Latest News
News Feature image

As Carrefour’s chief executive, Alexandre Bompard, says the retailer is not planning to exit any further countries, and its country operations in Belgium and Poland expand their offer, we round up news for the retailer.

More News

Frisco.pl reported a 37% increase in sales in 2018 to reach PLN96.5m (US$25.6m). This continues the double-digit growth rates it has been reporting since 2015. The pure online retailer is set to grow at above the rate for the channel, which we estimate to be around 15% between 2019 and 2023.

Frisco.pl is far from profitability, but it is getting there

Sales performance is illustrating growth, but the online retailer has yet to report a profit. In 2017 it generated a PLN12.7m (US$3.4m) net loss but was an improvement on the PLN13.2m (US$3.5m) net loss it recorded in 2016.

Regardless of its lack of profit it is managing to increase revenue. Following our recent visit to the country we have identified five strategies it is employing to do so.

1- Competes against other channels in the main shop mission space

Frisco.pl is growing its shopper base by attracting main shop missions from other channels. It is doing this by offering greater convenience and targeted pricing. Shoppers can buy bulky items, plan and build their shopping baskets across several sessions. It offers a wide range to compete against hypermarkets, while in relation to price, it uses targeted marketing, generated from data from shoppers’ smartphones or tablets geolocation, which it uses to send them personalised promotions.

2- Flexes its delivery service coverage

Frisco.pl mostly delivers in the Warsaw area, but does offer a limited service to the rest of the country. Deliveries outside of Warsaw are restricted to business hours, during weekdays. Most of these deliveries are made up of business-to-business orders, usually for offices. The retailer is looking to expand this coverage, most likely to another major city, such as Krakow.

Source: Frisco.pl

3- Drives sales on quality of fresh food

The pure online retailer uses a just-in-time model for their fresh food range, so it can offer assortments that compete on freshness, in addition to the quality of delivery. By attracting shoppers to its fresh category, it can convert them to buy their main shop mission through it too. It also drives sales by attracting shoppers to a category with targeted marketing and pricing, in collaboration with branded manufacturers.

4- Leverages shopper trends like healthy living

It added a page on its website to make it simpler for shoppers to buy and cook healthy food. In one example, it collaborated with celebrity fitness coach, Ewa Chodakowska, by linking shoppers to her website where they could plan their healthy diet meals. Other collaborations include Przepisy.pl where shoppers can select a meal and, with one click, add the relevant ingredients of that meal to their Frisco.pl shopping list.

Source: Frisco.pl, Przepisy.pl

5- Delivery payment benefits tied to purchase volume

Frisco Fruit is Frisco.pl’s benefits programme, which encourages shoppers to take advantage of lower delivery charges and better booking slots if they buy more. Shoppers are rewarded with points every time they complete an order, so for every PLN50 (US$13.30) above the minimum order they get 15 points. They can receive lower delivery charges or no charge at all, depending on the points, and additional products from a promotional basket.

Source: Frisco.pl

Frisco.pl is preparing for further growth with new automated warehouse

The retailer opened a 11,000 sq. m. automated warehouse near Warsaw, in May 2019, that quadruples its capacity for more orders. It is designed to centralise control over the entire picking process and increase its efficiency. The unit is divided into several temperature and logistic zones and has a robot that can prepare up to 420 orders per hour. Also, boxes are transported on conveyor belts around the warehouse, which handles 80% of the intra-warehouse transport.

Source: Frisco.pl

Subscribers can read how the food industry create solutions that make online shopping even more convenient Last mile: delivering the goods.

Amin Alkhatib

Amin Alkhatib

Senior Retail Analyst – Central & Eastern Europe

Central and Eastern Europe is a region that illustrates great growth potential for both retailers and suppliers. The region also presents opportunity for retailers to evolve their business model to widen their shopper base and draw more traffic to their stores.

This in-depth guide to Poland explores the key trends in grocery retail and the growth strategies of the leading retailers in the country.

See the latest industry news on Central and Eastern Europe.

Tesco’s loss-making operation in Poland has been a drag on the retailer’s profitability in central Europe. Tesco Poland has managed to turn around its profitability via its three-year transformation programme, which has helped boost regional profit in 2018. Tesco has done this by reorganising its logistical and store operations to introduce cost efficiencies and offer shoppers lower prices, which help it to compete against discounters.

Tesco Poland sees biggest decline in sales in 2018 in the region…

Tesco Central Europe reported a 4.5% drop in 2018 sales at constant exchange rates, to reach GBP6.0bn (US$7.6bn). This was partly explained by a 2.3% decline in like-for-like sales, due to Tesco’s non-participation in Black Thursday promotions in the region. The performance was also affected by a 9.1% sales decline in Poland, due to the loss of 25 trading days from the Sunday ban and the closure of 62 stores.

…but grows profit significantly

Although sales growth was a pain point for the central European operations, it reported an improvement in its operating margin from 1.8% in 2017 to 2.9% in 2018. A significant part of that is from the closure of unprofitable stores in Poland. But was also due to costs efficiencies introduced in the store and logistical operations. In addition to lowering costs, these efficiencies also helped to raise sales density by reorganising ranges and store operations to lower prices and attract more shoppers.

Repurposing of space in large formats stores continues

As part of the three-year transformation programme, Tesco has repurposed space by renting it out to third-party retailers. This is in line with shopper trends in Poland where they shop little and often. To help raise a revenue stream and lower costs in its larger stores in 2018, it added 22 new tenants to 14 hypermarkets. It also partnered with an insurance provider in 2019 to open 32 Superpolisa Ubezpieczenia outlets in Tesco stores. Similarly in Tesco Hungary it has added Media Markt shop-in-shops in nine hypermarkets.

Source: Super Polisa

Managing stock level and rotation

As hypermarket space shrinks so does the number of SKUs in Tesco Poland stores. The retailer is optimising its assortment by removing unprofitable categories, such as electricals, and focusing on more sustainable ones, such as baby. It introduced cost efficiencies via inventory management, which reduced stock levels and lowered replenishment frequency. This has translated into less transportation, reduced storage space, optimal use of store warehouse space and fewer out-of-stocks.

Fewer price changes and use of back-office staff

Across Tesco Central Europe it reduced the number of price changes by 28% in 2018, as many prices were reduced on a more permanent basis. Also, some back-office staff duties were moved to the shop floor to support in customer service and shelf replenishment.

Prices on food staples permanently lowered…

The retailer removed unprofitable assortments to focus on 600 basic food products, which it marked as Starlines, and promoted under the Nasz Cena (Our Price) tagline. They have had their prices permanently lowered to improve the price-quality ratio and to help Tesco become price competitive. The products were also given more shelf space. The retailer seems to be responding to market conditions in central Europe, and especially in Poland, by adopting elements of an EDLP strategy.

Source: IGD Research, Tesco Poland

…and the visibility of private label ranges raised

In some categories it is raising the visibility and shopper awareness of its private label ranges. One key example is in the baby category, where it has reduced the number of brands and assigned more space to its 200 SKU own labels, entry price Gaga and core range Fred & Flo. It is building awareness about the new brands through sampling in selected stores, special store decoration, leaflets and POS materials.

Source: IGD Research

Sunday trading ban will continue to drag Tesco sales in 2019 and 2020…

Poland is phasing in additional Sunday trading bans to reach 40 days in 2019 and extending this further in 2020 to cover all Sundays. For Tesco Poland to turnaround its sales decline, its strategy would have to be focused on recovering sales from the reduced trading days in the next two years. So far it has shown little sign on efforts to offset the loss from these trading days, like its key competitors Biedronka and Lidl.

…and profits will be hit by possible new tax law in 2020

The Court of the European Union ruled against the European Commission’s (EC) case that the Polish government’s tax on retail  is a form of state aid. It remains the case whether the new tax structure will go ahead or not in 2020, as the EC can appeal this decision. If the tax does goes ahead then this will hit retailers with a 0.8% or 1.4% tax bill on turnover above PLN17m (US$4.4m) per month, which will also hurt Tesco’s efforts to return its Polish operation to profitability.

Subscribers can read the latest news about the Polish grocery retail market.

Over the last 12 months, Lidl has expanded its online presence from four countries to 11, including grocery ecommerce operations in five countries. With the discounter accelerating its online expansion we look in-depth at its presence across Europe and the US.

Lidl’s online presence

Since the beginning of 2019, Lidl has launched grocery ecommerce operations in three countries and a non-grocery range online in Poland. The pace of its online store openings is accelerating in Europe, aligned with its current strategy to offer more digital solutions to shoppers. Lidl uses online non-grocery, as an extension of its physical stores, providing additional ranges to its shoppers.

The map below summarises Lidl’s online presence for its grocery and non-grocery ranges across Europe and the US.

 

Partnerships for online food delivery

In most markets where it offers online food, Lidl partners with well-established online supermarkets, such as Lola Market in Spain and Boxed in the US, instead of managing the process itself. This is an efficient and safe way to offer a new service to shoppers thanks to very limited investment required.

With online supermarkets managing orders and deliveries, Lidl doesn’t have to change its supply chain or invest in new facilities as products will be picked in store. These partnerships will also provide Lidl with a better understanding of shoppers and potentially improve its ranges and services.

In Italy and Spain, Lidl partnered with companies managing online grocery for other retailers, enabling it to also compete with these retailers, online. In every market where it offers online grocery, Lidl uses the same strategy. It tests the delivery in a limited area, usually a major city, before expanding to other cities. Tests in Belgium and Italy are proving successful and there are plans to expand the services to more cities.  

Future online developments in Europe

Earlier in May 2019, Schwarz Group, Lidl’s parent company, stated that investments and developments in digital will be an area of focus in 2019. Other markets are likely to follow, Lidl France has already mentioned it has plans to expand its ecommerce operations by 2020.

Currently the UK is the only major European market where Lidl doesn’t have any online presence. With all other major retailers offering online solutions, it appears as a country to watch for Lidl’s next non-grocery online store.

On top of these online stores’ developments, Lidl also invests in digital and payment solutions. It currently tests new payment solutions such as SHOP&GO in Paris and self-checkouts in several European cities.

On the digital side, Lidl continues the expansion of its loyalty programme, Lidl Plus, now available in five countries, after being launched in 2018. Following the success of the app in the different markets, we anticipate other countries will launch it by the end of 2019 as part of the discounter’s global strategy to strengthen its relationship with shoppers.

IGD can support all your online needs. For short-term success, we can advise you on how to sell more online. For the longer-term, we can help you prepare for the future and the new opportunities e-commerce brings, such as omnichannel, rapid delivery and social commerce. For more information, get in touch with Milos Ryba, Head of Retail Strategic projects, [email protected].

Keep up-to-date with the latest discount channel developments. Sign up for our channel specific newsletter. For subscribers wanting to know more about Lidl, please have a look at our Strategic Outlook for 2019.

maxime-delacour.jpg

Maxime Delacour

Senior Retail Analyst - Discount

If you have a specific business challenge or training requirement we can put together something just for you.

As Lidl continues its rapid expansion across Europe and the US, it is looking to build stronger relationship with its shoppers. As Lidl invests in its stores and expands the ranges and services it offers, identify your opportunities with the retailer as we explore the latest strategic priorities that will influence its future performance.

Presentations

10/06/2019
A monthly summary of the latest developments in the discount channel globally. We provide additional insights and our analysis on various topics, such as private labels, retailer strategies or digital developments related to the channel.
03/06/2019
We review A.S. Watson's recent performance, its growth forecasts for the next five years, plus progress against key strategic objectives.
16/04/2019
Four years on from the launch of its turnaround strategy, Tesco has made substantial progress against its strategic drivers to create long-term and sustainable value for its four key stakeholders – customers, colleagues, suppliers and shareholders. In this report we review how Tesco is delivering against its four strategic drivers and consider its next steps.
View all presentations

This in-depth guide to Poland explores the key trends in grocery retail and the growth strategies of the leading retailers in the country.

We've developed a single, universal methodology for calculating food and consumer goods retail data, supported by our programme of primary and secondary research. This makes Retail Analysis the most reliable and robust source available for data of this type. 

If you have a specific business challenge or training requirement we can put together something just for you.

Get the latest industry news and insights straight to your inbox with our range of newsletters.