The purchase of the Tesco business in Poland by the owner of the Netto chain is the largest transaction in trade on the Vistula River since the takeover of Real hypermarkets by Auchan. Its value is PLN 900 million.
The fate of the entire transaction is now in the hands of the antitrust authorities. The European Commission, at the request of the Polish authorities, referred the case to the Office of Competition and Consumer Protection. It is this institution that will decide whether there is a risk of distortion of competition rules in local retail markets for everyday consumer goods. The case is already pending.
Tesco and imperial plans in Poland
Tesco appeared in Poland in 1995. A few years ago, it was the vice-leader of the market (after Biedronka) with a turnover of PLN 11 billion. In 2014, it had 455 stores, and previous plans even mentioned 600. Then, however, the company began to have problems on the home British market and the money for further development ran out.
Some stores in Poland turned out to be unprofitable, and many others needed renovation. Tesco began to close a dozen or so outlets a year and sold them to other entities. In seven years, the number of stores decreased by over 100.
In the financial year 2019/20, Tesco Polska generated revenues (excluding VAT and fuels) of approximately PLN 6.8 billion and an operating loss before special costs of over PLN 119 million. On the other hand, in the same financial year, 301 stores sold in Poland generated sales, excluding VAT and gas stations, of PLN 4.7 billion and recorded a loss before tax of PLN 532 million, including special items (mainly restructuring costs and impairment) .
Why did Tesco lose in Poland?
It is commonly believed that Tesco in Poland was finished by a lost war with discounters – especially with Biedronka, Lidl, and also the domestic Dino. Added to this were the aforementioned problems on the British market. But that’s not all.
Filip Kowalik scored in “Forbes” last year all the reasons why the British network ceased to be attractive to Poles. In addition to the aforementioned lost war with discounters, he also mentioned, among others the very format of the stores, their unattractiveness, waste of space, changes that have occurred in our habits.
He also talks a lot about the condition of Tesco in our country special report by “Forbes” TOP 20 of the largest retail chains in Poland “. In 2018, retail sales increased by 5.95%, despite the introduction of trade-free Sundays. Additionally, some traditional hyper- and supermarket chains recorded a decline in revenues. Tesco’s revenues then fell by 4.9 percent year on year. to the level of PLN 11.13 billion.
As Filip Kowalik notes, It was in 2018 that Tesco realized that its efforts to heal the company were not paying off. Hence the decision to sell the property in Poland. After leaving our country, the British network wants to focus on the rest of Central Europe. Its strong position in the Czech Republic, Hungary and Slovakia is rather unchallenged.
In turn, the owner of Netto Polska, as well as the buyer of Tesco Polska, is Salling Group A / S, which in turn 100 percent. belongs to Salling Foundations from Denmark. The first Netto store in our country was opened in 1995 in Szczecin.
The new model of the network operation in Poland will be Netto 3.0. The store format known from Denmark assumes the use of multiple sales and purchase channels. Added to this is the promotion of local and fresh products.
Read more in the article The end of Tesco in Poland is getting closer. There are layoffs and liquidation of the e-shop