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Poland: Who started the price fight in Poland

Updated: Apr 15

Discount Retail Chain Biedronka's Chief Commercial Officer Grzegorz Pytko said in a recent interview with '"The first poster with the podium and price baskets was shown by Biedronka's more expensive retail competition. We have 5 million customers a day and their number is growing." See below the compete interview.

Who started the price war?

In the current situation, we tend to avoid this terminology and try to choose our words more carefully. The war is a tragic situation across our eastern border, and what we are dealing with in Poland is fierce competition for customers in a difficult market. It's more intense than it was before, but there are more reasons for this spiral. These activities include promotional and marketing mechanisms, but in the end, it is the consumer who benefits.

In the podcast, the CEO of Lidl emphasizes the topic of the same prices in all stores, and in Biedronka the prices are differentiated. Do you benefit from this conflict?

We have more customers, but we don't know if this is the result of intense competition or if other factors have an impact on it. We can see that we are also growing in terms of market share, despite building a high base in 2023. We are already at the level of approx. 30 %, and the promise we make as a market leader must be kept. The most important of them are: competitiveness and the lowest prices on the market.

Another new retail chain has joined the price war. Gives discounts on Lidl and Biedronka cards. Delikatesy Centrum stores want to prove that bargains can be found not only in discount chains. You can buy cheaper with the Biedronka or Lidl+ card, on the first day over 100,000 customers took advantage of the promotion.

Discounters were already growing as fastest, and now the message is getting through to consumers that a discount chain is always the cheapest.

Discounters have also gained before, so what is happening now is not unusual. We have always put the slogan "low prices every day" in the first place in communication with the customer. Other aspects related to the purchasing process, such as the breadth of the assortment or the ease of shopping, were a consequence of this and appeared later. Over the years, the competition has looked at slightly different attributes, the price was on the sidelines, attention was paid to the appearance of the stores, the breadth of the offer, etc. In recent years, this has changed, through the pandemic, the war in Ukraine, to high inflation. The customer has become much more price-sensitive, which has been noticed by the competition. Taking care of the customer experience did not have the same effect in attracting their attention as prices. Biedronka has been and still is consistent with a foundation in the form of low prices. Competition, broadly understood, has decided to change in this direction and convince customers that attention to prices is also important on their side.

But you can't do it with communication alone, you have to take care of it for years and convince buyers to do it every day. I do not believe that a customer looking at a few fragmentary price baskets will be able to change their opinion about who is the cheapest. Shopping carts are a slice of reality, what matters is how much the customer will ultimately pay at the checkout for their regular purchases.

Besides, no one buys such sets as these baskets present.

Every purchase is different, in order to evaluate it, it is not enough to analyze only 15 or 20 selected products. It is a matter of the entire purchasing process, our analyses taking into account the entire assortment and the promotions we offer, show that we are the undisputed price leader on the Polish market.

Where are the hypermarkets? They have the widest offer and it would probably be possible to do the cheapest shopping in them.

This channel has been losing market share for years. This trend is unstoppable, and many significant players have withdrawn from Polish. I do not agree with the statement that you can do the cheapest shopping in hypermarkets. The most comprehensive for sure – they are the clear leader when it comes to the breadth of the assortment. Our data shows that Biedronka's offer is the cheapest regardless of who we compare ourselves to.

Are private labels still gaining gain?

Private labels are an extremely important element of our offer. Many of them have market shares that threaten the leaders in their respective categories, or have even already beaten them. A frequently cited example is Dada, which, being its own private label brand, is the leader on the Polish market.

Recent years have consolidated changes in customs. Consumers have become even more price-sensitive and are redirecting interest to products on sale and to cheaper alternatives to what they typically buy. That is, private labels, the quality of which must be at least equal to or better than that of the brand leader. If, at the same time, the price is lower, then when the customer tries them, they come back to such purchases.

The share of our own private label brand in Biedronka's sales exceeds 40%, and we are also developing their offer by creating a special team dedicated to them.

In our stores, up to 94% of the offer comes from Polish companies, in contrast to the offer of our competitors. The truth is that our partners in the development of private label products are usually local Polish companies, which can therefore compete with international corporations. If the restrictions were to take place, jobs would be at risk on the producers' side.

Will the market bounce back this year after a quantitative decline in sales in 2023? This is quite an unusual situation in our market.

I can't predict what will happen. On the other hand, we are not experiencing a downturn in the economy last year or this year. We are increasing the volume of products sold in most categories, so if I were to measure the economic situation by our results, I do not see any deterioration in it. A certain slowdown in the market can be seen, but there are many factors that should lead to an improvement in the economic situation, such as an increase in the minimum wage or an increase in the child benefit to PLN 800. This should create the conditions for increased consumption.

Most categories with a positive effect? In which was it negative?

First of all, let's pay attention to the prices. Some categories are already deflationary, as a result of the events of 2023 and 2024. We have a real decrease in sales prices, which is also seen by customers, sometimes even a significant increase in the volume of sales is not able to give an increase in its value. Categories with deflation are mainly fresh products, such as fruits, vegetables, meat, dairy products, but also oils and loose products. Here, the competition between chains, but also between providers, is the greatest.

Market data indicates that there are fewer promotions. Is there an end in sight for Biedronka as well?

Our data shows that the share of sales in promotions is increasing. In Poland, it accounts for 40-45% of total sales. We have up to 900 products on sales promotion every day. When we compare it with the competition, the proportions are completely different, the share of promotional sales is lower.

On the entire market, it is about 30 per cent.

If the customer didn't see it and didn't appreciate it, then the traffic in our stores wouldn't increase so much. We already have 5 million customers a day and this number is growing despite market turmoil and changes in behavior. What has happened to the citizens of Ukraine is also important, at its peak, there were several million of them in Poland due to the war, but that is a thing of the past. Some of them returned to Poland, some went further to the West. Today, their number is much smaller, so is the overall customer base. And we're still growing.

The topic of opening Sundays is coming back, is it an important topic for you? Has the customer switched and no longer expects shopping on Sunday?

The ban on Sunday opening was a new reality a few years ago and it took a lot of effort to adapt to it. We have adapted to the new law, and the Polish client has undoubtedly become accustomed to the new conditions. Looking at shopping, you can see that what was bought on Sundays is now spread over other days and the value of spending has not decreased, although its structure has changed.

We try not to dwell on things that don't depend on us. For us, it is not only about the opening of retail stores on Sundays, but also about their preparations for work on Monday. At the beginning of a new week, the customer expects a fully prepared store from the very morning, which is not always possible after the weekend shopping peak, and without the possibility of working on Sundays.

Opening Sundays generate lower turnover than before. They are an anomaly, consumers forget about them. This shows that shopping habits have changed a lot. We will adjust to the decision if it arises.

And the internet? As a significant channel it is, the share of e-commerce in the food market is small.

Technology and the Internet are the future of the market, which does not change the fact that the basis of our business is over 3,500 and brick-and-mortar stores, and soon also new outlets in Slovakia. However, we are also developing digital channels. In 2020, we started with online delivery in partnership with Glovo. At the moment, we have it in about 70 cities. Two years later, we launched a quick-commerce project. At the moment, the service operates in six cities, as part of the assortment sent from specialized mini-warehouses with guaranteed delivery even in a dozen or so minutes.

Although there were many international operators on the market who decided to withdraw from it, we prove that success is possible, the key is the price. We will be launching new locations, consumers, especially in large cities, expect such services.

Biedronka Home operates with home accessories, and we are also running a pilot project for an e-grocery store

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