Sławomir Nitek, CEO of Action Polska: According to our observations, yes. The first pilot Action stores began operating in Poland four years ago, with the full presentation taking place in 2018. So far, such a concept, which offers 14 product categories under one roof, has never been seen in Poland. Customers appreciate the offer of our stores. This encourages us to expand our reach and open stores where we have not been there before.
It is difficult to define it unequivocally. We have very different customers, it depends, among others, on everyone living in the area. In large cities, Action stores are visited by many people: young and old, those with fewer opportunities and those with larger wallets, for whom low prices are equally important. The customer also depends on the individual product categories. Creative items are especially popular among young people, men buy DIY products and tools, and women buy home care products. As we have 14 product categories, the range of our customers is very wide.
The popularity of the activity is growing for several reasons. Discount market in Poland It has been on the rise for several years, and all forecasts are that it will continue. This is a result of customers changing their shopping habits, preferring to spend less time shopping in smaller sales areas. Discounts make this possible, especially in Action stores, which offer a wide range of products in 800-900 sq. M. Another factor is the crisis caused by high inflation. This is a good time for discounts, as customers are increasingly considering the price level when making a purchase decision.
According to the Polish Central Statistics Office (GUS), consumer inflation in December was 8.6 percent. Manufacturers are raising the price of products, energy and transport prices are rising. Has there been any price increase in Action in the new year?
We try to keep the lowest prices on the market. This is very important in our strategy. Of course, we are not separated from negative factors such as rising transport costs and rising energy costs. However, we have a relatively high level of flexibility in this matter, as purchases in our company are made for two thousand stores across Europe. Such a large scale of purchases allows us to neutralize the negative impact of inflation on the prices of our products.
Biedronka, Lidl and Kaufland report annual increases in store employees’ salaries. Are operating salaries similar to those in grocery stores, and have there been any recent increases?
Action store employees receive regular increases each year. From 2022, their salaries will increase by 300 PLN. We try to keep the salary level in our stores at the market level.
What products have become popular in connection with the pandemic? I mean a more stable trend than a temporary increase in interest.
We see some changes in consumer behavior. Because there was an increase in the basket during the pandemic Due to the threat of a pandemic, customers have reduced the number of visits to stores and once again made a bigger purchase. As for products, we have observed periodic changes. In 2020, during the period of full quarantine, interest in sports products for training at home increased. Interest in construction and repair articles, creative hobby articles and toys for children has also increased. After being able to go on vacation again, the demand for tourist and picnic products re-emerged.
What is the average shopping cart in Action?
This is enough strategic information, I can’t talk about it.
The pandemic has also boosted the popularity of e-commerce. Are you planning to start selling online?
We approach this issue carefully. We do not currently plan to launch e-commerce services. The strategic decision is that we will be based on brick shops. However, it should be noted that during the pandemic, we tested click and ball solutions in the Netherlands. This was only temporary at a time when Action stores were limited in those countries.
Is the fixed offer so attractive that there is no basis for the development of e-commerce? What is the main reason for not entering e-commerce?
By observing the behavior of our customers and the essence of the products we offer, we see that they like to come to the store and look at the products. Often a visit to the store inspires them to do some shopping, they always find something new in the Action. They like to touch, look at and inspect products. The Internet does not provide such opportunities. You can only show the product beautifully in the photo.
Action stores can be found in residential areas, shopping malls and retail parks. What depends on where you open new branches?
We analyze the potential of each place by analyzing several factors. The first is the availability of our store. The next is the number of parking spaces, the appearance of the store and the collection of water in the area, ie how many residents can potentially shop in our store. Different places work well for us. There are many well-developed independent stores located in the neighborhood. In the galleries, we perfectly complement the mix of tenants. The shops in the retail parks work very well in medium and large cities where we have completed our offer perfectly.
For example, stores like Action seem to be very attractive tenants for malls where some fashion stores have disappeared. Is that so?
Of course. We observe this Along with our development, we are becoming an increasingly desirable partner for homeowners. This is due to the growing scale and recognition of the Activity. The experience of the last four years shows that wherever we appear, we create additional traffic for the gallery or retail park. Their owners see the activity as a value.
At the same time, the German Teddy chain is developing in Poland. Is he your main rival or someone else?
I don’t want to look too arrogant, but we follow the market and we consider the Concept of Action unique. There is no similarity in the Polish market. Our concept is based on offering the lowest prices for quality products. But if we look at different product categories, of course, there are stores that can compete with us in these areas.
In 2020, Action’s total sales in Europe amounted to 5.6 billion PLN. What were the results in Poland?
Last year, our sales amounted to 634 million PLN. As for 2021, we have not closed the year yet. However, we expect a significant increase in sales in 2021 due to the opening of 74 new stores.
How many stores do you plan to have in Poland by the end of this year?
We have ambitious plans, we want to continue the dynamic development in Poland. However, it is difficult to give a specific figure, because we are still in a pandemic, and much depends on its development. We all hope that the situation will return to normal.
How many stores of this type are there in Poland?
I think there is still a lot of potential in the development of retail parks, which will increase in the next two to three years, especially in medium-sized cities. You can set up our stores there. The concept of operation is relatively new in the market and is well received by customers. There are definitely a lot of places for such stores in Poland.
The second distribution center in Poland on Wednesday, located in the city of Bierun in the province of Silesia. Will it be different from the center opened in Osla in 2019?
As for the area, it is similar, because it will be 56,000 square meters. sq m and has the same number of shops as the warehouse in Osla. The differences are due to technological solutions. In the new center On a larger scale, we have applied all kinds of environmental solutions to optimize heat, lighting and energy consumption. Among others, we also have solar panels. The distribution center has just passed the certification in the BREEAM system at the level of “Excellent” and received the highest score among Polish facilities in this category, ie 77.1 percent. It is also the first Distribution Center of Operations operated by our employees outside the Netherlands, unlike the Osla headquarters, which is run by a foreign company.
Will the new center serve only Polish stores, or will it also serve Czech stores depending on its location?
The center will provide stores in Poland. However, the Action looks at the supply chain from a pan-European perspective. For this reason, the center in Osla also supports stores in Germany and the Czech Republic.
You sell products from different companies, some of which are offered under your own brand. Are they mainly produced in Europe or Asia? What are the ratios?
Most of it is produced in Asia, and most of it is obtained from European markets using cooperation with our trading partners.
Do you also work with Polish companies?
Yes. For example, last year we started cooperating with Huta Szkła Krosno, whose products appear in our stores. This year we want to further develop cooperation with Polish suppliers. As our business grows, so does our purchasing power in Poland.
You said that Polish consumers want to touch the goods. However, e-commerce is growing strongly. Will there be fewer and fewer brick shops, and will they be able to close in the future?
I do not believe in the decline of traditional trade. I think that brick shops will continue to develop, and, of course, e-commerce will develop in parallel. At the beginning of the pandemic, we saw a very dynamic growth of online sales in Poland, which accounted for 40-60%. After a while, the dynamics is still high, but has dropped to 15-20 percent. Customers want the convenience of online shopping, but will not give up visiting stationary stores.