Biedronka opens store number 2,000 in Poland
It was simply to say that discount subsidiary Biedronka had passed the 2,000-stores-mark and increased its market leadership.
Clearly, Biedronka (Polish for ladybird) is well on the way to achieving its ambitious goal of 3,000 outlets by 2015.
Given the doom and gloom at so many retailers in a growing number of European countries, it's good to hear a success story.
So we asked da Silva, who is also country manager for Jerónimo Martins in Poland, to update us on progress in this important Central European country.
"A special flavour"
Mr da Silva, Biedronka has just opened its 2,000th Biedronka store in Lodz and its eleventh distribution centre in Sieradz. A cause for celebration?
Every new opening is a cause for celebration. It reflects the effort made by employees, the cooperation of our business partners, and the satisfaction of local customers.
Our 2,000th Biedronka does, however, have a special flavour because it means that we have met the expectations of Polish customers over the last 17 years. It is also a reflection of the great trust that 3.5m Polish shoppers feel towards the Biedronka brand every day.
In fact, "Biedronka", with a brand recognition of 98 per cent, is also the most appreciated retail brand in the country, which is why 70 per cent of all Poles shop regularly with us.
What else does Jerónimo Martins (JM) stand for today on the Polish market?
JM has invested around €2bn in Poland since 1995. JM Polska is now the fourth-biggest company in Poland by sales. Our 38,000 staff make it the no. 5 employer and the largest private one.
What are the secrets of your success?
We consistently offer a limited assortment of high-quality products which have been carefully selected in close cooperation with local producers. These are sold at the lowest every day prices in a neighbourhood store format. We have clearly read the market and constantly try to anticipate consumer habits, needs and aspirations.
We have methodically executed our strategic vision with an excellent team and have carefully chosen our business partners. This also demands a highly efficient store base, supply chain, and logistics. We nurture medium & long-term relations with our employees and business partners and act in a socially responsible way towards all stakeholders.
What were your annual sales in 2011, and how much do you expect to grow in 2012?
Last year, consolidated net sales rose 24.2 per cent in local currency and totalled €5.8bn. Despite the difficult macro-economic environment and increasing competition, we have continued to develop quickly this year. We have opened 250 more outlets, revamped our store base, and increased like-for-like sales.
Why didn’t you buy Schlecker Poland when you had the chance to do so earlier this year?
The locations and business model didn’t fit our store concepts.
Your stores average around 650m² and would be too small to interest Aldi or Lidl. How do you achieve economies of scale?
We run a number of different formats in over 800 towns with a total sales surface of more than 1,300,000m²! I think one could call that an economy of scale.
However, store size isn't the main paradigm. Economies of scale are best achieved by applying a consistent formula from A to Z. It’s more about offering the best value proposition, winning the daily appreciation of customers, and operating stores and the supply chain efficiently.
Who are your main competitors in Poland?
The ones which operate in the catchment areas of our neighbourhood stores, regardless of whether these are run by local operators or by international players.
What is the current situation on the Polish retail market?
It is one of the most competitive markets in Europe. Massive investment has been made over the last 20 years, which has greatly accelerated the modernisation process.
That said, self-service formats still only account for 55 per cent of the market, compared with 70 to 80 per cent in Western Europe. Therefore, we can expect further consolidation in retailing and wholesaling.
Compared with other European countries, Poland has coped well with the current economic slowdown. However, growth will probably now slow as customers increasingly ponder their daily shopping decisions.
What about Polish customers?
Polish customers are very value-conscious, but, like shoppers throughout Europe, they increasingly appreciate convenience. Poles have always been strong local shoppers and are more so than consumers in western Europe. They also shop on average at a minimum of three or four local stores.
How do you see the future?
Growing complexity and speed of change will increase competition in retailing. A number of factors will influence customer expenditure: the unstable economical environment, commodity price volatility, mobile technology developments, social media, sustainability, a growing lack of trust in companies and institutions etc.
This instability will increase the need for collaboration across the industry and will make differentiation and "uniqueness" critical drivers of success.
Efficiency, proximity, convenience and trust are more than ever the key to this new environment, and they may well need to be strategically redefined. Only adaptable business models will survive in these challenging times.
Growth opportunities in Portugal have become very difficult due to the economic situation. Therefore, our first priority is to continue our fast development in Poland.
Our intimate knowledge of local consumers and their needs, combined with strategic local partnerships, put us in an excellent position to diversify. For instance, we can see potential in health & beauty and already operate 60 "HeBe" drugstores. As regards further international expansion, we decided to enter South America a year ago.
Portugal has been mauled by the international financial crisis. Has this limited your capacity to invest in Poland?
Not really. In 2012, JM Group will have invested a total of around €650m, of which approximately 80 per cent was in Poland.
What are your key challenges as COO of JM Group?
We now have operations in three countries (Portugal, Poland and Columbia). This means three different currencies and three different speeds of development in a world full of macroeconomic uncertainty. Our operational role is to continue to anticipate consumer needs and expectations and to develop with strong, strategic partnerships.
We must reinforce our leadership positions through continuous innovation, differentiating our offer, and harnessing knowledge within the group.