New supply dominated by retail parks

In 2023, the Polish retail market saw robust development activity. Although it is already mature and highly saturated, its total retail stock expanded by nearly 440,000 sqm delivered through both new projects and redevelopments. 230,000 sqm was added to the market in the period October-December 2023 - last year’s strongest quarterly result. The largest new openings included E.Leclerc in Jelenia Góra (24,000+ sqm), Ozimska Park Opole (17,000 sqm) and N-Park Olkusz (15,800 sqm). BNP Paribas Real Estate Poland notes that the outlook for this year is positive and new supply is expected to match or even exceed last year’s volume. Retail parks accounted for 80% of the new supply and will continue to be a dominant retail format in 2024, says the report.

“The shopping centre development pipeline comprises only three retail schemes scheduled for delivery in 2024: the redeveloped Nowa Sukcesja shopping centre in Łódź, Brama Jury in Częstochowa and the extension of Galeria Hosso in Police. They account for just under 20% of the retail stock under construction. The remaining 80% is in retail parks and convenience centres”, comments Fabrice Paumelle, Head of Retail, BNP Paribas Real Estate Poland.

The popularity of this retail market segment has translated into investor interest. Retail parks accounted for 12% of 2023’s total investment volume. New market players joined retail investors - these include Lords LB Asset Management from Lithuania, BHM from the Czech Republic and French-based Frey. Polish private investors also remained active.

F&B and meeting space in one

2023 also saw a host of new F&B openings and transformations, including the opening of such food halls as Montownia in Gdańsk as part of the mixed-use project Doki and Hala Targowa in Bydgoszcz, as well as the Pedet zone in Wrocław’s Renoma. The food hall concept combines F&B space with an opportunity to socialize, relax and enjoy entertainment.

“This concept is being increasingly embraced by customers and has experienced a steady rise for several years in spite of the challenging pandemic period in 2020-2021. Consumer needs are evolving. Customers would like not only to shop in a shopping centre or other urban facilities but also to meet friends, spend time with family or to taste new dishes. This follows the social eating trend - meeting new people and enjoying food together”, says Anna Pływacz, Director, Retail Department, BNP Paribas Real Estate Poland.

Online and offline shopping experiences complement each other

Shopping centre turnover for October 2023 was up by 5% year-on-year, according to the report. This was broadly in line with retail sales in current prices published by Statistics Poland (GUS) showing an increase of 4.8%. Fashion was the stand-out category, with spend in shopping centres up by nearly 9%. Another positive was the improvement in the average shopping centre footfall, a metric tracked by the Polish Council of Shopping Centers, representing a 2% increase year-on-year in October.

Offline and online retail experiences are intertwining. The share of online sales in total retail sales reached 9.4% in December 2023 – a level seen prior to the Covid-19 pandemic. Although the online penetration rate is expected to increase in the coming years, it is unlikely to rise as sharply as it did during the pandemic. Oxford Economics’ forecast puts it in Poland at 14% in 2024-2027, which will not, however, mean any slowdown in brick-and-mortar retailing. Omnichannel is and will be a retail market standard in the coming years as it marries the convenience of online shopping and the personal experience of physical stores.

Multichannel retailing will also be a challenge for retailers as retail stores will have to meet the expectations of Gen Z who expect a wide and personalised offer. The importance of digital shopping is also underscored by the performance of the InPost Group, which in 2023 delivered 598.5 million parcels in Poland, an increase of 16% year-on-year.

Debuts on the retail market

2023 was a year of many debuts on the Polish retail market, with 29 new brands entering Poland in the last 12 months - the highest number since 2017. In addition, brands with an established presence in Poland chose to open new format stores. These included DIY retailers which launched smaller concepts such as Castorama Smart and Express, Pszczółka Express, and Ikea with its Planning Studios. At the same time, Decathlon opened its first City format store appropriate to its downtown location.

The closing months of last year also saw new expansions take place. For example, Primavera Furniture, a reputable Polish producer of furniture, opened its store in Warsaw’s Domoteka complex, while Medicover launched Stellar - a new brand of premium fitness clubs.