Developers of Polish shopping centres are looking beyond the largest cities. Agnieszka Winkler looks at the fundamentals of a maturing sector


With the largest cities in Poland offering a plethora of modern shopping centres with a diverse range of tenants, retail formats and stores, developers have been turning to smaller towns, looking for gaps to fill.

Colliers International’s latest report, ‘Retail Gaps – Small Cities Review’, presents an overview of the retail landscape in smaller Polish cities (defined as having 20,000-50,000 inhabitants) in response to the rapidly evolving retail market in the country. The report considers the existing and planned supply of modern retail space in the smaller cities, the developers and retail chains operating in those markets, as well as the purchasing power and shopping habits of their inhabitants.

In Poland, there are close to 60 cities with a population of 30,000-50,000, accounting for a population of approximately 2.3m people (5.9% of Poland’s population). The current supply of modern retail space in these cities amounts to 330,000sqm, translating to retail saturation levels of 145sqm per 1,000 inhabitants (compared with the Polish average of 240sqm). There is an estimated 337,000sqm scheduled for delivery up to 2015-16, and if developers succeed in their plans, retail saturation will rise to about 300sqm per 1,000 inhabitants.

Smaller markets throughout Poland are attractive not only to local developers but also to companies operating nationwide (domestic and foreign), including developers who operate in several markets within a standardised chain of small shopping centres.

In terms of the offer, there are many retail chains operating in towns with a population of less than 50,000, among which the discount chain Biedronka is undisputed leader, followed by Media Expert, Lidl, PEPCO, Kaufland and Textil Market. There are some exceptional situations when stores usually found in large cities open up in small towns, such as: delicatessens Alma (Nowy Targ) and Piotr i Paweł (Chrzanów); hypermarket Real (Zgorzelec); sports equipment store Intersport (Zakopane), or cinema chain Multikino (Zgorzelec). In the markets under analysis there are also more than 50 DIY stores, with the biggest shares held by national chain PSB-Mrówka (38%) and French operator Bricomarche (35%).

The retail markets in small cities are arguably best considered from the point of view of consumer-purchasing power. The purchasing-power index for the retail trade (GfK) in small cities amounts to 105.5 (with the national average of 100). For comparison, in the largest Polish cities, the figures are as follows: Warsaw, 149; Poznań, 112; Wrocław, 119.
Some bigger cities (200,000-400,000 people), such as Bydgoszcz (106) and Lublin (103), are at a level close to small towns. This confirms that smaller markets are attractive economically.

The branch structure of the purchasing-power index in categories such as FMCG, fashion, footwear and homeware, is above the national average in small cities.

However, the purchasing-power index in the food and entertainment and leisure sectors is below the national average (98). This indicates that spending in these areas is more associated with an urban lifestyle than with life in small towns.

FMCG accounts for the largest share of spending among Poles. In small towns, everyday shopping is done mainly in discount stores, accounting for more than 45% of purchases in this category, compared with only 30% at a national level. The leader in this category is Biedronka, where 70% of discount shopping takes place, followed by Lidl and Kaufland.
GfK data shows that there is still a large group of consumers in Poland (over 35%) who visit shopping centres less than once a month, but in small towns between 20,000 and 50,000 inhabitants, this amount increases to 43%. The percentage of people who do not shop at shopping centres amounts to 33% across Poland, and almost 38% in the towns under analysis. Purchases of fashion and footwear in these towns are made predominantly in high-street shops and in outdoor markets, which have strong retail traditions in Poland.

The analysis shows that retail markets in small cities can be an attractive location for modern shopping centres, and both developers and retail chains are interested in expanding into these markets. It is a major  concern of new entrants in these markets that new developments must be carefully matched to the spending power and needs of local residents in terms of size, tenant-mix, retail format and offer. A tailored and well-invested marketing strategy is also essential to create and nurture new shopping habits, leisure activities and the engagement of local society.

 The data concerning purchasing power and the consumer market in small cities on the one hand shows the potential that modern shopping centres have, but also highlights the lifestyle and shopping habits of inhabitants, which have to be taken into account by developers in order to succeed.

Agnieszka Winkler is a senior analyst at Colliers International