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Death of hypermarkets? How did Carrefour Poland achieve over 5% growth in a declining market?

06 April 2018

Marek Pisarczyk, Warsaw Office, Bord Bia – Irish Food Board

Context:

Poland is still very fragmented, and one of the most competitive retail markets in Europe. Euromonitor reports that the grocery retail market grows at 4.2% (2017), which is driven by discounters and convenience, but hypermarkets are in decline (-0.2%). Online channel grows at 19% and while this comes from a small base, it is expected to grow at double-digit speed for at least the next 5 years. Discounters now constitute over a third of the modern grocery market and with their 66% sales growth over the last 5 years, the well-established top 5 (Auchan, Kaufland, Tesco, Carrefour and E.Leclerc) are certainly feeling the pressure. Dealing with extremely price sensitive customers, retailers know that the race to the bottom needs to stop at some stage and they need to align to changing shoppers habits.

 

Carrefour Poland Case – Digital First!

The Busy Lives trend is the main reason why digital transformation is taking place, and we can now clearly observe that in Poland, too. It is starting with some delay, but businesses and consumers alike are adapting rapidly.

scanning QR code in a Carrefour

 

While all the top 5 retailers are making some progress in applying onmichannel strategies, Carrefour is clearly ahead of its competitors.

 

Established 20 years ago in Poland, Carrefour now has 4% of modern trade and operates in four brick-and-mortar formats: hypermarket, supermarket (classic, urban and premium), speciality stores (alcohol) and franchised convenience stores – close to 1k locations in total, serving 5m customers per week. The hypermarket format was always the core business for Carrefour in Poland, however the focus started to shift a couple of years ago, first to convenience and now to onmichannel. Last week, at the annual conference, the company’s CEO summed up a very successful last year and announced the new strategy for 2018-2022 called Digital First!.

 

What has been done so far?

The company entered e-commerce market a few years ago, but initially only with a non-food offering. Last year however brought many changes:

 

  • Complete online store with integrated food and non-food platforms and options of home deliveries, click-and-collect or pick up at coolomat (a Parcel Motel for chilled and frozen products)
  • An app with 1.2m downloads in 2017
  • A social shopping app (SaSiatki), which allows you to do shopping for someone else and receive extra discounts for future shopping in return
  • Carrefour Pro (see picture) – the most advanced technologically store in Poland, which features Scan&Go checkouts, 13k SKUs, 19 large screens that allow you to order items from pool of 23k SKUs or those that are just not convenient to carry (they will be delivered the same day), a bistro in the very centre of the store
  • C4 Retail Labs – Carrefour now supports 16 tech start-ups and is currently testing 5 of their products in stores, including Smart Cart
  • Carrefour Marketplace – an invite-only B2C platform integrated with Carrefour’s online store, which may become a great opportunity for Irish suppliers of ambient food and their distributors to test the market or just put the food in the door

 

Marketplace

One of the most interesting solutions that Carrefour introduced to date is the Marketplace. The concept is similar to Amazon but it is fully integrated with their online shop – a seller creates a product card with the support of a Carrefour category manager and within a week this product becomes available to all carrefour.pl customers. There are currently 5 non-food categories of products available but the range is expanding and baby and infant food will be added in April. The marketplace in less than 6 months old and improving rapidly; it is expected that customers will be able to purchase other ambient food in the near future.

Currently Carrefour.pl has 6k SKUs available of own stock, but the company already secured 150 suppliers for Marketplace with 150k SKUs.

 

Why this may be interesting for Irish suppliers?

 

  • This may be a good way of entering the Polish retail market for some suppliers
  • A low risk and low cost option for suppliers, as monthly fee is approx. €35 and 3.5 % to 9% commission of transaction value (depending on category)
  • While it would be beneficial to have a local support, there is no such requirement and it can be managed from Ireland (although the shipping costs might be a barrier in some cases)
  • In the next phase, suppliers will be chosen to take part in Carrefour’s Click & Collect solution with their fulfilment management
  • In the near future the participation in Polish Marketplace will open the door to Carrefour’s Marketplace in France, Spain and Romania

 

For more information please contact Marek Pisarczyk at Bord Bia Warsaw office at marek.pisarczyk@bordbia.ie.