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Poland: Discounters have 43% market share in Poland

Discount Retail Chain are strengthening their position and already control 43 percent of the retail market in Poland. What can slow down their further expansion? What are the prospects for supermarkets, hypermarkets and small formats? These questions are answered by Szymon Mordasiewicz, Managing Director at YouGov Poland.


Is there a place for a real supermarket in Poland today, one with a wide gastronomic offer and ready meals?

Szymon Mordasiewicz, Managing Director at YouGov "This question boils down to the question: should we copy foreign models or rather listen to the needs of the local consumer? I had the opportunity to observe various business models, both in the East and the West. I am convinced that we have no reason to be complex. Polish stores are tailored to the expectations of domestic customers and offer a great assortment. If there is no gastronomic offer in some of them, it may mean that there is no real demand for it. There is no point in thoughtlessly imitating Korean or Japanese formats, because each culture has its own specificity."


The German market shows that supermarkets can compete with discounters...

The question remains why? Perhaps a given sign had a better offer, but is it really a matter of format? Today, we refer to Biedronka or Lidl as discounters, because in this way it is easier for us to describe this specific business model. The boundaries between retail formats are becoming increasingly blurred. Supermarkets and hypermarkets are currently looking for new strategies, and the direction of change is set by Biedronka, Lidl and Żabka.

"An example is the Dino chain. Although it is not based on an innovative format, it is growing dynamically, because it is present where it is really needed. It offers good prices and effectively takes volume from a small format. So he has his own recipe for growth. It is worth emphasizing here that Polish trade is very well organized. We have nothing to be ashamed of it is an innovative, modern sector that effectively meets the needs of consumers.


Discounters already have 43 percent of the market. And what next? Is there a limit to their expansion?

"A lot depends on the policy of producers, who apply different levels of margins, that differentiate in discount stores, others in small formats, and still others in supermarkets. On the one hand, they can enjoy a dynamic increase in sales in discounters and profits resulting from huge volumes. However, more and more companies are recognizing that this is at the expense of not only margins, but also a significant reduction in the assortment. It is worth asking what will happen if the market becomes similar to the Swiss model, in which the two dominant chains, COOP and Migros, control over 70 percent of the market? And what if, in a dozen or so years, which is not an unrealistic scenario at all, two or three main players remain on the market, and small-format stores practically disappear?


"Of course, this does not mean that the entire small-format segment is at risk. An example of a chain that has done a great job is Żabka. It operates in a different market segment, carries out other purchasing missions and is able to defend itself effectively. However, there are many networks that require support on many levels, especially when working with independent entrepreneurs. It is often necessary to explain that if a retailer undertakes to carry out a promotion, he cannot sell the goods at a regular price, just to maintain a margin. In the long run, this is not beneficial. If there is no cooperation between the manufacturer and the retailer, whether it is a franchise operator or a purchasing group, then the small format will have more and more difficulties, and discounters will continue to dominate the market.


And what future awaits hypermarkets?

"Today, consumers expect convenience above all. They want to have a store nearby and be able to make quick purchases, even if it involves a smaller selection of products. The trend of "proximity", which intensified during the pandemic, seems to be permanently entrenched. Only about 2 percent of all customers are so-called "hypermarket heroes". This channel has been facing challenges for a long time, as consumers do not want to make large purchases in large-scale outlets. This is especially important in the context of location. Shops in shopping malls, often far from the city centre, are losing their importance.

"Of course, hypermarkets will not disappear from the market and will continue to generate sales, but they will no longer be a channel of growth. The glory years are behind them. I remember that 15 years ago we said that hypermarkets and discount stores would displace the small format from the market. Today, this role has been taken over by discount stores and supermarkets. The small format can still defend itself, but above all thanks to the franchise model. I think that the further path of hypermarkets will be towards reducing the sales area.


"Regardless of the sources, the data are consistent and confirm the same trend for the hypermarket format. From the perspective of households, a decrease in purchases by 0.8 percentage points was recorded last year, from 9.1 percent to 8.3 percent. These indicators have remained below 10 percent for a long time. Across the channel, the value of purchases fell by 2 percent, while the overall market grew by 7.5 percent. This is a huge change, which shows that the format of hypermarkets and large-format stores has exhausted its potential.



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