The pandemic highlighted the challenges that the Polish retail market had faced before, emphasizing not only the importance of multi-channel sales, but also the need to look for alternative locations.
The last twelve months were marked by three lockdowns which obviously changed the shopping habits of Poles and contributed to the growing popularity of smaller retail formats. At the same time, the outbreak of the pandemic highlighted the challenges that the market had faced for a long time. In addition to the increase in online and multi-channel sales, the need to look for alternative locations that would allow chains to attract new customer groups has also been underlined. Other locations include high streets, which, thanks to the adoption of new strategies, may benefit from the current changes taking place on the market,
says Anna Wysocka, Head of Retail Agency, JLL.
Supply - retail parks and convenience centres dominate
Of the new space delivered in 2020, 41% was located in retail parks and another 28% in convenience centres. Shopping centres, which are still the most widespread format on the market, delivered a mere 20% of the new retail space. As a result, total retail space in Poland, including both large formats and convenience centres, stood at nearly 16 million sqm at the end of 2020,
explains Joanna Tomczyk, Senior Research Analyst, JLL.
Demand - reshuffles on the retail map
On the other hand, most grocery chains and tenants in the "value retailer" category were less affected by the pandemic, and their expansion plans went ahead and were often targeted at new retail destinations more resistant to the effects of the introduced restrictions. It is also worth recalling that 2020 saw the debut of several foreign brands, including the Irish fashion giant, Primark and the American brand Urban Outfitters. In addition, American Vintage from France, Falconeri from Italy, a boutique with cosmetics - Armani Beauty from France, a chain of furniture stores - Mömax from Austria, and the Russian grocery discount, Mere, also opened their first stores in Poland during this time,
adds Joanna Tomczyk.
Investment market
2020 ended up with only approximately EUR 650 million worth of deals, predominantly focused on retail parks, convenience centres, DIY stores, food stores and assets for repositioning, repurposing or operator change. We expect that along with the continued high activity of developers in the segment of retail parks and convenience centres, as well as the changing shopping habits of Polish consumers, investor attention will increasingly focus on these types of formats. Prime retail park yields remain at 6.8% and are expected to compress, due to increased investor demand for this type of product,
comments Agnieszka Kołat, Executive Director, Retail Investment, JLL.
Strategy for the future
Due to the second lockdown in November and the third lockdown currently underway, in many cases further rent discounts are the subject of ongoing discussions. However, it should be borne in mind that government regulations have had a negative impact on the financial health of shopping centre owners, who are additionally not covered by any assistance programme. Lease renewals are currently more flexible, and in some cases, signed for a period of 2-3 years instead of the standard five years. An aspect which allows for cautious optimism, in terms of the gradual recovery of shopping centres and retail brands, is the shopping needs of Polish consumers. Although the growth of e-commerce in Poland is an undeniable fact, Poles still prefer shopping in the traditional manner,
summarizes Anna Wysocka.
