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Small stores decline trend must be stopped



Warsaw, 23rd January 2020

 

The Union of Entrepreneurs and Employers:
One has to stop the trend of small stores in decline

 

Sales in small stores are consistently falling. As a result, their number decreases. Expert reports indicate that this negative phenomenon is exacerbated by the Act on Sunday trade restrictions. In spite of appeals from employers’ organizations, the legislature does not plan any attempts to liberalise the trade ban. We should undertake all actions that can stop the liquidation of small Polish stores – calls the Union of Entrepreneurs and Employers. As one of the solutions, the Union offers large-scale implementation of technological innovations in small trade.

Trade in Poland increases annual. The driving force of this phenomenon is growing consumption, which is the main component in the growth structure of the Polish gross domestic product. Despite this favourable environment, small stores are further being closed down. There is a consistent decline in sales in the traditional segment (unorganised, individual stores located primarily in small towns and in rural areas) at the level of about 7.7% annually. Expert opinions point to the impact of the Act on Sunday trade restrictions as the driver deepening the negative trend of a decline in the role of traditional trade – notes the Union of Entrepreneurs and Employers in a newly published report “Prospects for improving competitiveness on the retail market in Poland”.

“The law that was supposed to help small stores has the exact opposite effect. It is observed that 49% of small traders run two or more stores. Therefore, the regulations affect them directly,” says Piotr Palutkiewicz representing the Union of Entrepreneurs and Employers. “The share of discount stores actively running marketing policies is changing the purchasing behaviour of the Polish people. Furthermore, large networks, taking advantage of economies of scale, have a strong negotiating position vis-à-vis producers and manufacturers and are able to quickly reach consumers with special offers. Big producers, in turn, do not spend time negotiating and executing bargains with small partners,” he adds.

The Union remarks in the report that the number of small grocery stores is steadily decreasing, while the so-called ‘small format’ has hitherto remained the main strength of the Polish FMCG market, which is a rarity on a European scale. As a consequence, the Union of Entrepreneurs and Employers recommends taking measures to stop further closing down the small stores. To achieve this goal, the Union pointed to the significance of implementing technological innovations aimed at meeting consumers’ expectations.

“This negative trend must be stopped at all cost. Poles still want to do their shopping in local stores. If these shops want to survive, they must adopt the practices used, for instance, by convenience stores. In this respect, the M/Platform created by the Polish company Comp Centrum Innowacji seems to be an interesting initiative. Already 9,000 small stores belong to this network. The tool provided by the company enables organising and managing offers and competitive price competition. This is a great opportunity for small Polish trade,” claims Cezary Kaźmierczak, President of the Union of Entrepreneurs and Employers. The Union’s leader adds: “The use of technology must be combined with the modernisation of activities similar to convenience store practices. Thanks to these two elements put together, many small Polish stores might have the chance to survive and be profitable.”

The Union estimates that the use of the M/platform tool may contribute to a change in the structure and nature of Polish trade. The case study cited in the report shows that a small store, deciding to use the platform, receives a fiscal module combined with sales management software. Owing to this, the store has at its disposal software recording sales as well as data regarding, among others, historical sales, payment settlements, product indexation, or analytical reports that allow its users to track trends in customer purchases. As part of the application, they receive promotional offers directly from producers.

By using the tool, the customer receives a product at a lower price, a small store offers bargains previously unavailable, while maintaining a margin on the goods sold. The manufacturer or producer increase sales.

“It is a solution providing retail stores with access to promotions offered directly by FMCG manufacturers. As a consequence, small stores are able to compete in terms of price with large stores, discount stores, and large retail chains,” adds Piotr Palutkiewicz.

“We must put a stop to the trend of small stores closing down by all means necessary. If the Government does not want to help them by liberalising the Sunday trade ban act, shopkeepers have to take matters into their own hands again and implement all tools available to them that can be helpful in competing with large entities. At the same time, the Union will not give up on its activities aimed at amending to the trade ban act,” concludes Cezary Kaźmierczak.

 

23.01.2020 Report by the Union of Entrepreneurs and Employers: Prospects for improving competitiveness on the retail market in Poland

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