Logistics in discount trade

In recent years, we have observed a dynamic development of two basic forms of discount trade in our country, i.e., discount stores and cash and carry wholesale warehouses. This development is primarily caused by a low level of consumer demand, while an increasing group of buyers prefers purchasing goods at reduced prices. The recently recorded average annual increase of 150 discount stores testifies to the high dynamics of their development, even outpacing the growth of hypermarkets and supermarkets. The revenues of discount stores and their share in the food market are also increasing at an accelerated pace (from 3.5% in 1997 to 7% in 2002).

Experts emphasize that after the accelerated development of hypermarkets and supermarkets, the era of discount stores is beginning. Discount store chains derive their strength from low prices and effective organization, as well as their potential by utilizing the synergy effect, which leads to an increase in loyal customers.

A significant feature of discount trade, distinguishing it from other forms of trade, is offering buyers a limited but comprehensive product range at a consistently reduced price level and with reduced customer service. The low price level, as the programmatically most important instrument for competing and influencing the market by discount chains, requires actions to rationalize distribution costs. Their reduction in discount stores is achieved not only through customer service reduced to a minimum (using self-service), but above all through efficient logistics and various savings in the course of goods flow and the rotation of their necessary stocks. Therefore, logistics service processes play a significant role in rationalizing costs and lowering price levels in discount chains. In studies by the Institute of Internal Market and Consumption from 2003 on the conditions, organization, and development directions of discount stores in Poland, special attention was paid to the issues of choosing supply sources and the foundations of discount chain logistics as a component of integrated actions within marketing strategies. The studies covered a representative group of general grocery, clothing, and footwear discount store chains.

Before we proceed to report the results of the research, it is purposeful to characterize the Polish market of discounters (discount stores). There are currently six significant discount chains operating in the food market: Biedronka (belonging to the Portuguese group Jeronimo Martins Dystrybucja), Plus Discount (German group Tengelmann), S discount stores (belonging to the “Społem” consumer cooperatives associated in the National Auditing Union of Consumer Cooperatives), Leader Price (Casino DT), Netto, and Lidl. They are characterized by diverse network potential, which is shown in Fig. 1. Although the market for general grocery discounters is already clearly shaped, it is subject to further dynamic changes. It is predicted that within a few years, the current number of general grocery discount stores belonging to their main operators will double (to 2500). On the other hand, in the non-food market, footwear and clothing discount chains have only just begun to form (Fig. 1). It should be assumed that this form of trade will find new market niches and cover other industries, e.g., furniture, electrical and electronic goods, sports equipment, books and toys, etc., as demand diversifies and consumer interest in it grows.