Luxury and premium brands are willing to enter Poland, but…

According to DTZ’s latest report entitled Retail Therapy 2014/2015, despite the global economic turbulences over the last years affecting also Polish retail market has remained in a good condition. Steady GDP growth and increase in customers’ purchasing power lead to the growing number of recipients of luxury goods. Nonetheless, this sector has been still developing significantly slower than the others.

Comparing with other European countries, Poland is in the leading position in terms of presence of global brands and the interest in the development of tenants from the premium sector. However, many retailers face limitations in entering the Polish market due to finding suitable locations for their flagship stores.

Most frequently luxury and premium brands entering the Polish market choose commercial streets in Warsaw and Cracow for their locations. However, the limited number of such estate as tenements and most often unsettled regulatory issues are the reasons behind brands’ decisions about not opening their salons there. Another factor which constraints expansion is the lower number of tourists in the Poland’s biggest cities compared with, for instance, Prague, Vienna or Berlin, said Renata Kusznierska, Senior Director, Head of Retail – CEE at DTZ.

The premium segment in Poland is largely represented by Italian brands such as: MaxMara, Weekend by Max Mara, Marella, Penny Black, iBlues, Pollini, Baldinini, Furla and Coccinelle, which have established their position on the retail market over the last years.

What’s more to mitigate risk, many luxury brands have decided to enter the market through franchising. Generally, newcomers commence their expansion in Warsaw, which is the most economically stable city, with large interest of customers in fashion.

Luxury brands located in Warsaw usually concentrate around Plac Trzech Krzyży and Nowy Świat Street, which is surrounded by refurbished tenements, offering commercial space. This area attracts such brands as: Burberry, E.Zegna, Carolina Herrera and many others.

From Plac Trzech Krzyży goes Mokotowska Street, where a multibrand shop Atelier Mokotowska 63 has been recently opened, in which there are multiple brands of Italian designers, including SerapianMilano, Boglioli, Seventy, Circolo, Eleventy, L.Borelli and Marina Yachting. Nearby, there is also a small shopping mall Mysia3, among others, with COS brand, Muji and the first in Europe Calvin Klein’s concept store with watches and jewellery.

The entrance of luxury brands is still constrained by the lack of suitable commercial space. Designers, in line with their image and strategy, prefer to open their flagship stores at premium streets of high class. Unfortunately, the availability of such locations is relatively small in both Warsaw and Cracow.

As a result of shortage of retail space at the main streets, Louis Vuitton, YSL, BottegaVeneta and Gucci have decided to open their salon's at Vitkac department store. The other brands also choose shopping centres such as in Warsaw DM Klif, Atrium Promenada, Galeria Mokotów, Galeria Krakowska in Cracow, Stary Browar in Poznań or Klif in Gdynia.

The demand for luxury goods by the Polish customers has created the promising niche for the local designers. Over the course of last two years, there is an increase in the number of salons offering clothing, footwear, accessories and jewellery. Among them are Zień, Bohoboco, LaMania and T.Ossoliński. Mokotowska Street has become the magnet for these dynamically developing brands.