THE POLISH GROCERY RETAIL MARKET IN 2010-2020 - PROXIMITY SUPERMARKETS AND CONVENIENCE SEGMENTS WILL BENEFIT FROM SLOWER GROWTH OF DISCOUNTERS ...
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THE POLISH GROCERY RETAIL MARKET IN 2010-2020 PROXIMITY SUPERMARKETS AND CONVENIENCE SEGMENTS WILL BENEFIT FROM SLOWER GROWTH OF DISCOUNTERS November, 2016
2 Grocery retail in Poland 2010-2020 – detailed analysis of convenience and proximity supermarkets segments Contents 1 Grocery retail market 5 2 Customer trends 13 3 Regulations 15
3 Grocery retail in Poland 2010-2020 – detailed analysis of convenience and proximity supermarkets segments Foreword We are happy to present the extended version of The Polish grocery retail market in 2010-2020 report published by Roland Berger in August 2016. The report gained noticeable market traction with number of articles in the most opinion shaping portals and newspapers. After thorough analysis and interviews with key market stakeholders we have decided to update and enrich the report with new conclusions. Major differences vs previous report are in market segmentation and forecast projection. We have distinguished soft franchise segment and divided supermarkets into large and proximity supermarkets. The reason for the change is different drivers behind those segments and therefore possible blurring of some market trends and dynamics. We have also updated the forecast as for major players in terms of LFL sales 2016 is much more lucrative than 2014 and 2015, inflationary perspective for Poland has changed and we have taken into account the impact of minimum wage. The results of the more detailed segmentation shine a new light on the market dynamics and the conclusions presented in the report describe deeper the perspectives for the future grocery market development. We encourage you to read the report carefully and wish you a pleasant lecture.
4 Grocery retail in Poland 2010-2020 – detailed analysis of convenience and proximity supermarkets segments Market expects convenience stores, proximity supermarkets and discounters to continue to be the fastest growing market segments. Overall market growth of grocery in Poland was Market expects the overall grocery sales in Poland 3.4% on average annually since 2010. Traditional to grow by 3.7% annually on average till 2020 trade declined on average by over 7% annually while driven by disposable income growth resulting from modern formats increased their market share by GDP development and increase in minimal wages total of 15 pp. Consumer trends strongly favoured as well as 500+ program (especially in 2016 and both discounters (14.1% annual growth) and 2017). Growth of inflation is also expected to be a convenience stores (14% annual growth) – those contributing factor. Traditional trade is expected two segments combined increased their market to further decline (by 3.7% annually) to reach share by 13 pp (from 21% to 34%) enjoying growth 14% share in 2020 as supported by CEE and WE on LFL and by aggressive network expansion. benchmarks. Convenience stores are expected to Proximity supermarkets were the third fastest continue to be the fastest growing segment (12.5% growing segment (8.1% annually), benefiting from annually) followed by proximity supermarkets (8.2% favourable customer trends. Furthermore number annually) and discounters (decrease in growth rate of stores increased the fastest in this segment (by from 14.1% 2010-2015 to 6.6% annually in the over 13% annually). Soft franchise networks enjoyed forecast period due to visible slow down in network moderate growth at rates above overall market, expansion, especially by Biedronka). Soft franchise which enabled them to increase their market share is expected to grow at rates comparable to overall by 3 pp. Sales volume and number of stores both market while hypermarkets and large supermarkets in large supermarkets and hypermarkets segments will further lose ground to other modern trade stagnated – their combined market share declined formats (decline of combined market share by 4pp). by 3 pp. Six key customer trends impact the buying behaviour and customer preferences across all retail formats: busy lifestyle, new family model, demand for higher quality, health consciousness, increased sophistication and awareness of customers and regional development. Expected customer trends, buying behaviour and preferences (including fast shopping, convenience, proximity etc.) will further promote development of convenience formats, discounters as well as small proximity supermarkets over other modern (large supermarkets, hypermarkets and soft franchise) and traditional channels.
5 Grocery retail in Poland 2010-2020 – detailed analysis of convenience and proximity supermarkets segments
1
Grocery retail market
1.1
Historical development of grocery market
Historical development of grocery market and traditional and modern channel
Sales value, 2010-2015 [PLN bn] Number of stores, 2010-2015 ['000]
65% 69% 72% 75% 78% 80% CAGR 16% 18% 21% 24% 27% 30% CAGR
211 3.4% 166 -3.7%
205
198 156
192 151
184 27 145 141
178 137
29
32
34
38
41
7.8% 8.4%
139 149 160 169
116 128
138
127 119
111 103 97
62 56 53 -7.7% -6.9%
49 44 41
2010 2011 2012 2013 2014 2015 2010 2011 2012 2013 2014 2015
Modern Traditional XX Share of modern channel
Source: Roland Berger analysis based on PMR, EMIS, Euromonitor, company webpages and expert interviews
Grocery market growth was driven by increasing Share of traditional trade in 2015 approached 20%,
disposable income and individual consumption but examples of both Eastern and Western European
slowed down due to deflation in 2014 and 2015. countries show potential for further declines.
Sales in traditional channel declined an estimated
7.7% annually, in line with historical trends and
experiences of more mature markets, while modern
trade formats grew over proportionately (7.8%
annually on average).6 Grocery retail in Poland 2010-2020 – detailed analysis of convenience and proximity supermarkets segments
1.2
Forecast of grocery market development
Forecast of traditional and modern grocery trade
Sales value, 2015-2020 [PLN bn] Number of shops, 2015-2020 ['000]
CAGR CAGR CAGR CAGR
80% 82% 84% 85% 86% 86% '10-'15 '15-'20 30% 32% 35% 38% 40% 42% '10-'15 '15-'20
252 3.4% 3.7% 137.4 135.6 134.6 -3.7% -0.6%
245 133.8 133.8 133.7
238
230
219
211 40.9
43.9 47.4
7.8% 5.3% 50.6 53.5 56.2 8.4% 6.6%
210 218
192 201
169 180
96.6 91.7 87.1 83.2 80.3 77.5
-7.7% -3.7% -6.9% -4.3%
41 39 38 36 35 34
2015 2016 2017 2018 2019 2020 2015 2016 2017 2018 2019 2020
Modern Traditional XX Share of modern trade
Source: Roland Berger analysis based on PMR, EMIS, Euromonitor, company webpages and expert interviews
Overview of traditional trade market shares and their development
Traditional trade share, 2015 [%] Traditional trade share development, 2010-2015 [%]
p.p. change 55%
'10-'15
50%
Greece -11 45%
41%
-2 40%
Italy 26%
35%
Spain 23% -4
30%
Poland 20% -15
25%
Austria 18% -3 20%
Germany 15% -1 15%
Portugal 15% -4 10%
Slovakia 11% -6
0%
Lithuania 11% -2 2010 2011 2012 2013 2014 2015
United Kingdom 11% -2 Greece Poland Slovakia Austria
Latvia 9% -4 Spain Portugal Latvia
Source: Roland Berger, EMIS
It is expected that the traditional trade will further The rate of decline is expected to slow down
decline, both in sales value (-3.7% annually) and as compared to historical figures, because as
number of shops (-4.3% annually). traditional grocery shops join soft franchise chains
or go out of market an increasing share of traditional
Trend is corroborated by experience from both WE
trade will come from specialized stores, which are
and CEE markets, where traditional trade share
still popular among Polish customers (e.g. butchers,
stabilizes at levels between 11% and 15%.
bakeries, alcohol shops, etc.).7 Grocery retail in Poland 2010-2020 – detailed analysis of convenience and proximity supermarkets segments
1.3
Historical grocery market segments development
Historical development of Polish grocery market by segment
Sales value, 2010-2015 [PLN bn] Number of stores, 2010-2015 ['000]
CAGR CAGR
166
211 3.4% 1 0 -3.7%
205 2
198 1 156
192 33 0
184 34 1.1% 9 4.1%
178 33 2 1 151
32 3 1 2 0
32
32
17
18 2.3% 3 145 3.1%
17 13 10 1 2 0 141
17 13
16 12 1 2 0 137 13.2%
16 10 11 8.1% 10 3
10 4 1 0
9 13 3
51 55 14.1% 11 4 9.9%
35 41 47
28 15 12
8
12 6.0%
10 11 12 15 16 14.0% 16
23 25 138
28 29 32 35 8.1% 19
127 9.8%
119 20
62 56 53 111
49 44 41 -7.7% 103
97 -6.9%
2010 2011 2012 2013 2014 2015 2010 2011 2012 2013 2014 2015
Hypermarkets Large supermarkets Proximity supermarkets Discounters Convenience Soft franchise Traditional
Source: Roland Berger analysis based on PMR, EMIS, Euromonitor, company webpages and expert interviews
Historical development of Polish grocery market by segment – market shares
Share in sales value, 2010-2015 [%] Share in # of stores, 2010-2015 [%]
145 141
178 184 192 198 205 211 166 156 151 0.3 0.3 137
0.7 0.2 0.3 0.3 0.8 0.8 0.9 0.3
1.0 1.2 1.4 1.6 1.8
17.8 17.6 16.9 16.8 16.4 15.9 0.8 1.4 1.7 0.7 2.0 0.7
2.3 2.6 2.7
8.3 8.4 5.6
8.8 8.8 8.8 8.5 6.2
6.8
5.4 5.6 5.9 6.2 7.6
4.9 5.2 8.5
9.0
15.8 18.9 7.8
21.2 23.6 24.9 26.0 8.6
4.7 9.9
5.3 5.7
6.2 11.1
13.2 7.2 7.6
13.5 13.4
14.4
14.6 14.9
15.6 16.4
83.5
81.5
34.7 30.7 79.1
27.6 24.6 76.5
21.7 19.6 72.8
70.3
2010 2011 2012 2013 2014 2015 2010 2011 2012 2013 2014 2015
Hypermarkets Large supermarkets Proximity supermarkets Discounters Convenience Soft franchise Traditional
Source: Roland Berger analysis based on PMR, EMIS, Euromonitor, company webpages and expert interviews
Smart shopping trend started during economic crisis chains aggressively, capturing significant part of the
strongly supported development of discounters. market. With a market share of 26% discounters
Lidl and especially Biedronka expanded their established themselves as leading segment.8 Grocery retail in Poland 2010-2020 – detailed analysis of convenience and proximity supermarkets segments
Convenience stores benefited from changing lost ground to other formats (market share declines
customer trends (especially busy lifestyle and new of 1 and 2 pp respectively).
family model). Network expansion of Żabka drove
Growth of soft franchise chains was fed by traditional
the growth. Convenience stores managed to grow in
shops seeking professional support on increasingly
significance increasing their share by 3 pp.
competitive market. Soft franchise chains increased
Those same trends lead to increasing stagnation market share by 3 pp, fuelled by rebranding of
of hypermarket sales as customers looked for traditional grocery stores.
proximity and fast shopping.
Traditional retail market shares dropped by almost
Proximity supermarkets sales growth outpaced the 15 pp measured both by value and by number of
growth of large supermarkets by almost a factor stores.
of 4. Proximity supermarkets gained market share
(1 pp), while large supermarkets and hypermarkets
1.4
Forecast of grocery market segments development
Forecast of grocery market segments development
Sales value, 2015-2020 [PLN bn] Number of stores, 2015-2020 ['000]
CAGR CAGR CAGR CAGR
'10-'15 '15-'20 '10-'15 '15-'20
3.4% 3.7% -3.7% -0.6%
252 137 136
245 1 135 134 134 134
238
230 33 1.1% -0.3%
3 00 1 0 1 0 1 1 1 1 2
4.1% 1.1%
219 33 4 3 3
211 33 4 3 4 4 3.1% 3.6%
33 19 2.3% 1.4% 4 4
33 19 4 4 13.2% 10.7%
33 19 19 12
18 18 8.1% 8.2% 13
18 17 14 9.9% 3.3%
18 16 14 15
14 16
13 6.0% 5.5%
71 75 14.1% 6.6%
64 68 20
55 58
22
25
18 21 23 26 29 14.0% 12.5% 27
16 28
29 9.8% 7.5%
35 38 40 42 42 43 8.1% 4.5%
97
92
87 83
41 39 38 36 35 34 -7.7% -3.7% 80
77 -6.9% -4.3%
2015 2016 2017 2018 2019 2020 2015 2016 2017 2018 2019 2020
Hypermarkets Proximity supermarkets Convenience Traditional
Large supermarkets Discounters Soft franchise
Source: Roland Berger analysis based on PMR, EMIS, Euromonitor, company webpages and expert interviews9 Grocery retail in Poland 2010-2020 – detailed analysis of convenience and proximity supermarkets segments
Forecast of grocery market segments development – market shares
Share in sales value, 2015-2020 [%] Share in # of stores, 2015-2020 [%]
211 219 230 238 245 252 137 136 136 135 134 134
0.3 0.4 0.4 1.1 0.4 1.1 0.4 1.1 0.4
1.8
15.9 15.2 14.5 14.0 13.5 13.0 0.9 2.1 1.0 2.3 1.1 2.6 2.8 3.1
2.7 2.9 3.0 3.1 3.2 3.3
8.0 7.8 7.6 7.5
8.4 8.2
7.4 7.6 9.0 9.6
6.2 6.5 6.8 7.1 10.2 10.8 11.4 12.1
26.0 26.7 27.7 28.5 29.2 29.8
14.9
16.5
18.4
7.6 8.3 9.1 9.8 19.9
10.6 11.5 21.1
22.0
16.4 17.1 17.5 17.5 17.3 17.0
70.3
67.6
19.6 64.7 62.2
18.0 16.5 15.3 14.4 60.0
13.5
58.0
2015 2016 2017 2018 2019 2020 2015 2016 2017 2018 2019 2020
Hypermarkets Large supermarkets Proximity supermarkets Discounters Convenience Soft franchise Traditional
Source: Roland Berger analysis based on PMR, EMIS, Euromonitor, company webpages and expert interviews
Convenience channel is expected to lead the growth Supermarket formats are expected to continue
in modern trade formats (on average 12.5% annually) to develop at different rates, with proximity
supported by favourable customer trends, gradually supermarkets sales expected to grow at 8.2% annually
eating away on traditional and soft franchise (store # by over 10%) while large supermarkets are
networks. Żabka is expected to lead the segment expected to stagnate. Proximity supermarkets are
with continued aggressive network expansion. Also expected to gain 2 pp of market share while large
sales in convenience stores are expected to increase supermarkets are expected to lose 1 pp.
significantly enabling them to reach 11% share in
Sales in soft franchise are expected to grow at levels
the market.
slightly higher than total market development (4.5%
Market expects slowing down of discounters’ annually) due to lower than historical shop number
growth. The number of stores opened in 2014 and growth and increasing competition with formalized
2015 was lower than in previous years, moreover convenience formats. Soft franchise stores are
the main discount chain has announced much expected to maintain their current position.
smaller plans of expansion due to reorganization of
Sales in hypermarkets are expected to decrease
their current stores. Increasing LFL sales will only
on average 0.3% annually due to customer trends
partially compensate revenues from reduced new
clearly putting this format at a disadvantage. Both
store openings.
hypermarkets and traditional trade are expected to
Discounters are expected to continue to have further decline reaching market shares of 13% and
leading customer perception and fit well to the 14% respectively.
smart shopping trend because they established
themselves as shopping destinations also for less
affluent people which should affect LFL and sales
per store but not stores number development.
Although discounters’ growth is expected to slow
down as compared to previous 5 years, this format
is expected to gain 4 pp of market share.10 Grocery retail in Poland 2010-2020 – detailed analysis of convenience and proximity supermarkets segments
1.5
Top players historical development
Overview of top players in modern Polish grocery retail
Sales value, 2010-2015 [PLN bn]
Top 10
market 41% 45% 48% 52% 55% 57%
share
211
205
198
192
184
178
28% 30%
25% 27%
20% 23%
6% 7% 8% 9% 9% 10%
15% 16% 15% 16% 17% 18%
9% 10%
3% 11% 12%
4% 4% 13% 12%
4% 4% 5%
46% 41% 37% 33% 29% 26%
2010 2011 2012 2013 2014 2015
TOP 3 TOP 4-5 TOP 6-10 TOP 11-20 TOP 21-30 Others
Source: Roland Berger analysis based on PMR, EMIS, Euromonitor, company webpages and expert interviews
Concentration of modern trade segment is from 26% to 40% (by 14 pp), whereas market share
increasing – share of Top 10 retailers grew by 16 of top 10, top 20, and top 30 grew by 17, 20, and
pp between 2010 and 2015. Top 3 players increased 22 pp respectively. Market share of smaller players
their combined market share between 2010 and is decreasing. In 2010 they accounted for 46% of
2015 by 10 pp. Market share of top 5 chains grew market while in 2015 their share dropped to 26%.
Overview of TOP20 players in terms of sales in 2015
Sales value, 2015 [PLN bn]
Sales value and 19.2 6.1 10.1 5.2 5.7 8.0 6.3 6.8 2.8 2.9 2.6 1.8 2.5 0.5 1.1 2.9 1.7 1.6 1.5 n/a
ranking, 2010
[PLN bn] 1 6 2 8 7 3 5 4 11 10 12 14 13 19 18 9 15 16 17 n/a
CAGR 10'-15' 15% 16% 2% 15% 12% 3% 7% 0% 19% 9% 11% 11% 2% 37% 18% -4% 5% 6% 7% n/a
Sales growth
9% 8% 0% 11% 10% 3% 15% 2% 11% 3% 6% 7% -1% 23% 6% -38% 5% 4% 6% n/a
2015/14 [%]
38.5
12.7
11.2 10.4 9.9 9.5 8.9
6.9 6.6
4.4 4.4 3.1 2.7 2.6 2.5 2.4 2.2 2.1 2.1 1.4
Lewiatan2)
Top Market2)
E.Leclerc
Auchan1)
Żabka2)3)
Intermarche
Netto
Groszek2)
Stokrotka
Kaufland
Carrefour
Dino
Polomarket
ABC2)
DC2)4)
Lidl
Piotr i Paweł
Mila
Biedronka
Tesco
Legend:5) Hypermarkets Large supermarkets Proximity supermarkets Discounters Convenience Soft franchise Traditional
1) Including Real 2) Estimated sales in stores 3) Żabka + Freshmarket 4) Delikatesy Centrum 5) Segment in which grocery chain had the most stores in 2015
Source: Roland Berger analysis based on PMR, EMIS, Euromonitor, company webpages and expert interviews11 Grocery retail in Poland 2010-2020 – detailed analysis of convenience and proximity supermarkets segments
Overview of TOP20 players in terms of stores number in 2015
Number of stores, 2015 [#]
Number of 3,990 2,431 2,730 1,649 1,102 561 610 335 400 150 638 111 371 212 178 n/a 300 274 161 61
stores and
ranking, 2010 1 3 2 4 5 8 7 11 9 17 6 18 10 14 15 n/a 12 13 16 19
CAGR 10'-15' 14% 12% 2% 10% 5% 14% 9% 19% 8% 29% -4% 36% 3% 11% 13% n/a -1% -1% 7% 28%
# of stores growth
10% 9% 4% 3% 2% 7% -7% 18% 5% 10% 8% 25% -2% 6% 30% -18% -36% -7% 5% 11%
2015/14 [%]
7,685
4,360
2,955 2,667
1,415 1,076 920 813 577 525 514 511 440 354 327 287 282 256 231 207
DC2)
RD3)
ABC
Netto
Stokrotka
Intermarche
Żabka1)
Lewiatan
Carrefour
Top Market
Dino
Małpka
Polomarket
Eko
Groszek
Spar
Biedronka
Lidl
Euro Sklep
Tesco
Legend:4) Hypermarkets Large supermarkets Proximity supermarkets Discounters Convenience Soft franchise Traditional
1) Żabka + Freshmarket 2) Delikatesy Centrum 3) Rabat Detal 4) Segment in which grocery chain had the most stores in 2015
Source: Roland Berger analysis based on PMR, EMIS, Euromonitor, company webpages and expert interviews
Overview of top players in market segments by sales, 2010-2015 [PLN bn]
Hypermarkets Large supermarkets Proximity supermarkets
58% 60% 62% 64% 70% 76% 58% 62% 62% 62% 62% 62% 61% 67% 71% 74% 76% 63%1)
31.7 32.5 32.5 33.3 33.6 33.4 15.7 16.2 16.9 16.8 17.1 17.6 12.0 13.2
10.4 11.1
5.7 6.0 7.1 8.3 9.0 9.9 3.6 4.0 4.3 4.3 4.3 4.4 8.8 9.5 3.1 3.3
6.5 2.9
6.3 6.0 6.1 7.7 8.9 2.9 3.4 3.8 3.9 4.3 4.4 1.9 0.5 2.3 0.8 2.6 1.2 1.7 2.1 2.6
6.5 7.0 6.8 6.9 6.9 2.6 2.6 2.6 2.2 2.1 2.2 2.4
6.8 2.9 3.3 3.6 3.8 3.9
13.2 13.0 12.5 12.0 10.0 7.9 6.6 6.2 6.2 6.4 6.4 6.6 3.4 3.2 3.0 2.9 2.9 4.9
2010 2011 2012 2013 2014 2015 2010 2011 2012 2013 2014 2015 2010 2011 2012 2013 2014 2015
Kaufland Auchan Tesco Other Tesco Intermarche Carrefour Other Delikatesy Dino Polomarket Other
Hypermarket Supermarkets Market Centrum
Soft franchise Discounters Convenience
64% 65% 66% 67% 70% 69% 96% 95% 98% 98% 98% 99% 36% 40% 44% 47% 53% 55%
23.4 31.8 34.5 50.9 54.6 16.1
27.6 29.1 46.7 14.8
5.2 24.8 10.4 9.4 34.8 40.1 10.9 4.6 12.4
7.7 8.7 28.2 8.3 9.7 4.3
3.1 1.1 3.2 1.7 2.1 1.3 2.5 1.7
6.3 6.9 35.3 38.5
6.7 6.7 6.8 28.2 32.4 3.2 0.5
6.8 6.6 4.2 6.1 6.6 19.2 1.8 23.8 2.1 2.6 0.2
2.8 3.3 3.9 2.4 2.7 2.9 3.1 0.5 6.5 0.9 7.0
8.5 8.6 9.3 9.5 9.6 10.6 6.1 1.1 7.1 1.7 8.7 0.8 10.6 1.0 11.7 1.1 12.7 0.4 5.3 0.1 5.8 0.2 6.1 7.2
2010 2011 2012 2013 2014 2015 2010 2011 2012 2013 2014 2015 2010 2011 2012 2013 2014 2015
ABC Lewiatan GK Specjal Other Biedronka Lidl Netto Other Żabka Carrefour Freshmarket Other
Express
XX Top 3 market share in segment 1) Polomarket chain was split into Mila and Polomarket in 2015
Source: Roland Berger analysis based on PMR, EMIS, Euromonitor, company webpages and expert interviews12 Grocery retail in Poland 2010-2020 – detailed analysis of convenience and proximity supermarkets segments
Overview of top players in terms of historical growth
CAGR of sales value, 2010-2015 CAGR of # of stores, 2010-2015
Sales value and 0.2 0.5 0.3 0.2 2.8 1.1 6.1 19.2 5.2 5.7 # of stores and 59 111 150 61 26 50 3,990 561 178 2,431
TOP20 ranking, TOP20 ranking,
2010 [PLN bn] 3 19 >20 >20 11 18 6 1 8 7 2010 11 18 17 19 >20 >20 1 8 15 3
Sales value and 2.5 2.6 0.7 0.6 6.6 2.5 12.7 38.5 10.4 9.9 # of stores and 576 511 525 207 76 106 7,685 1,076 327 4,360
TOP20 ranking, TOP20 ranking,
2015 [PLN bn] 6 14 >20 >20 9 15 2 1 4 5 2015 8 12 10 20 >20 >20 1 6 15 2
# of stores
Sales growth
19% 23% 15% 4% 11% 6% 8% 9% 11% 10% growth 2015/14 23% 25% 10% 11% -3% 13% 10% 7% 30% 9%
2015/14 [%]
[%]
63%
58%
37% 36%
29% 28% 24%
21% 20% 19% 18% 16% 15% 15% 12% 16% 14% 14% 13% 12%
Express3)
Express3)
Aldi
Delikatesy
ABC
Auchan2)
Aldi
ABC
Stokrotka
Carrefour
Dino
Top Market
Kaufland
Carrefour
Dino
Top Market
Żabka1)
Centrum
Żabka1)
Spar
Lidl
Spar
Biedronka
Legend:4) Hypermarkets Large supermarkets Proximity supermarkets Discounters Convenience Soft franchise Traditional
1) Żabka + Freshmarket 2) Including acquired and merged Real hypermarkets in 2014 3) Ranking for the whole Carrefour 4) Segment in which the company had the most stores in 2015
Source: Roland Berger analysis based on PMR, EMIS, Euromonitor, company webpages and expert interviews
Overview of top players stores number evolution in supermarket formats, 2010-2015
Large supermarkets Proximity supermarkets
CAGR +3% CAGR +13%
1.3 2.5
1.1 1.2 2.3
1.1 1.1 1.1 2.0 0.6
0.4 1.8 0.6
0.3 0.3 0.4 0.4 0.4 1.5 0.5
0.2 1.3 0.4 0.4 0.5
0.2 0.2 0.2 0.2 0.2 0.4 0.2 0.3 0.3
0.2 0.3 0.2 0.4
0.2 0.2 0.2 0.1 0.1 0.1 0.3 0.4 0.4
0.3
0.4 0.4 0.4 0.4 0.4 0.5 0.8 0.9 1.1
0.6 0.7 0.7
2010 2011 2012 2013 2014 2015 2010 2011 2012 2013 2014 2015
Tesco Supermarkets Carrefour Market Delikatesy Centrum Polomarket1)
Intermarche Other Dino Other
1) Polomarket chain was split into Mila and Polomarket in 2015, Mila was included in other segment
Source: Roland Berger analysis based on PMR, EMIS, Euromonitor, company webpages and expert interviews
Concentration is also growing in segments, especially Centrum. Dino jumped to 2nd position while 3rd
in convenience – most concentrated segments are place was taken by Polomarket. Differences between
discounters and hypermarkets. Concentration in the three largest chains in proximity supermarkets
convenience increased by 19 pp. Supermarkets is are not significant and there is no clear leader as
more stable segment with 6 pp change from 2010 to opposed to discounters and convenience segments.
2015. Concentration is also increasing in proximity In the large supermarkets segment concentration
supermarkets and large supermarkets. Top 3 players has increased by 4 pp from 58% to 62%. Top 3
in proximity supermarkets increased their share players in this segment were Tesco Supermarkets,
by 2 pp from 61% to 63%. The leader in proximity Intermarche and Carrefour Market, taking the first,
supermarkets segment continued to be Delikatesy second and third position respectively.13 Grocery retail in Poland 2010-2020 – detailed analysis of convenience and proximity supermarkets segments
The fastest growing retail chains from 2010-2015 slower growth pace than the leader. ABC, Delikatesy
both in terms of sales value and number of stores Centrum and Żabka were the fastest developing
were Carrefour Express and Dino. chains that in 2010 had already owned above of 500
stores.
The fastest growing chain in terms of sales value was
Carrefour Express with annual growth of 63% from The concentration is expected to increase most
2010 to 2015. 2nd and 3rd place was taken by Dino rapidly in convenience, proximity supermarkets
and Spar with almost two and three times slower and large supermarkets segment because of the
growth pace than the leader. LIDL, Biedronka and significant number of players in these segments and
ABC were the fastest developing chains that in 2010 better fit of these segments to shifting consumer
had already recorded sales value of above 5 PLN bn. trends.
The fastest growing chain in terms of number of
stores was Carrefour Express with annual growth of
58% from 2010 to 2015. 2nd and 3rd place was taken
by Dino and Top Market with almost two times
2
Customer trends
Impact of selected consumer trends on store format development
Large Proximity
Hypermarkets supermarkets supermarkets Discounters Convenience
Busy lifestyle Long shopping time due Long shopping time due Easy and fast shopping Extended shopping time Making shopping as
to large store size and to large store due to close location due to limited space, quick and convenient as
long queues, distant assortment and most and limited but sufficient crowded stores and possible, proximity
location often distant location assortment longer queues (limited
in-store employment)
New family model Rich offering of Rich offering of ready Already wide selection Selection of ready Potential to introduce
multipacks and family meals, including salads of ready meals or pre- meals or pre- ready meals and serve
packs but limited offer and frozen meals, assembled/ semiprepar- assembled/ semiprepar- food-to-go/hot drinks
for singles and lack of however lack of ed products ed products getting confirmed by
proximity proximity wider (e.g. grill sets) international examples
Demand for higher Wide assortment, of Wide assortment of high Wide assortment of Presence of high quality High quality of available
high quality products, quality products, fresh products, with Private Labels, assortment with large
quality, premium organic products organic products fresh charcuterie, less increasing focus on selection of ready meals
products available available premium products than fresh food and availability of niche
in large stores products
Wide assortment of Wide assortment of Fresh assortment with Increasing focus on Limited shelf space
Increasing health- fresh, organic and fresh products and high quality of products fresh food but potential reducing the ability to
consciousness regional products organic products but limited availability of limited by lower SKU offer eco/green products
organic products numbers and reducing potential
to offer fresh food
Increasing Prices comparable or Prices not much higher Prices of main SKUs Price levels difficult to High prices not
awareness of slightly lower than in than in hypermarkets, slightly higher than in compete with due to compensated by the
discounters, attractive attractive promotions, discounters, remaining simplified operating promotions
customers promotions Private Labels potential SKUs at higher prices model, efficient
than larger stores, logistics, large scale per
limited promotions SKU and Private Labels
Regional No development Limited development Format preferred by Limited development High potential of
potential in small and potential in small and small shopping malls potential in small and geographic penetration
development mid-size cities mid-size cities outside large mid-size cities due to small store area
agglomerations
Positive impact on format development Negative impact on format development
Source: Roland Berger analysis based on Nielsen, PMR, Industry expert interviews, industry press14 Grocery retail in Poland 2010-2020 – detailed analysis of convenience and proximity supermarkets segments
List of buying behaviors/customer preferences impacted by customer trends
Buying behavior/
customer preferences
A Increasing frequency of grocery shopping
B Growing importance of location near work/ home
C Availability of extended opening hours
D Important convenient access and availability of parking places
E Increasingly important range of products not available elsewhere
F More popular healthy, organic and fresh products
G Increasing popularity of regional products
H Quality, freshness of available products
I Continuously important promotions, attractive offers and loyalty programs
Source: Roland Berger analysis based on PMR, Industry expert interviews, industry press, GUS
Changing lifestyle and key consumer trends impact on shopping can easily buy necessary products
buying behaviour and customer preferences in quickly i.e. on their way home from work because of
Poland which further impact formats’ future the convenient localizations of stores and sufficient
growth potential with proximity, discounters and parking area. Both formats also respond well in
convenience being increasingly attractive. terms of delivering products at a reasonable price
and good quality.
Amongst the trends which have the most impact
on convenience, proximity supermarkets and On the other hand wide selection of ready meals in
discounters are busy lifestyle, new family model and proximity supermarkets and discounters attracts
increasing awareness of consumers. Busy lifestyle is customers fitting in the new family model because
a result of growing employment, increasing share of these customers are more often seeking ready or
employees working at more than one job or longer semi-ready products with a good quality to price
hours and more time spent on entertainment ratio. What is more, proximity supermarkets and
activities. New family model is driven by growth discounters, due to their suitable size and logistics
in number of single households and growing have big potential in regional development,
awareness is mainly a result of increasing internet especially penetrating smaller cities, inhabitants
access. of which are increasingly expecting same shopping
experience as in bigger cities.
Proximity, discounters and convenience stores
are best fit to customers’ increasing frequency On one hand it is caused by smaller store area
of shopping and closer locations. Proximity which enables reaching break even point with less
supermarkets and large stores are the best fit to customers than bigger stores. On the other hand
customers’ valuing healthy, fresh and regional it is caused accessibility to appropriate lots, lower
products of good quality. CAPEX and effective logistics.
Proximity supermarkets and discounters also
fit well in changing consumer trends, especially
busy lifestyle and new family model. On one hand
customers who do not want to spend a lot of time15 Grocery retail in Poland 2010-2020 – detailed analysis of convenience and proximity supermarkets segments
3
Regulations
3.1
The family 500+
Total impact of 500+ is estimated to contribute to Part of the growth may be explained by marginally
1.1% - 2.5% of additional sales growth in 2016-2017. positive food inflation but the rest of it is associated
with increased consumption that linked to family
In the first half of 2016 most of the grocery chains
500+.
noted positive revenue trend YoY with positive
LFL sales e.g. Biedronka announced YoY LFL sales
growth of 8.8% (9.8% Q2 2016) and Stokrotka
announced YoY LFL growth of 7,5% (6,6% Q2 2016).
3.2
Act on minimum hourly wage
Introduction of the minimum hourly wage act is On the other hand, increase of minimum hourly
expected to affect not only the convenience format, wage to 13 PLN/hour may contribute to growth
soft franchise and traditional stores in a negative in disposable income boosting individual
manner but also to stimulate the market growth. On consumption.
one hand in terms of higher employment costs, the
minimum hourly wage can lead to smaller margins
in the worst case, closing the store.16 Grocery retail in Poland 2010-2020 – detailed analysis of convenience and proximity supermarkets segments
3.3
Act on counteracting the unfair use of contractual
advantage in the trade in agricultural and food products
The act aims to eliminate unfair commercial • Diverting supply to large intermediaries in order
practices between buyers, especially large retail to reduce the risk of being accused of unfair use
chains, and producers of agricultural products of bargaining power against small, fragmented
throughout the supply chain. This is to be achieved suppliers
by prohibiting the unfair use of bargaining power in
• Diverting supply to foreign suppliers to whom
contracts in a way which is:
the Polish law does not apply
• against other similar practices (also not specified
• Difficulty to conduct marketing activities
by the act)
through e.g. temporary price reductions, shelf
• threatens or violates a substantial interest of the placement marketing and trade marketing
producer, by abusing a situation wherein the
producer lacks the ability to sell the agricultural
or food products to a different buyer, and there
is a substantial imbalance in the economic
potential in favour of the buyer (and vice versa)
The act is likely to affect all players in the retail
supply chain, including retailers, food processing
companies and agricultural producers.
Effects on retail chains and food processing
companies, based on market experience:
• If the act is successful as a measure to combat
downward price pressure on suppliers, thus
increasing the prices of supplied goods, retail
chains will likely increase prices in order to
secure margins leading to inflationary pressures17 Grocery retail in Poland 2010-2020 – detailed analysis of convenience and proximity supermarkets segments
Notes
Differences in comparison with the previous report
We have implemented several changes in comparison with the previous regarding the proximity supermarkets segments. The new division has
report. Changes appeared mainly in the past market value estimation, led to reassignment of top players amongst the new segments which
forecasted market value, defined segments, scope of top players and then led to slightly different distribution of market shares and growth
trend-segment fit assessment. of each segment. Furthermore we have excluded soft franchise segment
from the convenience and shown it separately.
Past market value in 2010-2015 has been adjusted due to the increased
detail level of analysis, whereas the projected market value has been This report also includes the extended top players scope (from 10 to
updated, mainly due to the recent inflation prognosis which turned out 30 players). The extension of the bottom up assessment was necessary
to be favourable for the retail market, recent high like-for-like results of for forecasting the market value with more accuracy and for detailed
top retail chains on the polish market and additional expert interviews estimation of newly assigned segments.
and industry report results.
Minor changes have also been implemented in the trends section in
In the above report we also identified new division of segments as the best-fit assessment of segments to the most recent trends. Changes
a result of breaking down supermarkets segment into proximity were implemented after consulting with the industry expert and using
supermarkets and large supermarkets. Breaking down the segment has additional sources (industry reports, financial reports of the extended
been consulted with the industry expert and made it available to forecast scope companies) with intent to more accurately picture the present
the market more accurately basing on the new assumptions especially and future market dynamics.
Methodology notes
Our analysis is performed on retail grocery market. Grocery sales We have modelled key historical operating parameters of approximately
includes the total value of products sold in grocery stores encompassing 40 largest retail players based on their performance in segments
fresh food, fast moving consumer goods, and other products (including (including: E.Leclerc Hypermarkets, Auchan, BI1, Kaufland, Tesco
non-food, such as clothing, footwear, home appliances, consumer Hypermarket, Carrefour Hypermarket, Real, Biedronka, Lidl, Netto,
electronics and digital media, home furnishings, toys) sold in grocery Aldi, Tesco Supermarket, E.Leclerc Supermarkets, Carrefour Market,
stores. Market assessment includes also food sales in specialist shops Simply Market, Intermarche, Piotr i Paweł, Alma, Stokrotka, Mila,
(e.g. butchers, bakeries, alcohol stores, fishmongers, green groceries). Polomarket, Dino, Spar, Eko, Delikatesy Centrum, Freshmarket, Żabka,
Carrefour Express, Chata Polska, Top Market, Groszek, GK Specjal, Euro
We have segmented the market into 6 segments – Hypermarkets, Sklep, Rabat Detal, Lewiatan, ABC).
Supermarkets (further sub segmented into Large, Proximity)
Discounters, Convenience (chain and hard franchise), Soft franchise,
Traditional trade.
Overview of grocery market segments and players clustering
Format Description Key players
Hypermarket > Mixed stores (food and non-food products) with an area of over 2,500 m², offering
around 30,000-50,000 products, of which grocery products comprise at least 50%.
Typical location outskirts of large cities
Discounter > General grocery stores with an area of around 1,000 m², offering with limited SKU,
mainly typical food products, many under white label. Prices typically lower by 15-30%
than the market average. Typical location large and medium cities both close to
residential areas and city centers
Large supermarket > Mixed stores (food and non-food products) or general grocery stores with an area of
500-2,500 m², offering around 5,000-10,000 SKUs, of which around 70% are typical food
Modern
products. Typical location outside residential areas in large and medium cities
Proximity > Mainly general grocery stores with an area of 200-500 m², operated in hard franchise or
supermarket own chain model, offering of around 4000-8000 SKUs, of which typically 90% are food
products. Typical location close to residential areas in large, medium and small cities
Convenience > Chain or hard franchise, self-service small format stores (on average sales area
(incl. hard franchise) accounts for around 60 sqm) opened at least 11 hours a day offering basic range of
groceries comprising food, alcohol, cigarettes and press. Also includes petrol stations.
Typical location city centers and residential areas in large, medium and small cities
Soft franchise > Soft franchise, predominantly self service small and medium format stores with a sales
area of 50-300 m2. Typical location city centers and residential areas in large, medium
and small cities
Traditional not > Not organized, individual grocery stores. Typical location small cities and rural areas
Tradi-
tional
organized trade
1) Stokrotka shops under 500 m2 selling surface assigned to proximity supermarkets
2) DC, Freshmarket and Eko shops over 200 m2 selling surface assigned to proximity supermarkets
Source: Roland Berger analysis based on PMR, EMIS, Euromonitor, company webpages and expert interviews18 Grocery retail in Poland 2010-2020 – detailed analysis of convenience and proximity supermarkets segments
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