Hard discounter Mere enters Poland

Maxime Delacour
Senior Retail Analyst
@RetailAnalysis

Date : 29 July 2020

Another market entry for the hard discounter Mere, part of Svetofor owned by Russian retail group Torgservis. The new store opened in the city of Czestochowa in Poland on July 25.

Fourth European market entry

Svetofor currently operates more than 1,500 stores across Russia, Kazakhstan, Belarus and China. In Europe it opened its first stores under the banner Mere in Romania in 2018, then entered Germany in 2019 and Lithuania in June 2020. Poland marks its fourth market entry in Europe.

In Russia, this is one of the fastest growing retailers. In 2019, it opened around 500 stores. This fast expansion led market leaders X5 and Magnit to launch their own new discount banners in response.

The Mere concept is based on very low prices (20% cheaper on average) and a limited assortment of grocery products (no fresh food). These products are usually sold directly on palettes in a warehouse-like store.

Source: Mere

 

Can Mere succeed in Poland?

Discount is the largest channel in Poland, accounting for 41% of modern grocery retail. The channel is led by Biedronka and Lidl, that are also the two largest grocery retailers in the country.

The two other discounters, Netto and Aldi are much smaller but have strong expansion plans. Netto is looking to complete the acquisition of Tesco Poland by the end of 2020. This will help it reach a store network the size closer to Lidl’s of over 700. Aldi, the smallest of the discounters recently announced its plans to triple its number of stores by 2022 to reach nearly 300.

Several challenges Mere could face in Poland:

  • Strong and competitive channel: the channel is growing and is becoming increasingly saturated due to its expansion pace. The current operators are expected to accelerate their developments in terms of prices (focus on low prices), assortment (catering for the main shop) and services (ecommerce and click and collect) to better serve shoppers and align with their latest expectations
  • No brand recognition: the discounter and its products have a non-existent brand recognition in the country. Mere does not invest in Marketing making the increase of the brand awareness even more difficult

In addition, Mere seems to struggle to expand its network of stores rapidly to reach a critical size in the other markets where it entered. Looking at the challenges it will face in Poland, plus the learnings from other markets, we do not expect Mere to become a strong competitor for the established retailers in Poland.

Despite the hard discount model not expected to make a comeback, the discount channel is changing.  Most discounters are moving back to a price-focused communication following years of value-orientated messages. The emphasis on low prices can be seen at a growing number of retailers across Europe and is expected to grow in the coming months.