Wpis dostępny jest także w języku: polski
The entry of dm-drogerie markt will not change the market’s growth trajectory, or its distribution channel mix. But it can seriously affect the competitive landscape in the sector of cosmetics stores. dm could become a strong second-tier player behind Rossmann.
Limited impact on market growth, channel mix
The cosmetics retail market in Poland is now a relatively mature one. The entry of dm-drogerie markt will not affect its growth rate in a significant way. We think the impact will be either neutral, or modestly positive. The Karslruhe-based chain will probably begin by opening stores in large cities, where all the major players already are. It is unlikely to expand the market’s reach and attract new customers. It will have to win market share mainly at the expense of the incumbents.
An important feature of the cosmetics retail market in Poland is a high share of the grocery store channel. Of the 20 largest sellers of cosmetics by value, half are grocers. Discount grocery chains, Biedronka and Lidl, have captured a particularly large chunk of the market, at 21% in 2020. The sector of specialist retailers, i.e. cosmetics stores and drugstores, accounted for 43% of sales in 2020. But its share has been declining. We do not think dm-drogerie markt’s entry can reverse this trend. Any customer migration is likely to be within channels, not between them.
dm can become a strong second-tier player
The Polish cosmetics retail market is dominated by Rossmann, which had a 23% share in 2020. And Rossmann’s dominance will remain unchallenged for years to come. dm-drogerie markt is not about to become the new market leader. In the Central and Eastern Europe countries where it enjoys that position – it accounts for 14-16% of cosmetics retail in Bulgaria, the Czech Republic, Hungary, and Slovakia – it does not have to compete with many other foreign chains, as it will have to in Poland. Rossmann, for example, is present only in one of them, Hungary. Moreover, dm drogerie markt has been in those countries for decades, playing a leading part in the rise of modern cosmetics retail formats there, much like Rossmann has here. It missed out on this crucial phase in Poland.
But it can certainly take some of the market share from Rossmann. Furthermore, the next-biggest specialist players, Hebe and Douglas, have much smaller shares, at 4% and 3% in 2020, respectively. dm-drogerie markt could catch up with them in a few years. Assuming, of course, that it is serious about its expansion in Poland (and the early signs are that it is). Especially if it combines physical stores with e-commerce.
About the author
Retail Market Analyst
Analyst with over four years of experience in retail market. Areas of specialization: clothing and footwear market, cosmetics market and e-commerce.