Polish grocery market: convenience and discount shops doing best

2010-01-28

The economic slowdown was also felt by the Polish grocery market, whose growth has been significantly stifled this year. According to our newest report, the grocery market will expand by 0.4% in 2009 in contrast to 8.9% the previous year. Convenience and discount outlets represent the segments noting the best growth this year.

Market stifled
According to the most recent edition of our report Grocery retail in Poland 2009, the grocery market in Poland, understood as the aggregate value of sales of grocery and non-food goods sold via grocery outlets, will amount to PLN 223.5bn in 2009. That figure stands approximately 0.4% above the tally of 2008, a year in which the market’s value expanded by 8.9%. The minimal increase is a consequence of the economic slowdown, which has led to more cautious spending by Polish consumers.
According to our moderately conservative forecasts, in 2010 the market will continue to expand by below 1%, mainly because of rising unemployment in the country. Thereafter, the situation will gradually improve.

Time for franchises
According to our estimates, convenience-type retail chains will post the best sales growth in 2009 as the segment expands by 21%. This is the fruit of the strong expansion of their franchise networks by three dominant market players – in 2009 abc, Zabka and Groszek have increased their aggregate store count by over 1,000 shops and at year-end had approximately 6,800 sales outlets.
The rapid development of franchise networks is not only the result of the development of convenience stores; 15 of the largest chains expanding on a franchise or agency basis added on 2,100 new shops, which means 15% growth on 2008. This is a consequence of the increasingly more competitive environment which has induced more and more small retailers to join one of the successful franchise chains.
The mounting competitive pressure means that independent store owners stand before a choice of either closing their store or becoming a member of one of the industry’s franchise systems. More and more are opting for the latter. In exchange for the lost independence they receive assistance and tools which help improve the profitability of their enterprises, and thus to survive on the market. Owing to the economic slowdown, the independents are most attracted to stronger partners. Franchisors have seen greater interest in the offered systems, made manifest in the higher number of applications. Yet, some may be prevented from joining a franchise because of difficulties in securing the financing necessary for the investment.

Discount stores grow in number
According to our estimates, discount outlets represent the most rapidly developing distribution channel at present. Their low price offer – best fitted to the current needs of the Polish consumer, as well as growth in their store count translated in 2009 to 18.5% increase in turnover at this type of retail outlets. As a consequence, discounts had the biggest increase in held share of the grocery market – from 7.7% in 2008 to 9.1% in 2009.
The combined market share of all three large-format distribution channels (hypermarkets, supermarkets and discount stores) will grow to 35.5% as at the end of 2009, from 30.8% in 2008.

Biedronka – Miss Popular
The popularity of large-format outlets was confirmed by the findings of a consumer preference and behaviour survey conducted for this report[1]. When asked what stores they most often visit, Poles most often said Biedronka, Real, Tesco and Carrefour.

Patrycja Nalepa
Retail Analyst
PMR Publications
patrycja.nalepa@pmrpublications.com


[1] Countrywide survey conducted between 16 and 20 September 2009 in all voivodships. The survey sample included all voivodship capitals and one selected town per voivodship, with a population size of between 10,000 and 100,000. The sample size was 416 persons.