system of contractual relationships between markets and juridical and
physical entities (including their networks);
 Further development of advanced conventional and unconventional forms of markets;
 A pre-holiday and seasonal sales;
 Development and improvement of forms of trade;
 Introduction of new technologies and modern forms of service, increase in technical and
technological re-equipment, expansion of market services (e-trade);
 Gradual transformation of markets for the sale of food and nonfood products into modern trade
and service centers;
 Increasing control over the quality and safety of goods;
 joint efforts of all stakeholders;
 use of shopping centers, a combination of efforts.
Status report on trade development in Chernivtsi city
8
CONCLUSIONS AND SUGGESTIONS


Trading activity has a big importance on the economic development of the city, because over
20 % of jobs have been created in this sphere; total retail and wholesale trade turnover is more
than 7 billion UAH.
Chernivtsi city has a good potential to develop as Centre of Interregional Trade, but municipal
policy maker may not be fully aware of the long-term potential of the trade sector to the City’s
development. To further promote Chernivtsi as an interregional trading centre, the municipality
may have to undertake certain steps to secure this potential long-term.
On this base it is recommended for EEP activities:
 To organize a working group under the Economic Department of the City Administration;
 To organize a workshop on discussing results of this Status report on trade development and
preparing a SWOT-Analysis;
 To organize a public hearing on state of situation and possible future Direction by City
Administration;
 To prepare draft of a concept paper on Chernovtsy as an interregional trade Centre
including road map on further measures;
 To organize experts workshop with participations from Ukrainian (For example, Metro, city
Association etc) and Germany (Ostausschuss);
 To finalize the concept paper and submit to Authorities.
Status report on trade development in Chernivtsi city
9