2018 Recap: the shopping centre market

The introduction of the Sunday trade ban was undoubtedly one of the most important and controversial decisions of last year, both for the retail sector and for the Polish society. How did it affect the condition of shopping centres and how did it change the Poles’ shopping habits? These and other questions are answered by the Retail Institute, which has published the results of a study in which it traced the visitor rate and turnover of shopping centres in 2018, with a particular focus on the changes that followed the introduction of the Sunday trade ban.

In 2018, the visitor rate to over 120 shopping centres participating in the Retail Institute’s study dropped by 1.9% compared to 2017. This means that 7.23 million fewer customers visited the shopping centres last year than in the previous year. The biggest slump was recorded by medium-sized centres with 20,000 to 39,999 sq m of leasable area (4.3%) and small centres with 5,000 to 19,999 sq m of leasable area (4%). The relatively best results were achieved by large and very large centres with over 40,000 sq m of leasable area, which closed 2018 with a negligible growth of 0.3%.

Changes brought about by the ban

In summing up the 2018 results, the Retail Institute’s Board of Experts focused in particular on the changes following the introduction of the Sunday trade ban. Hence, in 2018:

• Shopping centres lost 17.84 million customers (32.1% y/y) who had been shopping on Sundays and 0.99 million customers who had been shopping on Thursdays (2% y/y).
• Some of the losses were offset by an increase in the number of visits on Saturdays (8.1%), Mondays (4.8%) and Fridays (3.6%).
• Saturday (18.7%), Friday (16.53%) and Wednesday (13.84%) were the most popular days of the week for shopping in shopping centres.
• 32.9 million customers visited shopping centres on shopping Sundays, i.e. 8.5% more than in 2017.
• A high drop in the visitor rate was recorded in the centres located on the outskirts of cities (6.2%) and with a dominant food offer (5.3%).

‘32.9 million customers visiting the centres on shopping Sundays (8.5% more than in 2017) provide proof that there is a powerful social group in Poland, which, due to professional and family commitments, still has difficulty finding time for shopping on a different day of the week,’ commented Anna Szmeja, CEO of the Retail Institute.

The changing landscape

RI experts also point out that the Sunday ban is changing the landscape of the retail sector in Poland. As President of the Union of Entrepreneurs and Employers Cezary Kaźmierczak pointed out, small shops, which are unable to cope with aggressive sales promotions of the largest retail chains on Fridays and Saturdays, lose out to them as a result of the ban. So far, about 16,000 shops have gone out of business. Cezary Kaźmierczak’s statement confirms the trend of outflow of customers on Fridays and Saturdays to the dominant local retail formats. The trend is strongly visible in the RI studies. Although more customers visited the shopping centres on those days than in 2017, this does not compensate in any way for the losses incurred by the shops.

‘The word dominant becomes the key to understanding market trends these days. The effects of the Sunday trade ban are best dealt with by the largest and strongest companies and commercial facilities. If the ban is maintained, their position on local markets will become even stronger, and the already observed trends will become deeper, i.e. the decrease in the visitor rates, lower turnover, closures of small shops,’ says Anna Szmeja, CEO of RI.

Uncertain future

In the shopping centres surveyed by RI, the tenants’ turnover in 2018 increased by 0.5% compared to 2017, while at the same time the inflation rate was 1.8% according to the National Bank of Poland. The highest turnover was recorded by retail food sellers and specialist grocery stores, which grew by 8.4% year on year. Apart from companies representing the category of mixed fashion, leather accessories, jewellery and watches, electronics, home furnishings, which together account for 41.2% of the leasable area of shopping centres, other industries recorded a drop from 2 to 11% over 2017.

The trade ban has had a significant impact on the performance of businesses operating in Poland’s shopping centres. Due to unfavourable changes in legal regulations, the devastating pricing policy and rising costs of acquiring and retaining personnel, limited possibilities for brick-and-mortar businesses to compete with online shops and forecast cost increases, many entrepreneurs look at the results with anxiety.