“Value defines the very essence of Biedronka”

HOW DOES BIEDRONKA DEFINES THE VALUE PROPOSITION OFFERED TO ITS CUSTOMERS?

Value defines the very essence of Biedronka, as the company is structured around the discount format, which means promising our customers value in every transaction. Every day. This is due to the format itself, but also the way the brand identity was crafted and designed; price is the first element of the value created. All customers know, trust and are reassured that the brand, through its stores, offers “Low prices every day”.

For Biedronka, the basic expression of value creation lies in its ability to offer the lowest prices in the market. However, from the very beginning, in the early steps towards defining our positioning, we knew that price alone would not be enough. It was important to decide exactly which product prices would be the lowest, and it is here that we come to the second most important element or dimension of our value equation. In our core assortment, we have the lowest prices in a specific range of products, which is a big source of value creation. Firstly, it is aligned with the fundamental needs of regular customers in Poland, addressing their specific habits and cultural traditions. Secondly, it allows a level of operational efficiency that enables cost leadership and, therefore, the lowest prices.

Additionally, the assortment was crafted not only in terms of size, breadth and depth but also, or perhaps mainly, composition. Indeed the core assortment at Biedronka is made up of a portfolio of private brand products developed internally and produced by a network of predominantly local suppliers with high-quality standards. Although the assortment is a combination of well-known brands of fast-moving consumer goods (FMCG) and our private brands, these latter represent – in many categories – the highest share and are among the most beloved brands in Poland.

A continuous process of innovation is in place to ensure that both customer interest and their changing needs and preferences are addressed and, whenever possible, anticipated. Finally, it is also important to say that we have created a powerful combination of a permanent assortment – our firm commitment to the consumer as these products are always available – and a continuous flux of in-out campaigns that allows customers to buy other products only temporarily available and usually coming from smaller market segments, but where the price offered is always the average regular market price.

Therefore, when buying these products, customers know there are implicit savings, making it a good deal. A third dimension of value creation, also connected with the assortment and which deserves to be individualised due to its relevance, is the range of fresh products our stores offer every day. Understanding the behaviour of customers, positively biased towards fresh, clean label products in a market where the penetration of frozen food was always lower than in comparable markets, Biedronka offers a wide range of fresh produce, from fruit and vegetables and fresh milk to fresh meat and different species of fish, all of which arrive at the store every day.

Bread is also a daily product and freshly baked, either by our teams in each store or by daily deliveries from a network of local bakers we cooperate with. This offer is also a significant source of value because Poles typically shop more than once a week, another distinctive feature of the behaviour of Polish customers, and they prefer to shop near the place where they live and to buy small amounts of food each time to avoid food waste.

Value is, after all, a combination of these four core dimensions: proximity, a quality assortment, a range of fresh produce and lowest prices.

Last but not least, and in line with this behaviour, Biedronka creates value by being closer to its customers, through the largest network of stores in the country. The result of 25 years of expansion, Biedronka was not only the first supermarket to arrive in many cities, towns and villages, but it is, to this day, the brand with the best and most convenient location for customers. I left this dimension until the end, although in Poland, like in many other countries, it is the first factor of choice when customers decide which store to shop in.

Over time, some stores become too small or the expansion of cities with new roads and relocation of people makes replacements and extensions necessary in order to provide the right shopping experience to customers. That is exactly what Biedronka does, relentlessly, to ensure the closest proximity to customers, always. Value is, after all, a combination of these four core dimensions: proximity, a quality assortment, a range of fresh produce and lowest prices, well blended to match customer behaviour and expectations, and delivered in a store where the service is consistent with the brand’s positioning and value proposition, while ensuring the necessary efficiency, without which the value created for customers would not be possible.

IN THE CURRENT CONTEXT OF HIGH FOOD INFLATION, HOW IS BIEDRONKA WORKING TO MITIGATE THE ADVERSE EFFECT OF PRICE INCREASES ON CONSUMERS’ WALLETS?

I should start by saying that, after 27 years working in this industry, I never thought I would run or manage a company at a time of double-digit inflation. Most of our generation has managed businesses to create value for customers, and that always meant lowering prices and raising the competitiveness level to ensure the democratisation of access to all products. This has always been and still is our vision. In a certain way, it was the primary impulse behind retailers’ private brand development. Retailers knew that, in certain products, the price of some FMCG industry brands was just too high to allow mass consumer access.

Later, as we did in Biedronka, private brand products gave way to a fully developed range of private brand products, intrinsically disconnected from the FMCG assortment. Our private brand development made it possible for a higher number of people to buy certain products and categories. At the same time, there was a revolution in the FMCG industry, as the big A-brands, international or local, realised they had to compete with these challenging own brands to keep their share of the market. They also started to transfer more value to consumers, and the final outcome of this market dynamic is three decades of low inflation. In times of harder economic challenges, we even saw deflation.

It is important to say that the vision was not to commoditise, as in fact important categories and segments were developed. We can define this as value in premiumisation. Retailers led the transformation and evolution and, among retailers, the market leaders took the biggest responsibility. Exactly the same responsibility that companies like Biedronka now have. We define that responsibility in two fundamental ways: customers expect Biedronka to ALWAYS increase prices less than the market, and we live up to that expectation.

Even if it is absolutely impossible to avoid inflation under the current market conditions, the assumption that prices in our stores will increase less and at a slower pace is still valid. Time always matters, and it matters a lot here, and time is what leads to the second dimension of our responsibility. It is expected that the market leader, even if can’t stop inflation on its own, will create the conditions to ensure that prices increase as little and as late as possible. Biedronka has been doing this, negotiating as much as it can and delaying the price increase in the market as much as possible, many times even with unfavourable consequences at the availability level.

Emotional and rational dimensions are intertwined to reinforce customer awareness of the significant amount of value created and transferred to them every week by Biedronka.

Being the market leader means that others will follow our pricing strategy (as they cannot afford to lead it or lose competitiveness). The market moves as Biedronka moves and inflation is lower and slower than it would be without our determination to create value. This determination is also behind the other things we are doing to mitigate the impact of inflation on our customers. On the one hand, we have been promoting continuous saving opportunities, allowing customers to buy products at prices closer to the ones they were paying before inflation.

These saving opportunities are not only connected to discounts or bonuses to buy promotions, they are also connected to special savings, economy or family packs, as well as the development of a line of in-out economy products. Here the brands are known in the market, usually “b” or “c” brands, not the market leaders that are always in our assortment, and in general the quality is lower than in our private brand products. Typically, these products have no place in our assortment but in the current market situation there is a market segment where customers will trade a bit of quality for more affordable prices. On the other hand, we have already implemented two important initiatives to mitigate price increases in 2022.

We started in March with a campaign we called “Anti-inflation shield”, freezing the prices – up to June – of a basket of 150 top selling products, and also stating that in the hypothetical case that a customer found a lower price in the market we would return the difference. Already in the third quarter, the time of year when we usually launch our loyalty campaign centred on children, we started a new scheme this year addressing kids and emotional values combined with the overall need to save. The campaign was designed to enable 12 weeks of saving up and was branded “Biedronka Savings”. Every week there is a different saving mechanism, and, on top of special discounts and prices, customers accumulate money in a virtual wallet, which they can only spend on Saturday.

The weekly saving mechanisms are connected with weekly saving missions the three heroes of the kids’ story have to complete. The heroes are “Price”, “Quality” and “Proximity” and they are able to accomplish the week’s saving mission with the help of another hero, “Biedronka”. Another novelty in the loyalty mechanism is related to the process of getting stickers and toys, which this year is fuelled by customers’ capacity to save: “the more you save, the more toys you collect for your children”. Emotional and rational dimensions are intertwined to reinforce customer awareness of the significant amount of value created and transferred to them every week by Biedronka.