Taking the long view Forcing the pace of change in Poland, where a daily shop at the corner store is the norm, is not as easy as the global giants first thought. Hélène Aubrée reports Polish people still remember what shopping used to be like in the 1980s ­ waiting your turn in a long queue before you even got into a shop, which only then offered a very limited range. The numbers of trolleys were limited deliberately and it was only possible to get to the checkouts if you had this precious trolley. Today, 94% of Polish people still do a daily shop at one of the 120,000 corner shops or small supermarkets, and you might think that these long-held shopping habits would put off the world's leading retailers from the country. But there has been a massive influx of foreign companies sparking a revolution in the Polish retail sector and the country has become a global battleground. Ten years after its transition to a market economy, big supermarkets, which are nearly all financed by foreign capital, are now an integral part of Poland's landscape and the number of small shops is starting to decline as the lure of big, shiny new hypermarkets takes hold. Ninety nine per cent of Poles shopped daily in 1995, but it is estimated that only 86% will bother to do a daily shop in three years' time. And in the regions where the foreign supermarkets have a stronger presence, the percentage is even lower. Companies from Germany, France, Portugal, the UK and the Netherlands have all stuck their collective toes into the Polish water, with expansion accelerating in recent years. Most chains are announcing more stores, confident of the local community's desire to shop in bigger, glossier stores, with that all important offer ­ choice. Today, Poland has nearly 120 modern hypermarkets and the designs are growing more sophisticated. A few years ago, most resembled aircraft hangers, but they have now evolved into their occidental counterparts and feature shopping centres, giant car parks and even multiplex cinemas. Foreign investment in this sector amounts to billions of euros and the western companies involved have announced plans to fork out even more. All are hell-bent on developing the market even though it might not be as easy as first thought; earlier this month, Tesco announced that it "recognised the consumer squeeze on disposable incomes and had adjusted our operating plans to reflect this". Deputy chairman David Reid said Poland was the only grey spot where "breaking even is a good result at this early stage". However the chain still plans to open five more hypermarkets in Poland this year. The German giant Metro has already paid out more than 680m euros for the launch of various stores, including Real (23 hypermarkets), Macro (18 cash and carries), as well as Roller and Tip Discount. The group also manages a network of DIY and household appliance shops but admits it has not yet seen the cash rolling in. One of the directors, Hans Joachim Körber, says: "We have invested a lot in building new Polish stores, but we'll have to wait another year or two before we start making a profit." Metro plans to open 30 new stores between now and 2002 because it is confident of the gains to be made. It emphasises the benefits to local people and firms: each new store recruits between 400 and 1,400 local workers, while nearly 90% of the products it sells are manufactured locally, and it has signed contracts with more than 3,000 suppliers. The French supermarket chains have started to increase their investment to the level of other foreign companies. The country recently became the top foreign investor in Poland, investing an accumulated 11.3bn euros, a quarter of which is in the retailing sector. Its retailers are determined to win the race in Poland, especially in the fresh food sector, where consumers spend almost 40% of their budget. Casino and Carrefour are the third and fourth largest French investors (investing 630m euros and 415m euros respectively). Casino opened its first hypermarket in 1996 and now has three in Varsovie and nine in the suburbs. Casino intends to double the number of stores between now and 2005, and the group is expected to invest another 622 million euros in the process. Among its projects, Casino hopes to open (independently or under a franchise with local partners) 200 Leader Price supermarkets of 1,200 sq m; Casino sells 800 Leader Price products in its hypermarkets. Other planned investments include a distribution centre near Lodz, and the development of the Géant and Leader Price central distribution system. Casino's turnover in Poland reached 420,55m euros last year, which reflects a growth rate of 6.2% compared with the previous year. Carrefour owns eight hypermarkets and about 15 Champion supermarkets. Guy Yraet, md of Carrefour Polska, declares: "We hope to open at least two hypermarkets and 10 supermarkets next year." Carrefour is expected to invest 430m euros in the country up until 2002, which will be financed by Carrefour Polska's own funds. It has also bought 28 Belgium Globi (GB) supermarkets. Carrefour is also likely to launch its own fast food outlet called Le Rendez-vous in all the European and Eastern countries where the company has a presence. Auchan has six hypermarkets in Poland and is aware it needs to catch up with its competitors. Auchan aims to have between 30 and 40 hypermarkets in Poland by 2007/2008, which will mean an initial investment of 147m euros during 2001. It has set itself a target of opening four to five hypermarkets each year at a cost of about 26m euros each. It also wants to set up supermarkets under the Atac fascia. The French independents are also eager to test the Polish market; Leclerc already has 10 hypermarkets and 40 Intermarché supermarkets in Poland. Last year Tesco invested about $500m in Poland by opening six hypermarkets. The chain now has a network of 10 hypermarkets and has bought the Savia group, which has a network of small supermarkets. After a few months of distrust, Polish suppliers now consider Tesco a strong partner, and the company employs more than 5,000 people in the country. Tesco had a turnover of 450m euros in 2000, and is sure to make even more this year by continuing to invest. The group wants to have 30 hypermarkets by 2002, and plans to invest $27m in each one. Its biggest hypermarket is in Cracovie, which is 12,000 sq m, and it recently launched a hypermarket in Tychy (Silesia). Tesco also wants to develop a network of convenience stores and hopes to introduce its successful home shopping service when 20%-25% of the population are online. Other foreign companies in the investment frenzy include Ahold (which in 1999 had a turnover of 271m euros in Poland), Rewe (432m euros) and Portugal's Jeronimo Martins (808m euros). As a result of the frantic foreign investment, and with hypermarkets offering a 10%-12% price saving, smaller Polish companies feel left out, and many are complaining to the government. The shiny hypermarkets make many local retailers and the smaller supermarkets look shabby in comparison. They need money to modernise their outlets and they need to attract loans. With the help of the Polish church, local businesses are trying to press the authorities to prevent the growth of foreign brands with legal and financial restrictions. In July, the government ruled that any new store bigger than 1,000 sq m in a community of more than 10,000, must have permission from the municipal council. However, this does not seem to have had much effect on the foreign retailers which have not been prevented from building any stores. The government is also considering a ban on loss-leaders to reduce "unfriendly" competition. In response, the foreign retailers have set up the Association for Polish Retail and Distribution Business in a bid to ensure good relations with the media and Polish authorities. In general, they consider that the benefits from the Polish market far outweigh the obstacles, for example 40% of the Polish population is under 26 ­ the age group which is particularly receptive to improved consumer standards. The IGD says that there is the potential for at least 100 more hypermarkets and hundreds of supermarkets before the market is saturated, and that there will be about 200 hypermarkets by 2005. It is in this context that the foreign companies are ploughing ahead with plans for many more supermarkets in traditional, medium-sized towns, intent on persuading the Poles to swap their daily visits to the local store for a one-stop hypermarket shop. {{DISPATCHES }}