Business British retailer Tesco scales down in Poland

Britain’s biggest supermarket chain Tesco has announced the closure of four hypermarkets and a distribution center in Poland. A ban on Sunday trading and growth of discounters has hit the retailer’s bottom line.

Tesco said it would close four supermarkets in Poland as sales in the Eastern EU member continue to disappoint.

The stores, two in the south (Nowy Sacz and Ruda Slaska) and two in the north (Starogard Gdanski and Olsztyn) and one of Tesco’s three Polish distribution centers, in Poznan, will close this year. The warehouse in Komorniki near Poznan was set up only in 2016, delivering products to almost 120 Tesco outlets in western and northern Poland.

Tesco said last August it planned to shut 13 loss-making stores in the country, putting about 2,200 jobs at risk.

Poland is Tesco’s second biggest overseas market after Thailand by store numbers.

But problems in recent years have forced the company to simplify management structures, reduce store administration and close unprofitable outlets.

For example, the meat, fish and delicatessen departments will no longer be filled with specialists and the manned staff canteens and restaurants will also close.

Martin Behan, managing director of Tesco Poland, said the closures would support profitability. “The liquidation of unprofitable stores is a permanent element of business processes in a trading company,” he said.

“These changes are part of our work to improve the performance of operations in Poland to levels achieved by Tesco in other Central European countries,” Behan added.

In the last year, Tesco has closed 62 stores in Poland as part of reorganization plans aimed at saving 1.5 billion pounds (€1.75 billion, $2 billion) by 2020.

Sunday trading ban

The move is due in part to Poland’s ban on Sunday trading, which has obliged retail networks across Poland to compensate for the lost days of trading.

“We’ve lost a number of trading days again in the quarter and that just requires us to keep constantly improving the efficiency and productivity of that business in what is quite a challenging market,” Dave Lewis, group chief executive, said.

Matt Simister, CEO of Tesco Central Europe, said Tesco was focused on profitability to overcome the ban, including store closures and simplification of store operations.

The Polish government said in February it was reviewing the impact of the Sunday shopping ban, fueling speculation that it might relax the rules in this election year.

Source and full story: https://www.dw.com/en/british-retailer-tesco-scales-down-in-poland/a-48984312

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