Hitting the stores
By : Malgorzata Halaba
In Poland's decade-long economic transition, nothing has changed more than shopping. Ten years ago, shoppers would enter a store only to find the shelves largely empty, and ration coupons were required for almost every amenity.
Today, store shelves are stocked with everything from French cheese to Chinese noodles to Israeli bananas. While the number of retail outlets nationwide has grown steadily in recent years, 1999 marked the real explosion as almost 25 hypermarkets and eight shopping malls opened their doors nationwide. Hypermarkets now account for 5% of all retail sales, according to the Institute for Market Economics.
The emergence of hypermarkets and malls has caused a renaissance in shopping. Today, entire families hit the new shopping malls on Saturday and Sundays, going not only to peruse the stores but also to watch fashion shows, hear bands and generally be entertained. Friends meet at the local mall to grab a cup of coffee, maybe see a movie and also squeeze in a few purchases.
"I can see a lot of people who come here just to look around," said Jolanta Mroziewicz, manager of Deni Cler store in the Promenada shopping center. "There are whole families: children, parents and grandparents."
At the same time, the country's hypermarkets are packed with individuals loading up their carts. "I go to Carrefour once a month, at least," said Agnieszka Zakrzewska, a manicurist from Warsaw. And each trip, Zakrzewska said she drops zl. 300-zl. 500, mainly for household items, beverages and groceries.
"Hypermarkets are simply great," said Maciej Kaczanowski who shops at Carrefour or E. Leclerc at least twice a month. "You can buy everything, all in one place."
Those stores have created a new breed of shoppers that range from price-conscious individuals to those who will pay top zloty for premium brands. At the same time, the availability of goods have made their tastes more discriminating, which in turn is putting pressure on domestic chains to refurbish their rundown shops, offer more exotic goods and cut prices.
"There were a lot of changes in the retail market," said Urszula Klosiewicz, a researcher with the Institute of Internal Market and Consumption. "But most visible is the emergence of completely new entities: hypermarkets and supermarkets."
Despite the appearance of hypermarkets and shopping malls, small and medium-sized stores still account for more than half of all retail trade, according to the Institute for Market Economics. Those smaller stores typically have locations in the city center, making them more accessible for individuals without cars.
"At the same time, we have a plethora of small and medium-sized stores," Klosiewicz said. "And people keep using them."
At recent count, Poland has 57 hypermarkets (stores with more than 2,500 square meters) and 720 supermarkets (stores with 300-2,500 square meters), according to an HSBC report. The number of hypermarkets has grown 90% since 1996, according to the report.
Despite the large number of new hypermarkets, the retail market still has plenty of room for growth, said Maciej Grabowski, a senior researcher with the Institute for Market Economics. He said the Polish retail market is still very dispersed. According to HSBC, Poland has about 390,000 retail outlets.
"So, the market is far from being saturated," Grabowski said. This might happen in two-to-three years' time, he added.
According to HSBC, the top-five retailers in Poland account for 7% of total retail turnover. In the U.K., the top five retailers account for 62% of all retail turnover, while they hold 60% in France, according to HSBC. Chains with the largest networks in Poland are Real with 19 stores as well as Hit and Geant with 11 stores each, according to CAL consulting firm.
One reason for the lower penetration is that hypermarkets and large supermarkets are phenomena typically found only in larger cities. For instance, 12 out of 57 hypermarkets are located in Warsaw. In Warsaw, hypermarkets account for about 30-40% of food, cosmetics and detergent sales, according to HSBC. Outside Warsaw, hypermarkets account for only 18% of those sales.
Shopper profiles
These new types of stores are creating new types of shoppers. Hypermarket-crazed Zakrzewska and Kaczanowski, for instance, belong to a group of mainstream consumers, said Katarzyna Staszynska, sociologist and president of CASE. From her own experience, Staszynska has come up with four distinct groups of shoppers: "expats" who aren't concerned with prices, value-seeking mainstream shoppers, bargain hunters and lookers.
"At the very top, we have a group I'd call expats," Staszynska said. While not necessarily foreigners, Staszynska said this group spends with the same abandon. "They buy, on a regular weekly basis, all product categories and in large quantities."
Then there are mainstream consumers, those that look for value for money. The next group are price-conscious shoppers individuals looking for a bargain.
"And finally, we have vistors who come to hypermarkets like to a museum," Staszynska said. "They can't afford to shop, but they want to be part of it."
Many do spend, though, and heavily. Prices at the exclusive Deni Cler shop in the Promenada shopping mall have not deterred customers, said manager Mroziewicz, who used to work in one of the company's stores near ulica Nowy Swiat. Deni Cler has 17 stores throughout Poland.
"I can't say we don't have enough customers," she said. "Or that our customers don't have money. They do, and sometimes they spend small fortunes on clothes."
On the offensive
The emergence of hypermarkets and shopping malls is forcing traditional Polish stores to spruce up their outlets, expand their network and bring down prices.
The other development the new mass shopping outlets have helped to create is the concept of a discount store or outlets that sell products in bulk for lower prices, said Monika Chmielewska, an analyst with CAL.
"What are discount stores? Well, we define them as grocery stores that offer a limited scope of goods for a low price," she said. "The goods are displayed like in a warehouse and the design is very modest."
According to CAL, the largest network is owned by Biedronka (about 500 stores), Plus with 88 and Rema 1000 with 70 stores.
"We consider ourselves 'deep discount'," said Robert Szewczyk, public relations manager with Rema 1000. "That means a reasonable variety of products, between 2,000 and 2,500, a good standard, good service and better brands."
Rema 1000, which arrived in Poland six years ago, stresses that its strategy is to offer "low prices close to home," according to Szewczyk.
In spite of fierce competition, 90-year-old Spolem, an association of 5,200 collective stores, isn't daunted. In response to increased competition in retail in general, Spolem has split its chain into two distinct types of stores, a "Luks" outlet that offers premium brands and discount stores that offer price breaks. The company has 68 "Luks" stores and 102 discount stores, said Kazimierz Bendkowski, promotion manager with the National Association of Cooperatives Spolem.
While Spolem's revenue has not shown impressive real growth in recent years, the added competition in the market hasn't caused sales to slip either. The chain generated revenue of zl. 8 billion ($2.29 billion) in 1998, compared with zl. 7 billion ($2.19 billion) in 1997 and zl. 6 billion ($2.14 billion) in 1996.
"Of course we feel the competition," Bendkowski said. "Especially from the supermarkets built in city centers. But we are doing everything possible to face the competition."
