Re-emerging poor a target for some retailers

Tue May 12, 2009 8:25pm EDT
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By Gordana Filipovic and Aleksandar Vasovic

BELGRADE (Reuters) - As recession squeezes the fledgling middle classes of emerging economies, special shops for the poor are seizing the opportunities.

Slovenia and Serbia are among countries opening "SOS" shops that allow custom only from those officially registered as poor, who need special cards to access them.

"We see this effort as a new retail concept," Trade Minister Slobodan Milosavljevic said at a ceremony in March to open the first SOS shop, a whitewashed old house with a bright red sign. "The gauntlet has been thrown to other retailers and we can already see somewhat cheaper food in other markets."

The Slovenian initiative is primarily socially motivated but in Serbia, the Jabuka (Apple) retail chain also aims to make money just as such discounters as Wal-Mart and Target in the United States benefit from consumers seeking value for money.

"We didn't have profits in mind, but rather our social responsibility for the poor," Milorad Miskovic, Jabuka CEO, told Reuters. In Belgrade alone, 50,000 pensioners live on a monthly 50-100 euros ($68-136) and buy mainly bread, milk and poultry, he said.

Serbia's economy has grown by a steady 7 percent a year since 2003, but the credit crunch and falling global demand have led to a sharp economic contraction, estimated by the central bank at 5-7 percent in the first quarter of 2009.

So far 20,000 Belgrade residents have received special cards to buy staples, sometimes at half price, from the stores owned by Djordjije Nicovic, an ex-banker who has moved into farms and construction over the past eight years.

Jabuka will launch its fourth shop this week, and wants to expand across Serbia but the premises offered are often decrepit, said Miskovic: "We don't want people to feel like entering a warehouse, but rather to shop with a sense of dignity."   Continued...

<p>A woman leaves from a government-backed social SOS discount supermarket in Belgrade March 31, 2009. REUTERS/Marko Djurica</p>