22 (117) 2015
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Real Estate & Construction

Looking for the ‘Shopping Experience’

by Bożena Kozłowska, senior consultant, research, Knight Frank
Header bo ena kozlowska senior consultant research knight frank2015 zm

The total modern retail space in Poland amounts to 10.6 million m². Traditional shopping centres constitute majority of this volume. There are also two other formats of retail projects: retail parks and outlet centres.

All of them are schemes of minimum 5,000m² and 10 tenants. The retail market in Poland has been developing systematically since the early ‘90s. Thus it is getting more mature and more saturated. The average saturation of retail space accounts for around 240m²/1,000 inhabitants which is slightly higher than the EU average. Increasing retail saturation makes the market more demanding. In order to stand out against the competition, it’s essential to adjust to new market trends and to consumers’ changing needs.

The traditional retail offer in shopping centres no longer satisfies modern consumers. It’s becoming more popular that retail schemes should also operate as a community spaces. It should not be about only being in particular place, making purchases, being entertained and enjoying cultural facilities, but also about being remembered as an interesting place, exceptional in the market, one to which the customer wants to stay and remain loyal. 

Due to the increasing competition in the retail market, the landlords of aging retail facilities, have had to look at them in a new light. It’s necessary to adapt the offer and the design of this schemes to the market’s needs, usually by extension, modernisation or re-commercialisation

In the current climate of rapidly growing e-commerce sector, the wide range of pure retail offer is not enough. Instead of traditional shopping centres, retail schemes combining various functions such as retail, service, cultural and entertainment with an extended food service offer are becoming increasingly popular and expected. Such new facilities are necessary to be implemented in order to attract consumers on a regular basis.

As a consequence of increasing customer’s demand, developers work on the large-scale schemes, called mixed-use projects. By combining the commercial features such as retail, office, entertainment and cultural, which are forming one unit, the mixed-use projects create an unique and recognisable place on the map of the city. This kind of project can be considered as a similar to the high street, which constitutes a supplement to the traditional shopping centres, and cannot be considered as their competition. The example of mixed-use project combining residential, retail, business and cultural features might be Koneser located in the Praga district in Warsaw.

Shopping has to become easier and more convenient. As a result, projects which became more popular in recent times, are convenience shopping centres. These are the schemes with less than 5,000m² and only a few tenants and – what’s most important – easy access to the items of daily needs. In the smallest cities they are usually the only shopping centres, in which only few retail chains operate. In the largest agglomerations these are alternative solutions for hypermarkets in the shopping centres, and are usually located "on the way", close to residential areas. 

Another supplement to the traditional retail offer is the high street market, which is still at the phase of development. However, improving transportation systems around the most attractive locations in the city centres as well as improving standards of retail space along the high streets, undoubtedly attract new brands and potential customers. High street retail is an interesting alternative to the shopping centres not only in terms of business aspects but also of the aspect of doing shopping. The market of high street retail has been developed only in few cities in Poland: Warsaw, Kraków, Wrocław and Poznań. It is expected that together with development of the Polish retail market, high streets will gain in importance in other major cities. 

One of the key factors, responsible for the transformation of the Polish retail market, undoubtedly is rapidly growing e-commerce sector, affecting consumer’s behaviour. Nowadays, online shopping is becoming increasingly popular. According to the Gemius report, E-commerce in Poland 2015, 54% of the Polish population is buying online (an increase of 9 percentage points. when compared to 2014). Moreover, according to the data compiled by e-Commerce Polska, the growth rate in e-commerce industry in Poland amounts to 15-20% annually and it is expected to remain at this level. This will involve changes in existing stores (the volume of store retail space, exhibition space and the pickup place of the purchases made online). 

The retail sector in Poland is still changing as the market is maturing. The most important is following the market trends, especially by developers, owners and retail chains which adjust the offer to the demanding consumers, looking for new ‘shopping experience’.

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