New supply is on the rise in smaller cities
Nearly 100,000 sqm of modern retail space came on stream in Q2 2022, bringing Poland’s total retail stock to 15.6 million sq m. The three months to June saw ten new completions, including nine retail parks in smaller cities such as Busko-Zdrój, Giżycko, Jasło, Krotoszyn, Pszczyna, Puławy, Sławno, Szczytno and Łany near Wrocław. In addition, OBI opened its new retail warehouse in Mysiadło near Warsaw.
The new supply also comprised extensions of three existing retail schemes in Knurów, Radomsko and Zamość, as well as the redevelopment of Tesco’s outlet in Stalowa Wola into a Castorama store.
Retail parks dominate the development pipeline, with redevelopments and extensions underway
Retail parks account for 65% of the retail stock under construction, with 33 new completions and extensions scheduled for delivery in the next few years.
At the end of June 2022, more than 400,000 sq m of retail space was in the pipeline and scheduled for completion in 2022-2023 across 29 new developments, nine extensions and four redevelopments. The largest projects underway include Fort Wola (28,000 sq m), the 25,000 sq m extension of the Atut Ruczaj shopping centre in Krakow, Galeria Bawełnianka in Bełchatów (23,000 sq m), the second phase of the Karuzela shopping complex in Kołobrzeg and DOR Plaza retail park in Częstochowa.
Over 45% of the retail development pipeline is expected to be delivered in smaller cities with a population below 100,000. The largest conurbations account for more than 34% of the retail stock under construction.
We are buying more
In Q2 2022, retail sales rose 19% and 8.2% compared to April and May 2021, respectively. The strongest year-on-year growth in May 2022 was reported for textiles, fashion and footwear (up by 18%), followed by pharmaceuticals, cosmetics and orthopaedic equipment, other retail sales and grocery stores.
“The online retail penetration rate is changing from quarter to quarter. It stood in the range of 5-6% pre-pandemic, but peaked at 11% during in-store retail restrictions before falling back to around 8% following their lifting. The share of online sales as a proportion of total retail spend began to trend upwards, reaching around 10% in November 2021 and continued at this level into the first quarter of 2022, but in April and May 2022 it fell to 8.9%,”
- comments Ewa Derlatka-Chilewicz, Associate Director, Consulting & Research, Poland, Cushman & Wakefield.
“According to Cushman & Wakefield’s report ‘E-Commerce is Bursting at its Seams and Warehouses are Following’, the pandemic has reshaped e-commerce both in Poland and in the world. In the pandemic year 2020 the value of the Polish e-commerce market surpassed PLN 100 billion, with as many as 77% of internet users shopping online. As the Polish market is still young and immature, this sector’s growth is unlikely to slow down and is broadly expected to be worth between PLN 160-250 billion by 2025,”
-says Damian Kołata, Partner, Head of Industrial & Logistics Agency Poland, Head of E-Commerce CEE, Cushman & Wakefield.
Retail footfall shows improvement
Although in early 2022 the average footfall for shopping centres and retail parks was 14% lower compared to pre-pandemic levels, it averaged 380,000 shoppers per retail scheme per month at the end of Q2 2022, which was on a par with the figure seen in the same period in 2019. Large and very large shopping centres (40-60,000 sq m of floorspace and over 60,000 sq m, respectively) outperformed, attracting 8% more customers in June 2022 than in 2019.
“The growth in the number of large and very large shopping centre visitors has been driven, among other things, by the geopolitical situation, which has overshadowed the pandemic. The return to time-spending habits is clearly boosting the food & beverage and entertainment sectors. In addition, shopping centres in central locations, frequently close to passenger transport hubs, have naturally welcomed our Ukrainian neighbours. The return of footfall to pre-pandemic levels bodes well, but the rising inflation and legal regulations impacting net salaries and wages are likely to affect consumer discretionary spending in the long term,”
- says Paulina Bauer, Associate, Head of Retail, Cushman & Wakefield.
Shopping centres see turnover growth
Preliminary turnover data for shopping centres shows that retail sales were up in May 2022 by 20% compared to pre-pandemic levels. Increased retail spend on fashion, groceries, health and beauty in April 2022 accelerated turnover to above the 2019 level. It is, however, worth noting that retailers report nominal turnover values that exclude inflation.
“Average net retail sales in May 2022 surpassed PLN 1,000 per sq m of GLA. The improving footfall level is expected to drive retail sales growth in the coming months. Given lower prices in stores in shopping centres and retail parks, consumers will probably shift from online to offline. In the long term, however, such factors as the overall economic deterioration and the rising inflation curtailing the spending power of Polish shoppers are likely to result in lower turnover levels. Inflation-driven price growth will cause consumers to rethink their priorities, with non-essential needs unlikely to be the first to be satisfied,”
- adds Beata Kokeli, Partner, Head of Retail Agency, Poland, Cushman & Wakefield.