Insights in the Polish retail and food market
With more 38 million inhabitants, good economic indicators and higher incomes, the outlook of the Polish food and retail market is positive. Although demand for quality food products is growing, Polish consumers remain price sensitive, which results in a very price competitive retail landscape.
The forecast of the economic growth in 2018 is over 4%, following the trend of good growth rates in 2016 (2,6%) and 2017 (4,1%). Basic drivers behind these growth rates are private consumption and public investment due to the inflow of EU funds. Increasing consumption is driven by higher wages, a historic low unemployment (approx. 5% in 2017) and governmental social subsidy programs (i.e. 500+ program). It resulted in an increase of the FMCG market with 3,1%, up to a value of 260 bln PLN. Growth of the FMCG market will continue with approximately 3% yoy and will reach the 300 bln PLN level in 2022.
Due to the price sensitivity of Polish consumers, discounters have the largest market share in Polish retail. The largest Polish retail formula is Biedronka, having an estimated turnover of 46 bln PLN in 2017. Other retailers are much smaller, Lidl is the second largest retailer in Poland with an estimated turnover of 13,7 bln. PLN. Tesco (10,6), Kaufland (10,1), Auchan (10) and Carrefour (9,68) complete the top six retailers in Poland. Compared to other countries, the Polish retail landscape has a wide offer of retail brands: The 4 major retailers in Poland only have 33 % market shares, whereas for instance in France and UK this is over 70%. Important wholesale and franchise players in Poland are Eurocash, Specjal, Mid Europa Partners (with Zabka and Freshmarket as brands) and Makro.
Although slowly decreasing, relatively a low share of retail is modern trade. The number of traditional shops is approximately 80.000, whereas modern trades counts for approximately 7.000 shops. This results in the largest number of shops per 1000 inhabitants: almost 2,5 (compared to 0,5 per 1000 inhabitants on average in the EU).
Poland has a population of over 38 mln. 40 % of its population lives in rural areas, 49 % in small and medium cities, 11 % in big cities. As price is the main factor determining the purchase of food products in Poland, Polish Consumers are especially „loyal” to promotion (Biedronka and Lidl get 30-40% of their sales via promotional sales), not to a specific retail brand. It results in impressing numbers: on average Poles are visiting 6-7 different retail brands per month. On average 46 times a month a shop is visited. In other EU countries, these numbers are considerably lower.
Just as in other European countries, similar food trends are visible in the Polish food market. Healthy, organic and local (caused by consumer patriotism, which also supports Polish retail formula’s) food products can count on an increasing popularity. At the same time, also due to increasing travelling, international cuisine is popular, especially Italian and Asian food is popular. Less popular and only slowly growing is E-Grocery. Food e-commerce counts at the moment for 0,7% of the sales. High number of shops (almost at every corner a grocery shop is present), wide opening hours of shops (exept Sundays, see below, many shops are open almost 24 hrs) and difficulties in distribution hinders further development.
Legal regulations touching the retail landscape
The Polish government has adopted, or is planning to adopt several regulations which are touching the retail landscape. Recently a ban on Sunday trading was introduced. This ban limits Sunday shopping to the first and last Sunday of the month as of March 2018 until the end of 2018, the last Sunday of the month in 2019 and a complete ban as of 2020. Most retailers are affected, some exceptions are present.
Other planned regulations are restrictions in sales and exposition of alcohol beverages, a tax for owners of commercial shopping centers and a law on food waste and food losses (i.e. retailers will be obliged to start educational campaigns). Implemented, but temporary suspended is the law on taxation of retailers. In September 2016, Poland introduced a tax on retail shops, but after starting an investigation by the European Commission related to the compliance with EU treaties, the regulation on taxation of retailers is temporarily suspended in since October 2017 by the Polish government.
From April 9-11, a Dutch food & beverage trade mission organized by the Nederlandse Export Combinatie visited Poland. The program contained storechecks and matchmaking meetings organized by the Dutch-Polish Chamber of Commerce (NPCC). During the visit, also the exhibition World Food in Warsaw was visited. During the monthly businessmixer of NPCC, insights in the Polish retail developments were presented by Ms. Edyta Kochlewska, working for several agricultural, food and trade portals.