The price war between Lidl and Biedronka, which has been going on for months, is entering a new phase. And it is not about Biedronka's advert, in which a yellow and blue cow stands against the background of “high prices” banners, but about the involvement of the company's president, Luis Araújo, in the conflict.
Lidl is a German company whose strategy is determined by its German headquarters. As you know, the German headquarters has undergone many changes, which resulted not only in Poland but also in other markets in more aggressive price positioning. (…) We will do everything not to lose this competition
– said the president of Biedronka in an interview with “Puls Biznesu”. We have contacted Lidl for a comment on these words.
Who started the price war? Biedronka CEO claims it was not his company
When asked who started the price war on the Polish market, Luis Araújo answered directly that it certainly wasn't Biedronka, because the company had always been “competitive in this respect”. The president of the discount chain emphasized that Biedronka is a Polish concept, developed and created by our citizens. He added that Biedronka must convince customers that they are the cheapest store. “But why would we start a war?” said Arajuo. “We respect competition and we will do everything to avoid getting into legal fights. We deeply believe that it is possible to compete while maintaining ethics. This is what we have always done and this is what we will continue to do” – declared the president of Biedronka.
The price war has begun – as we wrote in February – from the reduction of regular prices of 60 products in Biedronka at the beginning of 2024, to which Lidl responded by reducing the price of 300 products. However, Biedronka beat this, reducing the prices of 360 products in total. It added a marketing campaign to this, convincing customers in text messages that Biedronka is cheaper than Lidl. The Food Portal also claimsthat it was Biedronka that started the open conflict by sending messages to customers comparing prices to those in Lidl.
Biedronka is reducing its margins from 2023. And this has an impact on the entire market
In addition Biedronka started reducing margins in 2023 year. And this, if translated into price cuts, may affect the entire market, said Janusz Pięta, an analyst at the mBank Brokerage House, in March, commenting on the collapse in Dino's share price. – Dino adjusts its pricing policy to the largest player on our market, Biedronka. If Biedronka keeps prices at a lower level, other players should do the same – if they did not adjust, sooner or later they would see a negative effect, if not on the margin, then in the form of a partial outflow of customers to other stores – said the analyst.
Luis Araújo also addressed the issue of Biedronka's falling margin. “The EBITDA margin level is the price we pay as a market leader to defend and strengthen our position. The lower margin is also the result of the decision taken at the end of last year to significantly increase the salaries of employees of stores and logistics centers. People in the retail industry are the most important asset, so investments in them always pay off in the long term. Although I admit that when we made the decision to increase prices, I did not expect such a large deflation of food prices this year,” said the president of Biedronka.
“If we analyze our results more deeply, we will also see an increase in volume and very solid cash generation, and above all, a constantly increasing market share – Biedronka has the highest growth since the beginning of this year,” summed up Luis Araújo.