Kevin Turpin, Regional Director of Research, CEE at Colliers explains: “Despite the ongoing pandemic a positive bounce in GDP has been seen. Yet the combination of the growth in inflation, and problems relating to the global supply chain, which add to the growing cost of products and resources, all contribute to the challenges faced by producers, retailers and ultimately, this passes on to the consumer. Due to the fact that the long-term impacts of the pandemic are still unknown, the growth in importance of smaller shopping centre formats and retail parks has strengthened. The multiple number of schemes under construction or in advanced stages of planning confirm this trend” he adds.

International and local developers continue their interest in retail parks

There are several developers investing in this market segment, such as Immofinanz, Saller, EDS RP, Trei Real Estate and Fidurock. The appetite from developers, investors and retailers for this type of asset can be considered strong. The stage of development of this market segment varies across CEE countries, but the segment of retail parks shows great potential for development.

Food and non-food discount retailers anchor retail parks

Discount retailers, both food and non-food, often play a crucial role in retail parks. Smaller retail parks are focused on the everyday shopper who visit them regularly, which is why food or non-food discount stores are typically the anchor tenants in the majority of such complexes. This trend applies to both the retail parks in main cities, as well as schemes in smaller towns. It is the result of the changing purchasing behaviour of CEE inhabitants. However, the growing interest in the location of stores within traditional shopping centres can be seen as well.

There are over 30 food discount chains in CEE-16. However, the distinction between discount grocery stores and supermarkets is becoming blurred. After the initial hard discount concept, selected grocery discounters started to shift their offering to compete with traditional supermarkets. At the same time, selected supermarkets are focusing on ‘lowest-price’ marketing and have also introduced their own-branded products. From the range of offer and the way products are presented in stores, the distinction between discount stores and supermarkets has been disappearing over the years.

Retailer leaders in CEE

In terms of the number of stores in CEE-16, the leading retailer is Biedronka, owned by Portuguese Jeronimo Martins, with over 3,100 stores in Poland. Germany’s Schwarz Group-owned Lidl is second with over 2,000 stores. The largest grocery discount chain in the Ukraine, ATB, holds third place. Other than Lidl and Kaufland, other German chains active across the CEE region include Aldi, present in Poland as Aldi Nord and in Hungary as Aldi Süd, and Penny, present in the Czech Republic, Hungary and Romania. Between the beginning of 2020 and the end of H1 2021 over 1,350 food discount stores were opened across the CEE. It confirms that the region is still on the path of development and is able to absorb many new facilities.

Non-food discount chains in the CEE region

There are over 45 non-food discount chains in the CEE region. The largest in terms of store numbers is Pepco, followed by KiK, Avrora and Ostrov Chistoty. Pepco with almost 2,500 stores is present in 11 countries. Pepco Group is also the owner of brand Dealz with circa. 100 stores in Poland. The second-largest chain in CEE, KiK has almost 1,000 stores in 8 countries. These, in addition to Dutch brand Action, German brand TEDi, have decided to enter CEE markets through opening stores in retail parks. However, during their rapid growth, these chains are also looking for opportunities in traditional shopping centres.

“Smart shopping” trend

There remains a huge potential for discount stores. A good proportion of CEE consumers are often buying goods in different shops, depending on which one offers the most favourable conditions. This “smart-shopping” trend is preferable for discount retailers. In addition, discounters appear to have suffered less in comparison to traditional retailers. Often located in smaller schemes, with outdoor parking and individual entrances, discounters have experienced slightly less disruption brought about by the different regulations or customer concerns during the pandemic.

Key figures for 2021:

• Traditional shopping centres in the CEE-16 exceeded 1,200 schemes
• Traditional shopping centres represent a stock of circa. 28.5 million square metres
• Retail parks represent circa. 1,350 schemes
• Retail parks represent a total stock of circa. 9 million square metres