Płock based Dystrybucja Logistyka Serwis (DLS), one of the largest Polish companies involved in wholesale trade, has announced that it will invest around PLN100m in developing its business to include increasing the number of its retail outlets from twenty to three hundred.
However it needs a financial backer to make this happen. Wojciech Kruszewski, MD of DLS, says that he is expecting to begin talks with a potential investor later this year although he did not want to reveal the name.
One of the potential investors is the American investment fund Enterprise Investors which in 1999 backed the wholesale and retail developments of the Stokrotka and Groszek chains as well as Lublin based El Dorado which is a competitor of DLS. This year El Dorado was successfully brought onto the stock market allowing Enterprise Investors to pull out. The AIG fund has also invested in the retail market.
Jacek Siwicki, the managing parter of Enterprise Investors says that as his company still has shares in El Dorado then it would not invest in a competing project. However in his opinion it is worthwhile for wholesales to invest in retail operations as margins are larger. He warns however that wholesalers must not fall into the trap of losing customers from the retail side. Ways around this problem include not localising in places where clients are present or proposing franchising deals. Retail is of course getting more competitive and the best way of development is through acquisitions. The wholesale market is also tight, and to fail to invest in new technology could mean loss of market.
DLS was formed in 1998 through the fusion of five firms. It concentrates on food products being present in 29 cities in Poland and has 67,000 sqm of space. Its twenty shops trade under the Lewiatan brand. It has six distribution centres which are located in Brodnica, Gdynia, Płock, Poznań, Szczecin and Żory.