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Magdalena Wolska-Omyła
Project Manager

tel. +48 12 350 54 35
magdalena.wolska@bbm.pl

More information about participation:

Anna Banaś
Head of Sales

tel: +48 12 350 54 06
mob: +48 605 990 659
anna.banas@bbm.pl

More information about partnership

Dagmara Sobczak
Enfant Terrible of Marketing

tel: +48 12 350 54 72
dagmara.sobczak@bbm.pl

More information about the event:

Magdalena Wolska-Omyła
Project Manager

tel. +48 12 350 54 35
magdalena.wolska@bbm.pl

More information about participation:

Anna Banaś
Head of Sales

tel: +48 12 350 54 06
mob: +48 605 990 659
anna.banas@bbm.pl

More information about partnership

Dagmara Sobczak
Enfant Terrible of Marketing

tel: +48 12 350 54 72
dagmara.sobczak@bbm.pl

Retail sector facing new challenges and opportunities Poland & CEE Retail Summit 2017

The finest minds that co-created the Polish retail market in the 1990s have never suspected what challenges they would have to face in two decades. Competition getting more and more fierce, customer 4.0, the obligatory presence in the virtual world that interweaves with reality more and more pronouncedly and influences profit – these are but to name a few.  Answers to many questions and doubts the retail sector has to face were brought to us by the 9th Poland & CEE Retail Summit held between 29th and 30th March 2017 in Hilton Hotel, Warsaw.

VIDEO COVERAGE

The ninth edition of the annual gathering organised by Blue Business Media was attended by a record number of representatives of retail chains and companies from the FMCG and durable goods sector. Traditionally, it was dominated by heated discussions about the current, very dynamic retail market and recipes for success in an era governed by consumers and changeability.

This year’s congress was opened by Aleksandra Schoen-Żmijowa, Director of Project Management Department of Blue Business Media and Magdalena Wolska-Omyła, Project Director representing Blue Business Media. It was hosted by Andrzej Wojciechowicz, Owner of FMCG Business Consulting. The substantive part of the congress captivated the Participants from the very beginning. Already during the first presentation the Speakers and invited Guests discussed key issues determining success on the contemporary, more and more demanding – not only in Poland – retail market. These were: the ability to adjust, innovations, the need for a Plan B, a new dimension in retailer-supplier cooperation and a shopper immersed in the virtual world. As emphasised by representatives of Oliver Wyman: Nick Harrison, Senior Partner and Member of the Management Committee Retail and Consumer Practice and Jens Torchalla, Partner Retail & CPG Practice,  retailers have to develop in order to survive. Today perhaps more than ever, as operational costs are increasing while the profit margins and profits are shrinking. Nick Harrison compared retailers to sharks as they have to swim to live and admitted that the contemporary transformations are not easy. Retailers’ development consists of three stages all of them have to go through: expansion, like for like development and diversification. Poland is currently going through the second, difficult stage and format development is reaching the end of its possibilities. During the stage of expansion, success was driven by standardisation and the pace of opening new branches. The like for like stage requires a different approach- it’s about adapting and diversifying, so we’ve got to have different plans, as one may not be enough. Not only do we have to be able to adjust to changes, we have to be able to do it quickly, as well – stressed Nick Harrison. Using the Customer Perception Map (CPM), a solution provided by OLIVER WYMAN may prove really useful during this specific, demanding stage. The company “maps” retailers on the market, checking who has competitive advantage and what is it built on – e.g. product range or the brand’s value and perception – and offering advice on how to improve one’s position.


There is no such thing as a single scenario for all the retailers – we always design individual strategies – stressed Jens Torchalla. For example, one CPM study conducted on the Polish market has shown that even though Biedonka is its leader, Aldi and Lidl are perceived as performing better. The latter also win in terms of product range.  Kaufland and E. Leclerc are the leaders of the hypermarket segment in this respect, while Piotr i Paweł leads the supermarket format. At the same time, the convenience market is noticeably fragmented. – Ongoing consolidation and a smaller number of market participants are bound to follow. The winners will be those perceived in terms of values and offer at the same time – Jens Torchalla emphasised.

More about Customer Perception Map in Poland

Format differentiation and diffusion

Undoubtedly the position of what is dubbed independent commerce on the Polish market is getting stronger and stronger. Pedro Martinho, Member of the Management Board of Eurocash and President of the Board of EKO Holding stressed that today, independent commerce is the “new modern commerce”. – 20 years ago everyone was saying that the retail market in Poland is going to look just like the French or German used to look a few years before. Time has shown that Poland is different – here it is the big but independent stores who win, while some big retail chains successfully operating on other markets have to withdraw. Turnover per square metre of a small store and a branch store belonging to a big, foreign retailer is similar. Small and medium stores are really effective, because Poles are entrepreneurial – said Pedro Martinho.

These changes are accompanied by a more and more pronouncedly visible division into two shopping places: one for small and quick shopping and the other one – for bigger shopping and stockpiling. Before, large-format stores were where most of the latter kind of shopping was done. Today, it is more and more often the Internet, and this trend will become stronger, including smaller towns. In case of brick-and-mortar stores, location and being close to the customer are unchangeably the key success factors. Still, the question remains how to compete effectively if there is a number of shops operating in close proximity? – I see the possibilities of development primarily  in specialisation. A grocery store located right beside a discount store does not really stand a chance, but if it was a specialist store, e.g. with wine and beer, press and snacks or ready-made products, it could be successful – predicted Pedro Martinho.

The diffusion of formats and the growing role of shopping convenience was also the topic of the panel discussion on the disappearing boundary between modern and traditional commerce. Radosław Wróblewski, Head of Business Development at Freebee reminded us that Nielsen has already stopped referring to one of the sectors of commerce as “modern” a few years ago. – Today this distinction seems to be virtually non-existent. It is clearly visible in the details: over the counter sales, which used to be synonymous with a traditional store, are now conducted in many kinds of enterprises, and in a really modern way – noted Andrzej Izraelski, Member of the Management Board and Commercial Director of Lewiatan Holding. Marek Wesołowski, Member of the Management Board and Commercial Director of Specjał Capital Group emphasised that the notions “modern” and “traditional” today refer rather to the way of reaching the client, while Michał Florkiewicz, Operational Director of Convenience Carrefour remarked: – Today we should be talking about formats and not about traditional and modern commerce. Still, it must be noted that the traditional retail model is flourishing today and the key to small format stores is ensuring shopping convenience for the customers.

A practical example of how to adjust to a changing market environment was brought up by Paweł Musiał, Member of the Management Board, X5 Retail Group NV and Member of the Management Board PROFI Rom Food Rumunia. Profi chain operates on the Romanian market that changes in a comparably dynamic way to the market in Poland. – In Bucharest, just like in Moscow, it matters to people what kind of shopping bag the neighbours are going to see them with. A considerable part of the Romanian society are young people, so the buying power increases, and the fastest developing formats in Romania are currently the convenience and supermarket format. This is the reason why when our customers began turning away from the discount format, we launched a huge marketing action. We employed bloggers, dispersed rumours that Profi was going to disappear from the market and in place of the Profi-discount stores we opened Profi-supermarkets – recalled Paweł Musiał.

Quick adjusting to market evolution and changes in customer preferences will be required more and more often, and the ever intensely visible migration of formats may serve as a proof in support of this thesis. Discount stores are becoming more and more similar to supermarkets while supermarkets lower the prices to effectively compete with the former, and so become more and more like discounts, or sometimes look for new visions of their enterprises, e.g. develop catering areas or fresh food stands. All this to meet the contemporary customer’s expectations. As emphasised during the congress, the customer is no longer the king, he is the emperor who can pick and choose the retailers at will.

Bearing in mind adjusting strategy to changes occurring in customer needs, Piotr i Paweł has also taken numerous new kinds of action. – We’re creating an offer responding to the needs and problems of our customers – such as a lack of time and fast pace of life, but also the yearning for taking pleasure in shopping, expecting a personalised offer or access to organic foods – Maciej Stoiński, Vice president of the Management Board and Managing Director of Piotr i Paweł told us.

Convenience over format

Solutions like the ones described by the representative of Piotr i Paweł are part of a widely popular retail strategy focused on ensuring the key expectation of a contemporary customer is met: convenience. And more and more often it becomes synonymous with the convenience format.  Trends and innovations in this sector were the topic of a panel discussion among Ewa Rybołowicz, Retailer Services Director from  Nielsen Poland, Andrzej Wojciechowicz, Owner of FMCG Business Consulting, Wojciech Kruszewski, CEO at Lewiatan Holding, Janusz Lella, President of the Management Board of Małpka Express and Dariusz Kalinowski, President of the Management Board at Stokrotka. Ewa Rybołowicz observed that a few years ago one of the main expectations on the behalf of the customers was a wide product range. Today it is the ability to find the product we are looking for easily that matters most to us with regard to small format stores. This is why when we are talking about convenience, we are discussing not only the format, but also customer needs. – The expectations pyramid of a contemporary consumer – the DNA of his needs – consists of elements such as: personal, smart and easy – remarked the representative of Nielsen. This makes the word “convenience” begin to refer to commerce in a broader sense. – The definition of convenience will gradually disappear, as all the retailers regardless of the format will try to make shopping with them convenient. – remarked Wojciech Kruszewski. Andrzej Wojciechowicz stressed that adjusting our product offer to new trends and its personalisation are becoming more and more important. Janusz Lella pointed out that today fast and convenient shopping is not enough – offering innovations is equally important. – Our studies show that the highest number of expectations involving innovations concerns fresh and precisely addressed products – e.g. appropriate for allergy sufferers. The atmosphere in the store and good impression matter as well – it all builds positive emotions – explained the president of Małpka Express. However, the list of factors that determine success is much longer. – Comfort  and quick pace of doing the shopping are the basis of convenience. Emotions are also important, price is another issue worth considering. And offering a good price can prove to be one of the most difficult challenges. Another tough one is making the consumers buy convenience products more often, on an everyday basis, rather than only when they’re in a hurry. It can be achieved by reducing the difference between the classic and convenience product’s price. The convenience format was also a prominent element of the speech delivered by Tobias Wasmuht, Managing Director of SPAR International. Social transformations make worth developing the convenience format and small stores are undergoing renaissance all over Europe – in Great Britain, for instance, convenience stores generate 93% of our sales. While responding to new challenges, we are concentrating on the fresh products segment more and more intensely, offering the possibility to eat a meal in store. We’re also reducing the number of non-food products on offer – explained Tobias Wasmuht. SPAR, whose acronym stands for the Dutch translation of “through united cooperation everyone regularly profits” is developing not only on well-known markets, but also in new directions, i.a. in Azerbaijan, Georgia and Albania, where it opened 17 stores since October.

Recipe for success in the hyper format

It would seem that in the era of growing popularity of the convenience format, the large format’s prospects for survival on the market are rather grim. Still, some large format stores were able to redefine their enterprises at an appropriate moment. The evolution of this format on the example of Tesco was the topic of presentation delivered by Piotr Korek, European Property Director Tesco CEE. In 1998, the British retailer opened a hypermarket at Bielany in Wrocław. The investment paid off in a few months’ time, as Poland was the promised land of retail back then – there were virtually no stores like this, shopping habits were still to be formed. It all began to change 10 years later. Three factors weighed on the transformation: the global financial crisis, the change of consumer habits – i.a. as a result of the crisis, which led Biedronka to take over some of the former hypermarket customers – and the appearance of specialist shops. This made i.a. Géant, Hypernova and Minimal disappear from the market. – Our response for what’s going was i.a. introducing e-shopping, which in a few years time made us the leader of this channel, and reducing the area of our hypermarkets with the perspective of creating the “shop in shop” concept – we’ve transformed the additional space into shopping arcades. We’ve invited other retailers, who could help us create complimentary offer moving beyond FMCG, e.g. Media Markt or H&M – Piotr Korek told us. Signals from the market suggest that it was a good idea – according to Nielsen, the hypermarket format currently has the best results since 2013.

Legal challenges

The intended and already implemented legal regulations – such as the ban on Sunday sales, the act on contractual advantage and the sales tax act – stirred a lot of emotions and were extensively commented on during the panel discussion by Renata Juszkiewicz, President of POHiD, Michał Sadecki, CEO of the Polish Supermarket Group, Krzysztof Tokarz, CEO of Specjał Capital Group as well as Mikołaj Piaskowski, Legal Counsel and Head of the Competition and Consumer Protection Law Department at Baker McKenzie. The most debatable topic turned out to be the act on preventing fraudulent uses of contractual advantage in selling plant products and foodstuff that is due to come into force in mid-July. According to Mikołaj Piaskowski, if we were to assume that this act is supposed to protect small players, producers, and processers against the biggest chains, it may actually serve its purpose. Still, the bigger the supplier and retailer, the smaller the differences in the scope of their actions and the strength of their brand and consequently, the more difficult it becomes for the Office for Competition and Consumer Protection to prove the abuse of market power. Michał Sadecki and Renata Juszkiewicz pointed out that some subjects fearing the risk posed by the regulations may resort to chosing products produced in other countries of the European Union rather than Poland. In Krzysztof Tokarz’s view, the act opens up possibilities for abuse and may lead to very unfair competition, as it allows the officers to commence control proceedings e.g. on the basis of a denunciation. As to the intended introduction of the ban on Sunday sales, the opinions were slightly more varied – according to the CEO of Specjał Capital Group such regulations could benefit traditional commerce. Renata Juszkiewicz spoke against the regulation, emphasising that restricting Sunday sales will translate into a deterioration of the job market and will entail negative economic effects.

The importance of partnership and cooperation

In the context of new legal regulations to come into force this year, good practices in cooperation between the supplier and retailer gain new importance. Jerzy Roguski, Commercial Director of Żabka Poland and Maciej Herman, Member of the Management Board, Sales and Marketing Director of Lotte Wedel told us how ideal cooperation between these subjects might look like. 90% of turnover in Żabka is generated by small sales and products to be consumed “immediately” or “today”, rather than products bought for a few days in advance. This is why, as Jerzy Roguski stressed, it is so important to understand the specifics of particular channels and combine this knowledge with the expectations of a given format’s customers. – We have to determine whether the product we offer is suitable for convenience chains – said the representative of Żabka Poland. Undoubtedly, this worked out ideally in Żabka’s cooperation with Lotte Wedel – a customer entering Żabka expects pleasure “here and now”, which is why rather than a full box of Ptasie Mleczko we offered them a much smaller package, and as smaller products occupy less space, more flavours could be introduced. As both speakers jokingly remarked – it shows that sometimes it’s good to allow ourselves to be tricked. – In Japan, Lotte produces over 350 different products for Seven Eleven. These products are especially adjusted to the needs of this particular retailer. 50 percent of the products are included in the basic product range, while another 50 percent are a dozen products a month that appear only for a few-week-long intervals. I see the example we presented as the beginning of the path toward practicing such solutions on a larger scale – recapitulated Maciej Herman.

The retailer-producer partnership in practice was also discussed by Krzysztof Matusiak, Client Logistics Director at Coca-Cola HBC Poland, who stressed that such cooperation amounts to building values together. – It’s not a project, rather a long-term programme, usually lasting for years. We’ve been doing it for over four years, cooperating with 29 partners. In each of the programmes we focus on ensuring cross-functional cooperation – as numerous functions within each of these organisations work on what we want to achieve – and cross-company – as both of the companies need to act together. In cooperating with retail chains we focus on a few areas: costs and connected optimisation, logistics and getting through with the product onto the market as well as customer satisfaction – we measure it. We expect development, and we’ll do everything to make our partner “grow” with us – we’re implementing appropriate initiatives focused on accelerating development. If we do everything right – it should result in an increase of product availability – explained Krzysztof Matusiak, who also added that this year will mark a breakthrough for the company, as a similar kind of cooperation in measuring availability will also be launched in cooperation with the wholesale channel. Of course, exchanging sales and logistic data, etc. is also important. It all amounts to Joint Value Creation. Krzysztof Matusiak also mentioned two tools he personally finds most valuable and resulting in the best JVC effects. The first one is “an implant”, meaning a person who is an employee of Coca-Cola, but spends at least 1-2 days a week in the partner’s chain, working with the team on the other side, initiating various projects – this guarantees a truly individual approach. The second tool is connected with product availability – it’s the OSA, meaning “On Shelf Availability”. –All the schools in the world claim that if you get rid of 3% of “out of stocks”, you’ll increase your sales by 1%. Its commendable to try and reach the smallest number of “out of stocks” possible. This is why creating individual solutions for increasing on shelf product availability in cooperation with partners – both large and smaller retail chains – is so important for us – summed up Krzysztof Matusiak.

Another example of the evolution of retailer-producer activities, this time in connection with negotiations was presented by Angelo Turati, Member of the Management Board and Commercial Director of O’KEY Retail Group Russia. In 2004, when Angelo Turati arrived in Russia, negotiations between suppliers and retail chains were held in an unprecedently short time. Sometimes a 15-minute talk sufficed to sign an annual contract, as back then, the most important factor on the Russian market was for the product to be available on shelves within the shortest time possible.  Soon after a relatively painful evolution of this process began. – Reverse margins and fees for placing products in stores appeared. The style of conducting negotiations changed as well, for they began stretching for days or even weeks – told us the representative of O’KEY Retail Group Russia. The financial crisis of 2009 and market changes that followed in its aftermath, made the negotiating power shift entirely from the producer to the retailer in some categories. The year 2011 marked the beginning of the next form of cooperation between the retailer and producer – introducing category management on a massive scale. Today, there is full price transparency in negotiations and agreements between the retailers and producers on the Russian market – the margin cannot be higher than 5% and everything has to be specified on an invoice. – What is important, a noticeable transformation in the way of thinking took place. Small retailers create alliances in negotiations with producers and negotiate conditions with suppliers together – said Angelo Turati. The market is becoming more and more difficult. – Currently, after 12 years, we are reaching an absolute stoppage  of development – retailers stop developing, there’s ongoing consolidation. Discount stores are becoming the number one format in Russia and Russian consumers are very sensitive to prices. A similar phenomenon was observable in Germany and France, but there it was a gradual process. Meanwhile in Russia price sensitivity appeared suddenly, and promotion intensity in some categories increased from 30% to 80% in just 18 months – explained the representative of O’KEY Retail Group Russia.

How to deal with such big and growing price pressure? One of the options is to cooperate with large procurement groups. Luc de Jong, Senior Retail Executive, who worked i.a. for AHOLD, EMD, SPAR UK, mentioned five big, international procurement groups – Eurauchan, Coopernic, EMD, Alidis and AMS. – All of them appeared at the turn of the 1980s and 1990s. The first four concentrate on brand products, the last one on own brands. One argument in favour of joining a procurement group is its purchasing power. Of course, there are membership fees, but they should be considered investments. Apart from this, international procurement groups offer access to different markets – stressed Luc de Jong, noting that this kind of mutual dependency does not have to be bad. To the contrary, it may be the source of market power.

Key to development: innovations

Changes in Polish retail, so frequently mentioned during this year’s Poland & CEE Retail Summit, have led to a state of affairs where the era of development through expansion – both with regard to retailers and producers – is over. Today the biggest profit is generated by innovations. However, not all innovations are going to translate into tangible success. – Innovations like expanding the product range are not satisfactory today, neither for the customer nor the retailer. Such actions do not generate growth. It is generated by breakthroughs. – explained Marcin Penconek, VP, Innovation Practice, Growth & Emerging Markets at Nielsen. He illustrated his speech with the example of introducing a food product, Fruto, on the Russian market. The product was addressed to children at the stage when they cease being fed by the parents and begin eating on their own. In this case, the key role is played by the packaging allowing easy access to the meal even for very young children.

Of course, breakthrough investments are worth their weight in gold and do not happen every day. Nielsen’s data proves this point, as when it researched the European Market in 2014 it found only 11 innovations that could aspire to be dubbed breakthroughs. Investing in developing innovative products is one thing, but still we cannot forget about the importance of effective marketing. – We estimate that as much as 1/3 of innovations do not have enough marketing support to be successful – noted the representative of Nielsen, adding that in-store marketing actions and an attractive packaging are increasingly important elements that are often neglected. All things considered, it seems that these days focusing on innovations is not a matter of choice, but rather a necessity. – If we won’t invest in innovations that can generate growth we’re up for an endless fight for promotions – summed up Marcin Penconek.

Customer 4.0, life in the era of digitalisation and mobility

The importance of innovations was also stressed by Geraldine Huse, CEO, President of the Management Board at Procter & Gamble Central Europe – Categories with innovations develop four times faster than others. Still, being innovative should not pertain only to the products themselves  but also to the methods of communicating with the customer – she explained. The ongoing social changes demand adopting such an approach. Today 3,5 mld people worldwide already live in cities (by 2020 this number should reach 5 mld). Households are getting smaller – over one generation the number of inhabitants per household decreased from 3,1 to 2,8. The number of people living on their own increases as well – from one generation to another, the percentage of single-person households increased from 18% to 24%. All this is accompanied by extraordinary technological changes demanding an entirely new approach to relations with the customer on behalf of both the retailers and producers and developing communication through social media. An example of successful interaction of this kind is posed by Robert Lewandowski, who extensively talks about Gillette products on his social media profiles. – If we want to encourage the customers to buy something, we should gain their trust and keep in mind the influence of advertising. In the 1990s retailers were the ones in power. Today it is the customer who decides what and when to buy and his knowledge comes from multiple sources. 80% of people who want to buy a toothbrush first look for information on the Internet. Then, 60% of those who decided which product they want  go to a brick-and-mortar shop, while 40% chooses online shopping. We have to keep up with these changes, use new channels of communication and respond to new needs like e.g. ordering products through a smartphone and picking them up in the shop – explained Geraldine Huse.

These changes are most pronouncedly visible in the Millenial consumer group, which presents a totally different shopping behaviour than the previous generations. Data gathered by Payback Poland shows that 70% of such consumers takes recommendations in social media into account when choosing a product and 68% interacts with the brand. Ewa Aleszczyk-Kalinowska, Marketing and Communication Director at Piotr i Paweł provided us with interesting examples of how such interaction can look like in practice and which market trends and consumer behaviours change a chain’s product range. – These days well-known brands are advertised by people who became widely popular overnight. This didn’t happen because of the media, it’s the result of their own activities. Such people are credible for the consumers, as they can easily be related to. Maffashion – a fashion blogger – is a perfect example of this phenomenon. A girl in her twenties, followed by nearly a million people on Instagram and another million on Facebook is invited to events like Fashion Week more often than our fashion designers. She also appeared in a Coca-Cola commercial – said Ewa Aleszczyk-Kalinowska.

Of course, people like Maffashion have to fit in the world they are trying to create. Ania Dziedzic, known in social media as Fit Mom, is this kind of person for Piotr i Paweł. She handles extensive communication through her Facebook profile and regularly broadcasts trainings designed for a particular group of people e.g. pregnant women. As part of her cooperation with the retailer, Fit Mom prepares leaflets “Recipes for a healthy life” and promotes the chain on the biggest social media platform in the world. – Everyone who works in marketing knows how much has to be invested in Facebook advertising and post engagements. Meanwhile, it sufficed for Ania Dziedzic to write that she began cooperating with us and in a really short time her post had 2,7 thousand likes and over 200 comments – said the representative of Piotr i Paweł.

Still, social media are not the only means of fighting for the consumer mentioned by Ewa Aleszczyk-Kalinowska. – Smart shopping is currently a very significant trend. Smartphones became an indispensable element of our daily lives – 61% of Poles own one. 16% of Poles use  mobile banking and 13% buy products only in the mobile channel. The digital and the real world are interweaving more and more noticeably – remarked the Marketing and Communication Director of Piotr i Paweł.

The influence of the mobile and virtual world on retail was also discussed by Sebastian Szmigielski, Agency Partner CEE at Facebook. The social network he represents has now over 2 mld users worldwide. Together with other services – What’s up, Instagram and Messenger – it creates a massive communication platform that can serve the retail industry perfectly as a tool to reach their sales goals. – Today we’re somewhere between omnichannel and mobile shopping. The latter will keep on gaining popularity, but even today the mobile industry has strong influence on off-line sales. 49% of sales in brick-and-mortar shops comes from people who saw an advertisement displayed on a mobile device earlier – explained the representative of Facebook. The latter phenomenon pertains to the generation Y in particular, but it’s worth remembering that the fastest growing group of social media users are people aged 35+. The challenges and opportunities stemming from these processes make social media operators provide new tools facilitating work of those who want to reach social media users. – We’ve introduced prospecting, for example. It enables finding users who haven’t visited our profile yet and showing it to them – said Sebastian Szmigielski. What is more, the possibilities offered by modern technologies allow e.g. the person watching a video commercial to be redirected straight to the portal where they would be able to buy the product with just one click on the product they liked. Still, it is crucial to approach all this in a creative way. It may help attract the watcher’s attention, which may prove especially difficult with regard to younger people who scroll through the displayed information faster and it is more difficult to make them stop.

As it was repeatedly stressed during the congress, a smart consumer, because that is who the modern consumer is, poses a big challenge for the retailers, the Polish consumer in particular. – The ideal customer is the one who doesn’t care about the price, forgives mistakes, comes back, spends money, recommends us to others and remains loyal – once attracted ensures steady profit. The Polish consumer is sensitive to price, looks for good deals, doesn’t like to be overcharged, thinks critically, is suspicious and treats the Internet as a reliable source of knowledge. Thus, as such a customer needs to be attracted all the time, he becomes an expensive kind of customer for the retailer – explained Marcin Walaszyk, Managing Director of Freebee Agency. This state of affairs is the outcome of the market players past actions. – We sent our customers the message that they’ll always be able to find a lower, promotional price somewhere else. There’s a proverb that says: “Once lowered, forever accustomed”. It means that attempts of returning to the price from before the promotion are perceived as increasing the product’s price. What is more, data presented during the congress shows that even 25% of promotional activities do not yield the expected results. Still, there is no running away from them as the competitors have them and this is what the consumers expect.

The situation can be improved through sales of impulsively bought products, usually sold with higher margins and rarely subject to promotions. What is more – the price is of little importance when it comes to typically impulsive categories such as sweet or salty snacks. Chocolate, for example, is on the ninth  position in the shopping decision-making tree, as it is a product identified with pleasure, which in turn makes the customers more willing to pay more for the product. The methods for increasing sales of this kind of products were presented to us by Piotr Kaznowski, Customer Marketing Director of Mars Poland. – The impulse products’ kingdom lies in the checkout area. The customer waits a minute on average before he reaches the checkout, so his choices in this area are quick. This is why putting out various exhibitions at different checkouts is a mistake – nobody will change their line to buy something on an impulse. Consequently, the bulk of checkout assortment should be the same at all stands – emphasised Piotr Kaznowski.

Facilitating the customers’ search for a product is another important aspect of contemporary sales. According to research 7% of people who are unable to find what they are looking for in a store do not buy it at all and 9% go to a different shop. It can be prevented i.a. by using modern technological solutions facilitating finding the required products e.g. the Indoor Position system. It is a system of localisation and communication with the client offered by Philips Lighting. Tomasz Waszkiewicz, Retail Director CEE at Philips Lighting told us more about the system’s functioning. – Today we’re dealing with the convenience shopping and smart shopping trends, and providing real-time information fits in very well in both of them. This is why we need to invest in technologies that will help us reach the Millennial generation today – emphasised the representative of Philips Lighting. The Indoor Positioning system is a very precise method of locating products in a store – it allows to pinpoint the product’s position with 30 cm accuracy. By modulating the lighting it sends out a unique code received by the smartphone through its camera and shows us where the product is. Additionally, the system displays the shortest route to the product we’re looking for. Moreover, information about promotions – both general and adjusted to the needs of a particular customer – can be displayed on a smartphone using this system.

 

Build loyalty and do not drown in the stream of data

In an era when the customer is less and less loyal to the retailer, the ability to create an appropriate loyalty programme that could become an important element of supporting sales and building relations with the client gains additional importance. This topic was brought to our attention by Dawid Ledziński, New Business Director of Payback Poland. – A good loyalty programme should allow us to enter into dialogue with the consumer – emphasised Dawid Ledziński. The elements of loyalty building mentioned by the representative of Payback Poland included: gratification, personalisation, surprise and added value. It is important to chose the right method and use it well, without making painful mistakes. – There are many methods of reaching the customer – they include in-store interaction, social media, “post buy” e-mails, newsletters and mobile applications. The customers themselves list receiving information about offers they are not and were not interested in among the mistakes that evoke negative emotions. Positive emotions, in turn, are triggered e.g. when the retailer remembers about the consumer’s birthday – explained Dawid Ledziński. Loyalty programmes are also worth developing among business partners. – They can result in increasing the sales volume as well as the sales and distribution margins, reaching quality goals and acquiring new customers – noted the representative of Payback Poland.

Loyalty cannot be built without data, of course. However, the biggest challenge in this area today is not data acquisition itself, but rather its analysis, and more particularly inferring appropriate information. Retailers representing dunhumby – Michalina Truszkiewicz, Senior Client Director and Adam Longhorn, Customer Understanding explained to us how to function in order not to let Big Data turn into Big Lies. – We enable comparing customers’ declarations with their actual behaviours and combining this kind of data with loyalty cards offers huge possibilities – stressed Adam Longhorn. Support like this is becoming more and more worth considering, as the amount of data at our disposal continues to grow. – In order to be able to make the right business decisions we have to choose a few particular ones and study them from the right perspective. An appropriate analysis can help us get higher margins and sales – said Michalina Truszkiewicz. The importance of data for the retail sector was emphasised also by Matthew Jipps, Member of the Management Board and Strategy and Insight Director of Kompania Piwowarska. Everybody’s got data nowadays. What is really important is to be able to use it in an appropriate way, especially on the Polish market. Poles belong to the most clever groups of consumers – they are not only looking for the best price, but rather for its combination with good quality. This is why at Kompania Piwowarska we devote a lot of time to price and promotion analyses, checking how large the discount should be in order for us to maximise profit, etc.

Benefits stemming from data are also the object of interest of a retailer operating on the Croatian market – Konzum – who entered into cooperation with Sigmia to utilise their potential. The details of this cooperation were discussed by Adrian Alajkovic, Inventory Management and Planning Director at Konzum and Argiris Mokios, PhD, Supply Chain Solutions Director representing Sigmia. – Konzum has a really diverse store chain. There are no two identical branches. We wanted to improve the data collecting process to better adjust to our customers. It becomes even more important once we realise that the Croatian market does not belong to the easy ones – the competition is intense and if we want to be able to compete with operators such as Lidl or SPAR successfully, we have to be effective. We needed a strong partner – not only in terms of technology but also in terms of business. This is why we began cooperating with Sigmia – explained Adrian Alajkovic. Implementing data analysis systems is not easy. We have to make sure that the software is going to fit our particular business, adjust an existing system to our needs or create an entirely new one – emphasised dr Argiris Mokios. Still, the effects of cooperation between Konzum and Sigmia show that this challenge is worth facing. As the representative of Konzum stressed, data analysis makes the information flow more effective and shortens the time of reaction at the same time allowing the chain to predict the demand.

Big Data is only one of the elements translating into business results attained in retail sales. Empathy turns out to be no less important. The importance of this factor and the ways in which it can take us from full understanding, through better communication to bigger sales were discussed in the presentation delivered by Nikolaos Dimitriadis, PhD from The University of Sheffield International Faculty in City College. The human brain is equipped with a function allowing the human to guess – of course not without error – emotions and intentions. It also pertains to people walking into a shop. The brain quickly decides whether the others we meet are friends or foes. Making the decision whether a product is good for the consumer or not takes place equally fast. Emotions are distributed over two perpendicular axes: “warmth” and “competence”, and each of these elements may be experienced as weak or strong. It is best when both of them are perceived by the consumer as strong – in this case the brand and the company behind it are perceived as competent and simultaneously create positive emotions. It is worst when both of the elements are located in low areas – a company is then associated with a cold attitude focused exclusively on sales. – It is extremely important to answer the question where your company is, when seen from this perspective – said Nikolaos Dimitriadis. He went on to explain that empathy is not about smiling to the customer, but about being responsive. It brings tangible benefits – empathic companies generate 55% time more turnover than those which are lacking in this aspect.

From private label to private brand

The biggest countrywide congress of retail could not have passed without discussing the question of own brands, that recently went through a major evolution. Joao Ramos, expert and former Product Range Director of Jeronimo Martins Poland reminded us how significant the change was. Once the price used to be the main attribute of an own brand. It is changing and the price differences between own and standard brands are getting smaller. – These days an own brand is a true brand that additionally allows to build chain loyalty, as the customer knows that the given brand is available only at a particular chain – said Joao Ramos. The current strength of own brands is proven by numbers – in Great Britain, within a week, Tesco has introduced 76 products in seven different own brands. Additional advantage is bound to result from combining an own brand with personal publicity – Jamie Oliver, who is associated with fighting unhealthy eating habits serves as a great example here. His picture on the package is a guarantee of success as Jamie Oliver is more than just a celebrity, he represents a certain kind of philosophy. Another example of an own brand’s exceptional career is to be found in Piotr i Paweł which introduced the Plus brand as a response the trend of searching for functional foods that the customers used to buy in specialist shops. – This brand consists of lactose-free and gluten-free products, among others. Initially some of the people monitoring the market criticised our decision. Meanwhile, own brands generate as much as 8% of our turnover – noted Maciej Stoiński, Vice President of the Management Board and Managing Director of Piotr i Paweł. All the changes on the own brand market make using the name “private label” less frequent than “private brand”. The word “brand” is no coincidence here – it is associated with a higher value than “label”.

Supply chain without weak links

Retail sales could not be successful without an optimised supply chain. Arkadiusz Glinka, Director Eastern Europe at  C.H. Robinson told us about savings that can be found in this area. – Supply chain optimisation covers numerous aspects today, e.g. transport and warehousing. We’ve marked out eight paths of finding savings in supply chain and divided them into three packages. The first one – basic – includes three elements of optimisation: loading method benchmarking, loading benchmarking and the assessment of imperfections – explained the representative of C.H. Robinson. This package allows to find up to 10% savings. The second package also consists of three elements: putting together various cost groups, grouping smaller shippings (a few groups within one shipment) and multi-stop loading with static or dynamic optimisation. The complex package includes two additional elements: one allowing to reduce empty runs and network modeling which includes a very detailed analysis of costs of transport, warehousing and production – explained Arkadiusz Glinka. This method may seem a bit complicated and the data collecting process takes from three to five months but savings thus acquired can amount up to 20-30%.

Referring to supply chain, Ilker Yagci, Supply Chain Excellence & CI Director, Asia from Carlsberg presented the rules for acting in accordance with LEAN, emphasising that in all probability they are the best way to optimise the supply chain. – LEAN is a necessity these days. Still, it’s not enough on its own. There are other elements that influence effectiveness, such as project adjustment, responsibility, and of course taking action. Adjusting means that we should design with a particular purpose in mind and stick to that goal in our daily activities. We also have to remember that if we won’t listen to our coworkers we will never be able to create a doable project. Let’s not be afraid of technology and changes. Let’s measure our actions, above all efficiency and effectiveness, but remember that we’re doing this in order to reach a particular goal, not just to acquire the results – Ilker Yagci said. He went on to stress that even though a good project is necessary to create improvements in supply chain, the key factor is its appropriate implementation and keeping the overarching goal in mind at all times.

Another important element of optimising supply chain is the improvement of delivery punctuality and completeness. Grzegorz Olędzki, Head of Logistic Negotiations at Castorama Poland told us how to do it effectively. – In order to be able to sell goods effectively we need to receive them in an equally efficient manner. This is why we measure punctuality and completeness of orders. On shelf product availability is really important for us – he stressed. Among the elements influencing OSA the representative of Castorama Poland listed the correctness of ordering data and the information exchange involved, appropriate IT solutions, ensuring the stock is available in the warehouse, effective delivery methods (Castorama uses three delivery methods – direct, from the central warehouse – reserved for products imported from abroad – and cross-dock deliveries) as well as the previously mentioned punctuality and completeness of orders. Indicators accepted by the chain are 97% with regard to completeness and 95% with regard to punctuality. – Actions that we undertake together with the supplier to attain the expected results are i.a. joint data analyses, configuring procurement units, creating a delivery plan and ensuring a smooth flow of goods – summed up Grzegorz Olędzki.

Next year we will be celebrating the 10th, jubilee edition of Poland & CEE Retail Summit. It seems that there will be even more captivating topics for us to discuss then, as we can accept as a fact that the dynamics of retail evolution will not subside anytime soon.

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