As a result of buoyant sales at hypermarkets and discount stores, which surged by 34 and 31 per cent, respectively, the value of the Polish private label market grew by 29 per cent in 2009. This was revealed in a research report by PMR – a British-American company providing market information, advice and services to international businesses.
The report, titled “Private label in Poland 2010”, points out that the robust growth in the private label market was no doubt facilitated by the economic downturn, which forced cash-strapped Polish consumers to look for bargains. “With price remaining the key determining factor, private label products fit in well with this need for more rational spending,” says Patrycja Nalepa, senior retail analyst at PMR.
In response, retailers are expanding their private label offerings by introducing new labels, new products and new categories. They are also optimising product ranges by withdrawing slow-moving items and replacing them with new ones. Furthermore, new retailers are joining the private label bandwagon, most recently Piotr i Pawel (a supermarket chain operating in Poland) and Zabka (a convenience store in Czech Republic).
“More and more retailers are now able to offer their customers private label products at two or more price and quality points. Private labels in Poland are no longer synonymous with the cheapest items in simple packaging. More and more products are positioned in the middle price segment, providing a price-competitive alternative to branded products while offering comparable quality. In most cases such ‘value-for-money’ items are 20-40 percent cheaper than their branded counterparts,” Nalepa explains.
Retail chains that have expanded their private label ranges during the past year include Tesco, Real, Auchan and Intermarche. According to PMR estimates, Tesco was the main engine of private label sales in Poland’s hypermarket sector in 2009. The UK retailer launched 50 new labels covering 1,000 products sold at discount prices last year. The new offering, introduced in response to greater demand for low-priced items during the economic downturn, is designed to enable Tesco to compete more effectively with discounters, particularly Biedronka.
Two other major contributors to the segment growth in 2009 were Real and Auchan, which last year focused mainly on developing their corporate private label brands launched in 2008 – Real Quality and Auchan. Kaufland, which derives a bigger share of its revenues from private labels than any other hypermarket chain in Poland, enjoyed a strong increase in sales in 2009, also helping drive the overall market result.
The strong growth in private label sales in Poland is also being fuelled by a fast-expanding network of discount stores, where private label products account for over 60 per cent of aggregate sales, more than in any other store format. In 2009, a total of 230 new discount stores were opened in the country, up from 178 in 2008.
At the forefront of this expansion is Biedronka, which is adding 100-150 new stores a year. But quite apart from new store-openings, sales growth in this segment is also a result of rising popularity of the format itself, which translates into higher customer traffic at existing stores. Also, discount retailers, with their reputation for low prices, have benefited from the economic downturn, which forced more consumers to seek ways to save money.
“We forecast that the Polish private label market will continue to expand dynamically in 2010 and beyond. Fuelling this expansion will be continued by development of private label ranges across all modern retail formats, as well as by wholesalers supplying traditional retail outlets,” predicts Nalepa.