Retail Market in Poland - July 2021
Despite COVID-19 implications, forecasts look favourable. Retail sales growth in Poland is positioned in the forefront of European countries.
The COVID-19 pandemic seems to be receding into the backdrop during summer, in parallel with the increasing number of vaccinations in Poland. Stationary retail is operating fully, with restrictions only on the number of customers in stores.
Although the Polish retail market is still struggling with the COVID-19 implications, forecasts look favourable compared to the rest of Europe. According to Oxford Economics, retail sales in Poland are expected to grow by 4.9% per annum until 2023, which places Poland in the forefront of European countries.
Compared to the same period in 2020, H1 2021 was characterised by increased construction activity. In the first six months of 2021 developers completed 242,000 m2 of GLA of new retail space, 43% of which was delivered in retail parks and convenience centres dedicated to everyday, quick shopping. Unsurprisingly, following the shuffle of hypermarket operators, 47% of the new completions came in the stand-alone retail warehouses. This is mainly due to the ongoing process of former Tesco stores being taken over by DIY operators and the opening of a big-box IKEA furniture store in Szczecin.
The results of the retail investment market were still affected by the pandemic and limitations imposed on retail trading in H1 2021. The total investment turnover stood at approximately EUR 290 million, the lowest volume for H1 since 2013. However, the number of transactions was among the highest ever recorded, and the low turnover was due to the type of assets that are currently the most popular with investors. Investors’ attention is focused mainly on retail parks, convenience centres, DIY stores and grocery shops. Recently we have also noted increased activity in opportunistic transactions involving shopping centres with cap rates exceeding 10%. The investment market is also driven by the supply of investment products fuelled by Tesco’s impending exit from Poland.
The new normal on the retail market in Poland, as well as retailers’ experience during the pandemic, impacted expansion strategies, including alternative retail locations. In parallel, tenants are not giving up on developing their stores in shopping centres. The Irish fashion giant Primark has announced another two upcoming locations in major shopping centres in Kraków and Katowice. Rituals Cosmetics, with its debut set on August 2021 in Westfield Arkadia in Warsaw, plans a chain of 100 stores by 2027 in Poland. Similarly, Polish off-price chain HalfPrice (owned by CCC) opened seventeen locations just within two months after its debut, from prime shopping centres to high street premises.
Sustainable development is increasingly common on the retail market. Global fashion giants such as H&M, United Colors of Benetton and Tommy Hilfiger, to name just a few, sell clothing collections made from recycled products and biodegradable natural materials. LEGO is testing blocks made of recycled plastic, and second-hand clothing firms are expanding both in the physical and virtual retail environments.
We encourage you to read full latest JLL report on the retail market in Poland. The publication is also available in Polish.