The teutonic titan

German firm Aldi, one of the world's largest discount retail chains, is preparing to launch on the Polish market according to sources cited by the Puls Biznesu daily. The paper says the chain, known for its low prices, may launch in Poland next year, beginning with up to 12 supermarkets in Warsaw, Poznań and the Silesia region.

The FMCG retail market in Poland is already relatively saturated, leading some to speculate that the company may have already missed the boat. Yet Marek Dietl, an expert from Simon-Kucher & Partners Poland, says the company is well prepared for the entrance, since it has been preparing for the move for quite some time.

Dietl says that Aldi's biggest advantage is its efficient sales strategy and logistics operations, which enables the chain to set low prices with no significant harm to quality or employees' wages. "While in other supermarkets, the cost of the sales process is 13 percent, in Aldi it is five percent," he points out. Moreover, Aldi's product rotation is three times faster than in other chains, since their selection is smaller. This speeds up cash flow as well, Dietl explains.

Experts expect the emergence of such a strong player on the Polish market to have a major impact on both foreign and domestic FMCG retailers. "Although Polish retailers have improved considerably over the last couple of years, their marketing is still rather poor," notes Dietl. The entrance of Aldi may force them to improve on their promotion or to lower their prices even further, which would be detrimental to earnings. Foreign discount shops, such as Lidl, will also be pressed to improve their quality, Dietl believes.

Still, experts say that despite advantages, Aldi's share in the saturated retail market is not likely to reach more than two percent within the first five years of operation.