Poland: The warm autumn has hurt fashion - The driver of trade is and will continue to be services

In September, the cumulative turnover of tenants operating in shopping centres monitored by the Retail Institute was 5.4 per cent higher compared to the nine months of the previous year. At the same time, attendance increased by only 2.9 per cent (13.1 per cent like for like). In September, tenants achieved turnover of £892.8/sq m of lettable space, which was 3 per cent lower than in September last year and as much as 8.3 per cent lower than in August. The weakest results were recorded by the fashion industry, which was hurt by the unusually warm autumn. On the big positive side, however, are services, which are increasingly driving visits to shopping malls.

In September, we recorded a fall in inflation to 8.2 per cent and increases in mortgages and consumer loans. The first positive outlook in a long time still does not translate into an increase in household spending carried out in shopping malls. Consumers have moved very cautiously into shopping, and although the increase in footfall (2.9 per cent) is still significantly lower than the turnover growth rate (5.4 per cent), there is reason for satisfaction in the performance of mall tenants, Retail Institute experts emphasise.

"We are observing an intensification of a trend that Retail Institute experts have been predicting for many years the engine of commerce are and will continue to be services, as these are the ones most slowly cannibalised by eCommerce. They are the ones that will generate high mall attendance and can become a strong visitor magnet. The question that remains open is which new services to develop in the centres and how to shape the mall's offer in order to attract new customers and build the loyalty of existing ones, emphasises Anna Szmeja, president of the Retail Institute.

The largest cumulative increases for the nine months of this year were recorded in broadly defined services, i.e.: health and beauty (+44 per cent y/y), services, i.e. insurance and banking services, travel agencies, postal services, laundries, florists, shoemakers, key fobs, etc. (+26.5 per cent y/y), entertainment (+22.4 per cent y/y), cafes and restaurants (+11 per cent y/y). At the same time, the turnover of the fashion sector, which accounts for as much as 53.1 per cent of the shopping mall offer in Poland, grew by only 0.2 per cent. The biggest declines were recorded by: women's fashion (-5.3 per cent y/y), men's fashion (-4.8 per cent y/y) and mixed fashion (-1.2 per cent y/y). On the other hand, leather goods (+16.3 per cent y/y), children's and maternity goods (+12.7 per cent y/y) and lingerie (+3.6 per cent y/y) and footwear (+2.9 per cent y/y) are recording increases. Also on the slight upside are jewellery and watches (+0.9 per cent y/y). It is worth noting that fashion chains appear to be reducing the space leased in shopping malls, which has fallen by 1.2 per cent this year compared to the same period last year. Of concern is the decline in sales of basic goods and foodstuffs
in shopping malls by as much as -5.3 per cent.

"For more than 20 years, I have been observing the evolution of the shopping centre industry and how difficult it is to achieve current visitor and turnover figures. In 2024, we will implement continuous monitoring of customer behaviour across all sales channels. We will combine data from shopping centres and retail chains, as well as transactional systems, to find out the answers to the questions of how the shopping centre offer should change to significantly improve its visitation and the turnover generated on its premises. We have harnessed artificial intelligence (AI) and machine learning, among others, and invited academic lecturers and retail industry leaders to join our team. I believe this will be a breakthrough in the field of knowledge management and shopping centre innovation," says Anna Szmeja.

Poles are cutting back on spending because of job loss, a reduction in the salary they receive, or fear of a possible worsening of their life situation in the future. High inflation and its consequences for wallets have a huge impact on spending.

Author: Retail Institute