Poland is one of those few countries that is under total domination by discounters, notably Biedronka and Lidl, although other chains like Netto and Aldi Nord are also active in the market. Our recent Global Loyalty Study shows that 56% of Polish shoppers use discount as their main store, with hypermarkets and supermarkets acting as the main store for just 17% and 16% of shoppers respectively.
A number of hypermarkets and supermarkets have decided to swim in the opposite direction to the discounters, Carrefour in particular reinvigorating its stores with edited non-food ranges and really raising its game in fresh. Local players like Piotr y Pavel have followed suit in the supermarket space, creating premium destinations for the urban grocery shopper.
For mainstream players, notably in the hypermarket space, a familiar challenge has appeared: the discounters are performing well as they offer not just economy of money, but also economy of time (closer and smaller stores) and economy of thought (two SKUs of ketchup rather than 35).
Against this backdrop, selling the concept of big out-of-town sheds has become more difficult. Kaufland seemingly continues to do well with its more compact format featuring limited non-food, an improved store concept and a punchy EDLP positioning. Auchan, resembling at times an explosion in a luminous Post-it factory, provides excitement through its frenetic promotional endeavours.
Somewhere in the middle of all of this sits Tesco Extra, the British-owned hypermarket chain that operates alongside smaller Tesco supermarkets and a significant online grocery business. It’s hard to gauge these days how well Tesco Poland is doing, thanks in part to the rolling up of Tesco’s reporting to the regional level.
I guess something might be inferred from the fact that the number three retailer recently embarked on a minor store closure programme and one could possibly conclude that the Polish branch of the business adheres to the broader trends for Tesco Central Europe: food sales making LFL progress counteracted by ongoing weakness in GM and clothing sales.
The store I visited in a suburb of Warsaw engendered a real sense of déjà vu, sharing so much DNA with the UK mothership, although there were a number of striking differences. Chief among these were a much better sense of spaciousness compared to most Extras in the UK, some real superiority in service counters and the fact that the Polish stores seem to still be awash with supplier cash.
This latter point is notable given that Tesco UK has really dialled back on commercial income and the UK stores have (largely) seen a commensurate dissipation of cardboard and supplier branding. In this store, shopper marketing was aplenty, but mainly in a good way. The BWS section was home to some cracking bits of kit from spirits brands, while other categories such as confectionery, toys and health & beauty also hosted some fine display items. Fortunately, plenty of these deployments aided category navigation and were very eye-catching so actually served some useful purpose from the shopper perspective.
In fresh, I was a big fan of the expansive bakery as well as the fish counter which featured a nice outbreak of cross-merchandising with herbs. Produce held its own against competitors like Kaufland or Auchan, but was streets behind the best-in-class stuff to be found in Carrefour stores elsewhere the city. It was pleasing, however, to see the Perfectly Imperfect range of wonky fruit and veg prominently displayed, part of Tesco Poland’s praiseworthy, market-leading initiative to reduce food waste.
The broader grocery range was done well, private label across various tiers supporting the comprehensive branded offering. Promotional activity was bubbling across the store and called out through yellow and red signage. Overall navigability was good, with plenty of overhead and end-of-aisle signage identifying broad categories, while sections such as yogurt benefitted from colour-coded segmentation.
Non-food, while well done, was sparsely occupied by shoppers, underlining the fact that this has been a weak spot, not just for Tesco, but for a number of hypermarket operators in the region. Tesco’s expertise in PL really shone through here though, with brands like F&F in clothing and home, Go Cook in kitchenware and Carousel in toys providing a strong amount of differentiation.
Clubcard was very much to the fore in all the Tesco stores I visited in Poland. Our research shows that while is outshone by competitors like Stokrotka, Lidl and Kaufland in terms of instore experience and by Lidl, Biedronka and Kaufland in terms of pricing, Tesco is by far and away the market leader in terms of rewarding shoppers for their loyalty.
All in all, this was a very solid store with a perfectly pleasant shopping experience. One valid observation might be that the place is simply too big and could do with having a quarter of it lopped off and given to another retailer; and another would be that there could be something to learn from the new concept Carrefour hypermarkets in terms of look & feel and theatre. Without a degree of reinvention, the middle ground is often an uncomfortable place to be.
Bryan Roberts, Global Insights Director