The paper deals with structural changes the Croatian retail sector has been facing in the period of 1998 - 2001. Although the general trends have been more or less anticipated, the question is what has been happening within the retail sector in regard to the effectiveness and the speed of changes. A descriptive comparative analysis of statistical data is used. It was the base for the authors’ calculation of different significant indicators including relative numbers, indices and correlation coefficients. The results of analysis support the hypotheses that the Croatian retail market has been characterised by very dynamic changes and growth in effectiveness. The ongoing changes have been generating a new retail structure tending to those prevailing in the EU countries. The analytical results provide an important implication for the retail strategy that should consider both benefits and costs of the retail development. The major set of actions includes an insistence on highquality management, improvement of knowledge, efficient divisions of labour and integrated information system. A long-term partnership with producers is the main precondition for building an efficient value added chain and reduction of business risk.