After 15 Years of EU Membership Poland is a Mature Market
In 2004, the European Union saw a robust retail market in Poland which was experiencing an organic growth and benefiting from the country’s buoyant economy and the growing affluence of the Polish society, says Szymon Łukasik, Head of Retail at Cresa Poland.
Poland’s retail stock amounts to 14.8 million sqm, marking an almost threefold increase since the country’ entry into the EU. At the end of 2003, Poland had 297 modern retail schemes with a total area of more than 5.2 million sqm.
The Polish retail market has gone a long way in the last 15 years to achieving full maturity in half the time taken by most Western European countries where this process lasted 25-30 years. What was the catalyst for these rapid changes? Was the nation’s entry into the European Union a milestone in the growth of Polish retail? It did provide an additional impetus, but the Polish retail market had already been growing organically before, benefiting from the booming economy and growing demand from the increasingly affluent Polish society.
Villages and small towns have benefitted
When Poland joined the European Union on 1 May 2004, its modern retail market was already powering ahead. It had already seen first- and second-generation shopping centres developed and the largest cities witnessed the exponential growth of third-generation schemes with strong retail and F&B components. Galeria Mokotów, the first modern third-generation shopping centre, had been opened four years earlier.
Poland’s presence in the EU has not resulted in any significant or massive influx of retail brands. Retailers such as H&M, C&A and Intersport maintain their strong market positions but were already present in Poland in 2004. Today, they are completely different brands which continue to evolve in line with market trends and customers’ needs.
Many shopping centres have, however, extended their respective catchment areas, which was an indirect effect of Poland’s entry into the European Union. EU funds have largely contributed to the rapid growth of the country’s network of national roads and motorways. Thanks to improved and faster transportation options, those living in villages and small towns gained a markedly better access to retail. The well-developed road infrastructure drove the logistics sector forward, thereby boosting the rise of e-commerce.
Growth, crisis, rebound and consolidations
In the first years of Poland’s EU membership, retail development continued to focus on the largest cities and subsequently spread to smaller cities; it started off with food-oriented retail stores, followed by shopping centres and retail parks. The 2008 financial crisis triggered a global economic slowdown. And although Poland was called a ‘green island’, from 2008 onwards retailers with a presence on the Polish market also began to revise their expansion plans. Some companies went bankrupt, some vacated their premises. However, several retailers took the risk of leasing such vacated space, securing very advantageous rental conditions. TK Maxx, which began building its network in Poland in 2009, was among them. And its decision proved right. After 2010, retail got back on track and the pre-GFC trends continued: small towns expanded and large cities saw more retail space added to their existing stock.
The maturing market also means consolidations – strong retailers take over competitive or complementary brands to increase profits and market shares. This trend was the strongest on the food market where Geant was first acquired by Real, which was later taken over by Auchan. On the fashion market, the 2009 takeover of Krakow-based Artman, the owner of House and Mohito, was an important event in LPP’s expansion and provided a strong stimulus to its further growth.
The rise of e-commerce has been the dominant theme in the last five years, which contrary to analysts’ concerns has not so far brought about any significant traditional shopping footfall decline.
Unique and in good taste
434 shopping centres providing 10.7 million sqm of GLA dominate the Polish retail market. Other formats include 84 retail parks with a total area of more than 1.1 million sqm of GLA and 15 outlet centres with nearly 270,000 sqm of GLA. The remaining 2.7 million sqm is located in standalone food, furniture and DIY stores and cash & carry warehouses. Last year, Poland’s retail space saturation rate averaged 386 sqm per 1,000 inhabitants, placing the country in the middle of the European ranking, alongside the likes of France, the UK and Portugal.
These figures demonstrate that in the 15 years since Poland joined the EU the Polish market has reached saturation and maturity. A mature market seeks, among other things, niche or bespoke solutions. Developers and retailers are now taking more time to analyse what customers need and cannot get locally. That’s why the upcoming years will see unconventional and mixed-use projects come onto the market such as the existing Hala Koszyki and Koneser, or Elektrownia Powiśle, which is currently under construction.