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Hypermarkets getting smaller but smarter in evolving polish retailing environment.

Discount store openings in Poland are far outpacing those for supermarkets and even hypermarkets, according to the most recent report by PMR Ltd., Krakow--but hypermarkets are the most dynamically developing contemporary distribution channel for groceries.

The major force behind growth in this segment are so-called compact hypermarkets, said PMR, which has published a new report entitled Grocery Retail Poland 2005. It analyzes the market conditions, encompassing hypermarkets, supermarkets, discount stores, traditional neighborhood stores and cash & carry type outlets.

In the modern distribution channel for grocery products, which includes hypermarkets, supermarkets and discount stores, every year has seen intensive growth in the number of stores. According to PMR, 160 discount stores were opened in 2005, which equals growth of almost 13%. The hypermarket segment, however, is developing most dynamically, with growth on the order of 20%.

Despite unpromising forecasts regarding the future of hypermarket development, the number of outlets of this type continues to rise. Store openings last year were only marginally lower than in 2004, when a record number of 41 new hypermarkets went into business.

According to analysts at PMR, 37 hypermarkets were opened in 2005, the majority of which are stores with a significantly smaller sales area. The Polish market is seeing the appearance of more and more compact hypermarkets not exceeding 5,500 square meters, and most with an average 2,000 square meters.

This tendency is the result of the increasing saturation of commercial space of the biggest agglomerations in Poland, and growing interest in medium-size cities with around 100,000 inhabitants. In such cities building large-scale outlets is usually not cost-effective. Building stores with a smaller surface area is less expensive, and, as a result, allows for more dynamic development of the chain.

According to Malgorzata Machnicka, co-author of the report, "From the point of view of hypermarket opera tom, the smaller format meets customer needs in terms of low prices and a location close to where they live." The largest hypermarket operator in Poland, the British Tesco chain, has been investing in compact stores since the end of 2004. Last year the retailer opened eight such stores, of which three have a surface area of 1,000 square meters. The operator plans to add more. Ahold, owner of the Hypernova chain, finalized sale of all its large-scale outlets at the beginning of this year and is focusing on the compact format.

Interest in compact stores is also being shown by E. Leclerc and Kaufland. Recently Germany's Real announced plans to open outlets with an area of 4,000 square meters. The stores of a few operators are evolving not only in terms of surface area but also product assortment, with supermarkets being opened under the hypermarket banner. At present E. Leclerc has five such outlets and Tesco is in the process of taking over nine stores of the Austrian operator Julius Meinl, which has decided to exit the market.
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Title Annotation:FOCUS on RUSSIA
Publication:Quick Frozen Foods International
Date:Jan 1, 2006
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