Multinational retail chains continue to thrive
Since the fall of communism 10 years ago, supermarkets and hypermarkets have mushroomed across the country.
Along with the emergence of the free market, a two-year "tax holiday" for investors made Poland a fertile and welcoming soil for international retail chains. The country's 38 million potential customers and lack of a modern retail market were also a tremendous draw.
The result has been unequivocal: 17% of an estimated 1999 turnover of $25 billion from sales of food and groceries belonged to supermarkets and hypermarkets, according to market research company CAL Company Assistance.
Hypermarkets, which are larger and carry more products than supermarkets, have at least 2,500 square meters of sales area. They can also accommodate about 500-1,000 cars.
Hypermarkets stock more than 50,000 different items, from sportswear to food products, but at least half of all turnover must come from food sales, said Edward Maleszyk, an employee with the Institute of Domestic Market and Consumption (IRWiK) in Warsaw.
In comparison, supermarkets have 400-2,499 square meters of sales floor area and food products constitute at least 70% of the goods sold, Maleszyk said.
The retail market has gone through dramatic changes since the early 1990s. One of the first moves by the new democratic government was to nullify old rules favoring the public retail sector and make taxes equal for all enterprises, industry sources said. This helped pave the way for foreign supermarket and hypermarket retailers to enter the country.
German firm Billa, which opened in Warsaw in 1991, was the first supermarket in Poland. Belgian Globi, Norwegian Rema 1000 and German Hit soon followed. The greatest boom occurred in 1995, when the French chains Leclerc, Auchan, Carrefour and Geant opened their first stores here, Maleszyk said.
Today there are seven foreign hypermarket operators in Poland, according to McKinsey & Co., an independent research group. In total, 95 hypermarkets and 730 supermarkets with at least some foreign ownership had established a presence in Poland by the end of 1999, according to CAL.
Nowadays, Hit, Geant, Auchan, Carrefour and the German Real are the market leaders. "The five major chains decide on the speed and dynamics of the development of hypermarkets in Poland," Maleszyk said.
And the speed of their development is overwhelming. In 1999, Real, owned by Metro, opened nine new stores. Real's rapid growth has been possible thanks to a completely different approach to selling than that of small Polish retailers, industry sources said. Under communism, when even the most basic goods were hard to find, a shop owner was sure that whatever items he had in stock would be sold immediately. After 1990, however, the situation changed. Consumers became more demanding since they finally had a choice among the multitude of new small shops and available goods.
"The form (of supermarkets and hypermarkets) was unknown to the Polish consumer: a wide selection of goods under one roof," Maleszyk said. But low prices have made the retail giants even more attractive.
Buying in bulk allows them to negotiate huge discounts from suppliers, often making prices lower than from wholesalers. In addition, self-service, promotions, parking, and free-of-charge transport to and from stores in certain areas are among the reasons that the foreign chains have become popular.
Because of their size, supermarkets and hypermarkets are located in bigger cities. Five thousand nearby residents are enough to ensure the profitability of a supermarket and 200,000 for a hypermarket, Maleszyk said.
But unlike in Western Europe, hypermarkets tend to be closer to city centers and are sometimes just a few kilometers away from downtown. While this may be fine for customers who use public transportation, "hypermarkets located in the center are a pathology," said Maleszyk, referring to the throngs of customers typically stuck in traffic jams in municipal areas.
Not everyone, however, is happy with the growth that multinational retail chains have experienced here. Many small independent shop owners are losing business and protesting the location of new stores, as well as accusing them of illegal practices such as dumping selling products for less than market price. They are also joining merchants associations to petition authorities to try to save Polish retailing.
Nevertheless, the loudest voice in this battle is the customer, who tends to choose lower prices over more expensive goods at the local mom and pop shop.
The customer is also supported by economic indicators: "Low prices in hypermarkets have hampered inflation, and in certain years, even lowered it," Maleszyk said.
The future of foreign chains appears to be bright. By 2005 the estimated number of hypermarkets is expected to increase to 180-200 stores, according to CAL.
