Market Transformation and the COVID-19 Crisis: Challenges Faced by Local Markets in Serbia

By Marko D. Petrovic

Marketplaces, as sites for retail trade, are a dominant form of retail activity in Serbia. Farmers have traditionally been associated with marketplaces and have served as the primary gathering place for buyers and sellers throughout centuries. Marketplaces play a critical role in residents’ social lives and foster the psychological component of community connection.

The COVID-19 crisis has left an unprecedented impact on the overall business of Serbian local markets since March 2020. This resulted in several organizational changes which required doing business in a highly regulated and controlled manner. Street vendors, for example, were burdened by high monthly rental rates and lower profits, all while continuing to face the traditional challenges of unregulated street vendors competing for their customer base.

Along with the COVID-19 pandemic crisis, the most significant threat that has emerged in the last couple of years is the entry of new competition into the market. The emergence of new domestic supermarket chains and entry of international grocery stores into the market, encouraged by the development of the banking system and non-cash payments, significantly impacted the business environment in which local markets operate, as well as the businesses of people working with those local markets. For marketplaces in Serbia, the public utility model highlighted here should respect the unique characteristics of marketplace activities to ensure successful markets for communities and vendors. Marketplaces offer communities choice and flexibility. As they look to adapt to the needs of their communities, local governments have an opportunity to adopt policy and practices in data collection and management to celebrate their successes and ensure their survival. The competition to market vendors is very challenging and represents a “new phenomenon” for which most of them are unprepared.

Serbian society is undergoing a period of adjustment to new social and economic changes in the labor market. Local marketplaces and street vendors play a significant role in society’s transition and the development of local communities. This could be connected with the global trend of supporting and encouraging small entrepreneurs (such as local trade), particularly in developing countries. The uneven quality of services in the markets, particularly in the case of perishable food, and the necessity for more investment in infrastructure equipment and market arrangements, are indicators of the changing demands. However, national legislation has not yet clearly defined all legal acts for the market activity and the role of street vendors.

In order to recover from the ongoing challenges, three key policy recommendations have been identified which could be implemented on the national scale:

1) The first policy recommendation is to increase the institutional support of vendors. This could be accomplished by establishing connections to technical expertise for business development and financial education. Currently, new grocery stores are receiving incentives from the state budget, but small street vendors are not included.

2) The second suggestion is for local leaders to embrace a diverse vendor and customer base as an opportunity to support community development at the markets. Both city governments and civic organizations could be more present at market via public outreach.

3) Lastly, the third policy recommendation would be to incentivize the sale of local, green, and sustainably sourced agricultural products through rent reductions or tax benefits.

Local Serbian markets face significant challenges due to circumstances that have emerged during the COVID-19 pandemic crisis and market transformation. Local municipalities must develop strategies to maintain vendors at the market while disincentivizing illegal vending operations outside of market grounds.