Evolve or die

With rapidly changing consumer habits, retailers are hard-pressed to keep up. They are introducing new retail formats, integrating virtual with traditional – they will try anything to bring retail closer to the customer and stay on the competitive edge By Beata Socha Changing retail habits have been taking their toll on traditional retailers for some time now, but the results are only now becoming apparent. The segment that has experienced the biggest changes over the past few years is food retail. After Auchan’s acquisition of Real stores, eight of the Real hypermarkets have to be sold within 18 months of finalizing the deal, in line with the requirements imposed by the consumer protection agency. These stores are located in Białystok, Rzeszów, Legnica, Szczecin and Wałbrzych, as well as three in Silesia: in Bielsko-Biała, Czeladź and Sosnowiec. The four hypermarket chains still operating in Poland: Tesco, Auchan, Carrefour and E.Leclerc, are still under serious pressure from the ever growing discount store chains, Biedronka and Lidl, as well as from corner shop chains Żabka, Fresh Market and several others. “Clients have fled to discount and convenience stores not because they are cheaper, but because shopping there is far less time consuming. You drive up, have a quick run around the store and come out with two shopping bags,” explains Marek Noetzel, head of the Retail Department at Cushman & Wakefield. Teaming up No wonder then that all the major retail chains are desperate to get into that niche as well. Carrefour already has 110 Carrefour Express stores in the Warsaw agglomeration alone. It also operates its convenience stores at several Lukoil gas stations. Opening up new convenience stores at gas stations is one of the latest developments in the industry. A few have tried and failed, like Piotr i Paweł joining forces with Shell or Carrefour’s previous endeavor with BP. But others seem to persist, like Intermarche’s small stores at its own stations. Now Tesco, albeit somewhat late, is joining the gas station game. It has just launched a 12-month testing period for 10 Tesco Express stores at Orlen’s stations in Warsaw, Kraków and Łódź. It will offer not only brand name goods and Tesco-branded products, but also fresh fruit and vegetables, the company said. It is not only the food segment that has seen consolidation recently. In early 2014, Swiss Papag purchased 24 Praktiker supermarkets. More recently, Bricomarche bought 14 Nomi stores. The changes in the DIY segment are mainly the product of the slowdown on the residential market in 2009-2012. Embrace the digital Other retail segments, including electronics, are also experiencing some far-reaching changes, though probably less visible from the outside. It is no secret that electronics retailers, more than other segments, have long been under pressure from e-commerce. Some are fearfully looking at ever-decreasing footfall levels and rail against the “show-rooming” effect. But others have managed to stay on top of things. They key is to integrate the two channels and offer your customers a choice: if you want to come to the store to look at TVs, be our guest, but if you want to compare all the specs for our hair dryers online and buy it there, that’s fine too. In a “favorite retailer” ranking compiled by consulting firm OC&C Strategy Consultants, electronics chain RTV Euro AGD climbed 19 places from 28th last year to 10th in this year’s ranking due to its convenient click-and-collect sales model. “It’s a myth that in some categories, consumers will move all of their purchases to the internet, and in other categories, to the round-the-corner shops. People already work in both of these worlds simultaneously, jumping from one to the other depending on their needs,” said Marek Zdziech, partner at OC&C. Real estate analysts concur. “What is important to remember is that you can’t operate only in brick-and-mortar stores or online. Clients expect retailers to offer both and those chains that can balance the two channels will gain the most. Even Amazon, which grew up in the virtual world, is opening up a traditional store. So these two worlds are getting more and more intertwined,” said Noetzel from Cushman & Wakefield. [negative]“It’s a myth that in some categories, consumers will move all of their purchases to the internet, and in other categories, to the round-the-corner shops.[/negative] In a test tube The idea of embracing the digital world is nothing new in Western Europe. Those who keep their ear to the ground have probably heard of an interesting experiment launched a few weeks ago in Germany. Metro Group, together with eBay and PayPal, are testing a new omni-channel sales concept dubbed “The Inspiration Store.” It is located in the Weserpark shopping mall in Bremen. Clients are now offered a variety of options: they can do their shopping in a traditional way, via touch screens located inside and outside the store, they can do it online or using mobile devices. Meanwhile, in Poland, many retailers are still toying with the click-and-collect concept. For those who linger too long, the next few years will be a rude awakening. Particularly, since “customers now expect a lot more than just websites. They want mobile apps to help them with the shopping, by e.g. allowing them to compare prices and enhancing their shopping experience. That’s another source of opportunities for retailers,” Noetzel added.