Get on your bike

Last week Bronisław Komorowski the incumbent President of Poland facing a second round run off with the opposition “stand in” candidate was harangued by a young man asking him how his graduate sister (presumably with a degree in political studies) was supposed to survive on 2,000 PLN per month from her “non” job and how she was supposed to buy her own flat. Komorowski replied that she should: a) get a better paid job and b) take out a mortgage. This reminded me of the response by Norman Tebbit- Maggie Thatcher’s tame rotweiller advising a young man unable to get a job in a Northen town to “get on his bike” and head south. Well as it turns out years later the people heading to where there are jobs were Poles and other Central Europeans.

Actually the key message is that many people believe that governments can and indeed should create jobs. Well the reality is that they can’t. What they can do is destroy jobs. Only entrepreneurs create jobs. When I look at Poland I find that, apart from multinationals, there are a large number of businesses set up by enterprising young Americans, Spanish, Koreans and Vietnamese amongst others who came to Poland and who run succesfull companies. One example I like to quote is Coffee Heaven set up by a young (then) American – one Michael Ovidenko and a UK company brought to Poland by Tesco to set up in store bakeries. As it turned out Tesco pulled out of the idea and my firm put together Michael who had an idea and the UK company who saw potential. Money was raised on the UK AIM market and the rest is history. Now being destroyed by Costa Coffee but that is as they say another story.

Another success story is Allegro, set up by a Dutch citizen leaving e-bay as an also run.

I could cite many other examples including Solaris buses and Raben logistics. Look at major UK companies such as M&S set up by immigrants. What is the common thread? Probably hunger has a role but I guess mainly it is not being bound by local “received wisdom” and thinking outside the box.

Coming back to Poland there are a large number of issues. The key one being education (we don’t need no education – leave the kids alone to quote Pink Floyd). There is no doubt that the Polish system is strong on fact regurgititation. What is is not good at is team work and building social capital. Oh and the mania that you cannot leave school until you are 19 and that 50% plus have to go on to university. Why? Look at succesfull entrepreneurs: Steve Jobs, Alan Sugar, Richard Branson and Bill Gates amongst others. Couldn’t wait to quit main stream education.

So the key issue of the current Presidential elections and the up coming Parliamentary elections should be just what sort of education the government should use OUR money to fund. Not whether in vitro is a good or bad thing or whether the RC church should have a monopoly on ethical education in schools.

Is Lidl the retail future?

UK newspapers have reported that Lidl has now overtaken Waitrose with more than 5% of the market.

Having studiously avoided the discounters when shopping in Warsaw I was intrigued by their Exclusive range. So on Good Friday I went to the local Lidl in Konstancin to see if I could prepare a three course meal for three using only ingedients sourced from Lidl.

And guess what? Very much possible. The starter was Parma ham, pate de fois gras (duck), smoked goose breast, brie, french stick and salted (yes salted) butter. The main course was a very good roast duck, potato gratin and mixed leaf salad. Pud was an excellent cheesecake and Tiramisu. All washed down with a bottle of Prosecco and a bottle of Pinot Grigio. The speed with which the victuals disappeared confirms the quality and whole lot came in just over PLN 100 (18 pounds sterling).

Which just goes to show that a relative upstart (outside of Germany where it all started years ago) can not only source to a very low price point but also maintaim quality and what’s more cater for the less well off as well as attract those more used to shopping at Alma or Piotr and Paweł.

Now theoretically the likes of Tesco and Auchan should not have had much to fear from the upstart. But and this is a great but shopping at Tesco, Auchan etc is a joyless experience, having to tramp around for an hour or more just to do a basic shop. And not knowing which of their discounted products have been “manuafactured to a price point” by sacrificing quality. Whilst at the high end of the market Alma has good quality products the prices are sky high.

So what is Lidl’s secret? Well as far as wines are concerned they buy from smaller vinyards and sell until stocks run out, replacing by something new. The same goes for the Exclusive range which is relatively limited but again comes from small producers. Lidl avoids where it can the large multinational producers who in the main have agreements in place with the majors not to sell at attractive prices to wholesalers and the smaller chains. All perfectly illegal I am sure. As an example the Polish Cadbury plant sold a lot of its production to UK cash and carries as the plant was not covered by price maintenance agreements!

Tesco started life as a “pile it high, sell it cheap” retailer. It then moved upmarket in the UK and recently has lost the plot. Not least because I guess people have better things to do than: battle for a parking space 400 yards from the store entrance, navigate around acres of “special offers” and guess where the mechandising gurus have placed the horseradish sauce. Then wait in the checkout queue. And of course there is the fact that being faced with special offers people over buy and end up binning half of what they bought.

Much more enjoyable to pop into a local convenience store, plan meals around what is fresh and available, take no more than half an hour to shop and have the car parked no more than 30 metres away. And because it only takes half an hour or so you can repeat the experience several times a week buying smaller quantities.

For the “heavy” shop of washing powder, dog food etc there is of course home delivery from the large chains. One wonders what effect the start up of Amazon food sales in the US will have on US hypermarkets.

Ah well it was never going to last (the majors taking an ever greater share of the market). In the current world you have to be nimble with a flatish management structure to succeed. And an ability to listen to what consumers actually want.

Lastly Lidl shows that economies of scale are not all they are cracked up to be!