the changing retail landscape - epp · retail is a hot topic in the property industry. as more...
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THE CHANGING RETAIL LANDSCAPE
The revolving trends in the retail space continue to inform EPP’s strategy. Our projects have a strong presence in
Poland’s major cities and they continue to attract and capture footfall. Active asset management, driven by a
market leading team and well curated tenant mix, makes EPP relevant and attractive to both retailers and
shoppers. EPP continues to monitor these trends in order to stay ahead of the market and use our scale in Poland,
expertise and innovative approach to remain a market leader.
E-COMMERCE
HOW EPP IS RESPONDING
E-commerce and its impact on traditional
retail is a hot topic in the property industry.
As more people embrace smartphones and
tablets e-commerce has moved from a
futuristic concept to the mainstream.
However, the Polish market is unique in its
uptake of e-commerce and traditional stores
still have a strong place in the market.
The e-commerce market share of total retail
sales is estimated to be between 5% and
6% in 2018 and is expected to increase
to 7% in the next three years. This remains
relatively low compared to Western
European countries where the market share
exceeds 10%. Research has proven that in-
store sales remain very popular in Poland as
consumers prefer to “try and feel“ goods
before buying. Therefore more than 70% of
online sales in Poland are done through click
& collect. One of the additional reasons for
this is that people aren’t at home to collect
goods and traditional shopping centres
remain open at more convenient hours. The
click & collect concept is bridging the gap
between online and bricks and mortar and
provides a number of benefits including a
no cost collection option for consumers,
allowing brands to stay physically connected
to customers; incremental spontaneous
sales on collection and positions retail real
estate as more than a sales point but also an
awareness and fulfilment point. Over and
above this, Poles do not feel comfortable
with sharing personal data online and
therefore prefer to go into a store to pay for
and collect goods.
There is a demonstrated halo effect when
opening a new store, which not only
increases the brand awareness but also
stimulates online traffic. As a result many
Polish e-retailers, such as iperfumery by
Notino and e-obuwie, are opening traditional
stores to help increase brand recognition.
Top products bought online are clothes and
accessories (64%), books, CDs and movies
(54%), tickets (51%), shoes (44%), cosmetics
(43%) and home appliances (37%).
The uniqueness of Poland is also marked by
the lack of high street retail with shopping
centres across the country being the main
destination for shopping and leisure.
Sources: Savills; Colliers
Demand for retail space remains high in
Poland. EPP works closely with tenants to
adapt space to accommodate click & collect.
In addition we focus on driving footfall to
our centres by enhancing our leisure and
entrainment offerings. This not only includes
restaurants and cinemas but also fitness
centres and children’s play areas.
We have also identified a need for some
tenants requiring assistance in setting up
an online presence and we are
investigating ways to assist tenants in this
regard. This could include a platform for
them to sell their products. This concept is
currently under investigation.
EPP works closely
with tenants to
adapt space to
accommodate click
& collect.
Research has proven
that in-store sales
remain very popular
in Poland as
consumers prefer to
“try and feel“ goods
before buying.
28 EPP Integrated report 2018
Demand for food and beverage offerings
and variety in this space has risen in the
past few years. The expansion of food
and leisure offerings is a clear trend in
retail with the food and entertainment
offering in retail centres increasing from
5% 20 years ago to up to 25% today.
The perception of gastronomy has
undergone profound changes in recent
years. In fact, the range of food available
is no longer an addition to a pure
shopping experience, but now also is
part of the reason why customers
continue to visit shopping centres.
Sources: Savills; JLL
HOW EPP IS RESPONDING
EPP has advanced the redevelopment of
its food courts at Galeria Echo, Pasaż Grunwaldzki and Galaxy to ensure a more
modern, shopper-friendly environment
that encourages dwell time. The Galeria
Młociny development in Warsaw will
feature Dechy na Bielanach, a specially
designed roof garden offering a
gastronomic street with a wide array
of restaurants in wooden capsules
surrounded by greenery designed by
international architectural studio
Broadway Malyan. This feature is expected
to foster various interactions including
family get-togethers, meetings with
friends, new tastes and culinary
experiences as well as cultural, sporting
and open-air events (see shopping centres
as a leisure and entertainment destination
below).
Food and
entrainment
offering in retail
centres increasing
from 5% 20 years
ago to up to 25%
today.
FOOD AS THE NEW FASHION
29EPP Integrated report 2018
THE CHANGING RETAIL LANDSCAPE (CONTINUED)
In March 2018 the Sunday trading ban in
Poland was introduced whereby stores are
closed on two Sundays per month in 2018
and three Sundays in 2019 until 2020
when the ban will apply every Sunday. As
anticipated, customers adjusted their
shopping habits moving their shopping
days to Mondays, Fridays and Saturdays.
For the year the trading ban resulted in
20 closed Sundays resulting in Saturday
footfall in EPP centres increasing 12%;
Mondays up 9% and Fridays up 6% at
year-end.
Although it is too early to tell, to date the
Sunday trading ban has had a minimal
impact on operations.
HOW EPP IS RESPONDING
EPP has launched the EPP Shopping
Centres Social Activation programme
which is aimed at using the Sunday trading
ban to position our shopping centres as
places of social and cultural activity. This
has involved cooperation with public
institutions and the implementation of
non-commercial attractions focused on
cultural, educational, health and
technology events. This has helped drive
footfall on Sundays and attracted new
groups of customers to our centres. The
programme has better positioned our
assets and strengthened our competitive
advantage in local markets.
Examples of events at Galeria Echo
include the 18XI Sport Sunday in
conjunction with City Hall and main
sports clubs in Kielce, Independence Day
and Unplugged Games (educational
board games). The idea behind the
events was to offer customers an
attractive way to spend free time and to
encourage them to take advantage of
the food options available at shopping
centres on trade-free Sundays. All three
events generated an increase of between
90% and 128% in footfall on a trading
ban Sunday.
As anticipated,
customers adjusted
their shopping
habits moving their
shopping days to
Mondays, Fridays
and Saturdays.
EPP is positioning its
shopping centres as
places of social and
cultural activity.
SUNDAY TRADING BAN
30 EPP Integrated report 2018
Poland has experienced four advances in
shopping malls since the mid-1990s
having moved from hypermarkets with
relatively small shopping arcades usually
located in suburban areas, close to large
housing estates and near important
transport routes, to adding specialist
stores for home and garden, electronics
and clothing. This was followed by the
introduction of entertainment and leisure
and sports products as well as international
brands at the beginning of the 2000s.
Now shopping centres can also be
attached to offices and hotels and apart
from restaurants and cinemas they also
feature art galleries, concert halls, discos,
gyms, indoor climbing walls, hair dressers
and fun fairs for kids.
Shopping centres are no longer just retail
establishments but also a place where
people go to spend their free time. Studies
of Polish consumers show that young
people in particular enjoy spending their
free time in shopping centres. Modern
shopping centres are adapting their
offering to address these changing needs.
Source: Consumer preferences and
behaviour in shopping malls in Poland –
Anna Irena Szymańska and Monika Płaziak.
HOW EPP IS RESPONDING
Tenant mix is at the heart of EPP as this
remains a significant driver of footfall. As
part of our focus on tenant mix over the
past few years we have increased the
exposure to food and beverage in our
shopping centres. Polish consumers see
shopping as a leisure activity and place to
meet friends and therefore we want to
provide an environment that caters to the
needs of our consumers. We have
therefore set a long-term target that our
centres should have an exposure to food
and beverage and entertainment of
between 15% and 25%.
As part of our focus
on tenant mix over
the past few years
we have increased
the exposure to food
and beverage in our
shopping centres.
Shopping centres are
no longer just retail
establishments but
also a place where
people go to spend
their free time.
SHOPPING CENTRES AS A LEISURE AND ENTERTAINMENT DESTINATION
31EPP Integrated report 2018