Johnstone also notices that there are no dominant local players on the Polish market. He points out that there are strong, active Polish chains, but none of them could be seen as the outstanding market leader, as can be found with domestic brands in Germany, France or the UK.
However, the director of Metro AG‘s representative office in Poland, Renata Juszkiewicz, claims that Polish retailers are doing a fairly good job standing up to the foreign retail chains, despite the obvious differences in capital.
„Polish small and family-owned stores have experienced growth this year,” Juszkiewicz says. She thinks that the market will be diverse in terms of store formats, and that there is room for convenience stores, hyper- and supermarkets, as well as small, neighborhood shops. „As for the Polish retail chain, their development chances lie in the smaller towns,” the Metro AG director says.
Next-generation shopping
Juszkiewicz also underlines that half of Poles do not have contact with modern retail formats. But that could soon change with Ruch‘s plans. Its December IPO and ambitious segmentation strategy could turn the company into a powerful competitor on the retail market. With its 9,500 retail outlets, it can reach clients across the whole country.
Ruch‘s Pawłowicz doesn‘t see his company as a natural competitor to the large super- and hypermarket chains. „Different formats have different functions,” he says. Ruch wants to be in shopping centers, in the form of press shops, and at road intersections, with kiosks. Pawłowicz ponders which way the neighborhood kiosk will go - will they be more of a grocery store, a supermarket-type press shop, or should they focus more on offering financial services, enabling money transfers, bill payments or buying phone credits?
Diversify or die
Growing competition will force the players on the market to come up with new ideas to gain a competitive advantage. The general secretary of the Polish Organization of Commerce and Distribution (POHiD), Andrzej Faliński, claims that super- and hypermarkets will have to offer a very wide range of products, both in terms of quality and price, to meet demand from different types of customers.
On the other hand, next to the growing convenience stores and discount outlets, he sees room for delicatessen-type stores which offer higher-quality, upper-shelf products rather than using price as a competitive advantage. He even claims that this will become a Polish specialty. „This option could be used to expand on other markets,” Faliński claims.
Retail revolution
Juszkiewicz notices another trend that is entering the Polish market - the use of new technologies in retail. The use of IT in what she calls „future stores” provides clients with services such as „intelligent” scales or shopping carts that have devices which scan the prices of chosen products and update you on the price of your purchase. However, Juszkiewicz is not sure whether another aspect of new technologies - e-commerce - will gain much ground in Poland in the near future.
„Poles treat shopping as a way of spending their free time, so I don‘t think that they will give it up for virtual shopping,” she claims. Johnstone is more optimistic, claiming that although low internet penetration in Poland is certainly a hindrance to the development of e-commerce, the proportion of users actually buying on the net is high even by comparison to Western standards. lto examine the trends pervading Poland‘s retail market. Participants found that fragmentation and the lack of a dominant domestic player mean continued market consolidation is inevitable, and that increased competition will force the big boys to offer a wider range of products, while the mom-and-pops will increasingly look to compete on the basis of quality, rather than price.
Retail roundup
George Johnstone,
chairman of PricewaterhouseCoopers (PwC) Polska
On Wal-Mart‘s potential entry into the Polish market: „I don‘t think [Wal-Mart] would be so crazy [to enter the Polish market]. But they still could come here by buying a company that is already present on the market.”
Renata Juszkiewicz,
director of Metro AG‘s representative office
On the abuse of workers‘ rights in large retail chains: „Contrary to popular opinion, the wages in our business are 20-percent higher than the average in trade and commerce. Plus we offer a whole social package, with training possibilities and personal-development opportunities. This is one of the few sectors of the industry where it is possible to go from a low post gradually all the way up to the top management level.”
On e-commerce: „Poles treat shopping as a way of spending their free time so I don‘t think they will give it up for virtual shopping.”
Adam Pawłowicz,
president of Ruch
On the importance of brands: „The number of brands in a company‘s portfolio is playing an increasingly important role. The more brands one has, the easier it is to negotiate with shopping centers. Empik, for example, has more than a dozen brands. We do have a problem, because very often shopping centers do not want someone with 50 sqm, but they prefer to lease 200 sqm.”
On the prospects for smaller stores on the retail market: „Who would go to a hypermarket to get a newspaper, rolls and cigarettes?”
Andrzej Faliński,
general secretary
of the Polish Organization of Commerce and Distribution (POHiD)
On delicatessens: „This could be the supplement to convenience and discount stores. Polish consumers‘ shopping criteria are very diverse and there is a need for contact with luxury. We should definitely notice the upper shelf.”
„The Polish retail market is remarkably unconsolidated,” says the chairman of PricewaterhouseCoopers (PwC) Polska, George Johnstone. Speaking at a Business Breakfast organized by Warsaw Business Journal (WBJ), in cooperation with the Polish Confederation of Private Employers (PKPP) Lewiatan and PwC, Johnstone pointed to a study conducted by PwC, which shows that the top five players on the Polish retail market have less than 10 percent of the market. In Germany the top five retailers can boast over 70 percent, whereas in France and the UK the figure fluctuates around 60 percent. The president of press distributor and retailer Ruch, Adam Pawłowicz, thinks that consolidation on the market is inevitable. „Small stores and their owners must integrate and enter the large chains,” he claims.
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