Over there
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Native brands familiar on the Polish market for many years are more frequently popping up on foreign markets, with clothing companies leading the pack, although others are now getting in on the act
Eastern Europe continues to be the principal area of expansion, with most outlets appearing in Ukraine, still regarded by Polish producers to be virgin territory.
Maciej Dyjas, president of the EM&F group, remarks: “It is a huge market of forty million people and has tremendous potential. In many respects the Ukrainian market is similar to that of Poland in the late 1990s, but I would say Ukraine will make up for lost ground over Poland much earlier than within 8 years.”
The Russian market is also promising though more expensive than Ukraine, with more than 200 shopping malls operating in Moscow alone. Renata Kusznierska, director of the Retail Space Department of DTZ Polska, notes that: “Though investment costs in Moscow are greater by as much as 30 to 40 pct than in Warsaw, invested capital in Moscow offers the possibility of a multiple return in the long term.”
Reliable friend
You must have a good local partner to have any chance of existing on a foreign market. Companies with brands recognised and respected on a given market are treated entirely differently than those of which nothing is known. Shopping centre operators do not always trust Polish firms and often prove difficult to win over as partners. German centres belonging to the ECE chain are among the exceptions, being firmly rooted in the Polish market and thus able to assess the reliability of potential tenants.
The absence of a business partner in a given country often excludes opening an outlet for the most prosaic reasons – e.g. in Russiaonly a citizen of the country is allowed to run a business.
Wojciech Fedorowicz of Gino Rossi confirms: “It is quite impossible to open outlets in Ukraine or Russia without good trustworthy local partners, while Belarus will still be a ‘wild country’ for many years to come in which nothing will be settled without encountering huge problems.”
Safe partners
Some Polish manufacturers refuse to take the risk and enlarge a foreign franchise chain instead of opneing stores. Artman which owns the House youth fashion brand, has plumped for franchising. Jan Pilch, Artman’s vice president, tells us that: “We have 36 such outlets in Austria, Russia, Estonia, Latvia, Lithuania, Slovakia and Ukraine which amount to 6,500 sqm total shopping space.”
The Polish Quiosqe brand, which operates on the Italian, Belarussian, Russian and Ukrainian markets is based on a franchise network.
Smyk toys, Empik books
The EM&F group has begun to feel that the strong position of the Empik and Smyk outlets is just not enough and that the time has come to conquer Poland’s eastern neighbours, in particular the Ukrainian market. The group paid more than PLN 11 mln for the controlling shares of two Ukrainian retail firms. EM&F acquired 65 pct of the shares of the Bukva company which owns 27 Ukrainian bookstores and also took over a Ukrainian retailing company belonging to the Kirilla Levin group. This company runs two outlets selling children’s goods under the name ‘Kinderland’. The Polish investor is to adapt these outlets with the purpose of unifying the whole chain and making it recognizable on the local market. Maciej Dyjas reveals that: “We should have at least three new large Smyks and also large Empiks in Ukraine by the end of next year.” These outlets will be almost identical with those existing on the Polish market. Katarzyna Górecka, EM&F’s communications director, adds: “The format of these outlets and the range of goods sold will be similar to those in Poland. We shall be making central purchases of many products traded in the Ukrainian shops, though some of the goods (e.g. books and newspapers in the case of Empik) will be purchased locally.”
Polish pioneer
The undisputed leader of international expansion is LPP, which owns such popular Polish brands as Reserved, Cropp Town and Henderson. This Gdańsk–based company owns more than 70 Reserved outlets and another 12 Cropp Town shops abroad. This company’s boutiques, as with most Polish showrooms abroad, can be usually found in large cities and in shopping centres. LPP manages sales outlets in Estonia, Czech Republic, Russia, Latvia, Lithuania and Slovakia and also owns 5 shops in Hungary, with further expansion of its foreign network planned.
Renata Kusznierska of DTZ remarks that: “A very rapid expansion of the LPP company has been evident of late, especially in Ukraine and Russia (11 outlets). LPP has announced it will be opening 40 new shops abroad by the end of 2006 (22 – Reserved, 18 – Cropp Town), half of which are to be in Russia.”
Westward bound
But many Polish companies have decided to move westwards, the German market looking particularly attractive and being often treated as a stepping stone to expanding to other western countries.
Renata Kusznierska says: “Polish companies are starting to penetrate the markets of Poland’s western neighbours. When we consider Berlin, for example, this helped by the advantageous level of rents compared with other European capital cities, and also by its very short distance – a mere 70 km – from the Polish border. The Berlin ECE Center shopping centre is a highly popular sales spot for Polish clothing firms. Out of the 150 sales outlets in this centre, four are Polish retailers.”
Gino Rossi which runs 90 outlets abroad, including around a dozen in Germany, has decided to open several outlets in Germany for the leather accessories and footwear it produces. It intends to open a total of around 100 outlets in Germany in the next 10 years. Wojciech Fedrowicz, exports director of Gino Rossi asserts that: “We have nothing to fear on foreign markets and have successfully found an opening in the west. We are creating a series of small outlets with professional staff for customers and such shops in the West are both expensive and also competitive. Our interest is addressed not only to the German market and are negotiating also in Austria and Hungary. We are also studying developments in Sweden and Norway. But having said that, our priority target is developing a strong network of sales outlets on the German market.”
It is not only this company that has an eye on the German market. Diverse, Bytom and Tatuum have also opened outlets there. But will neighbouring markets really succumb to Polish brands? Time will show, though the process will surely be neither simple nor rapid.
The priority task facing all Polish businesses is to create an awareness of Polish brands and that they become accepted recognizable features on foreign markets. When that is achieved they can start to think of conquering Europe and even other continents.
Zuzanna Wiak
Eastern Europe continues to be the principal area of expansion, with most outlets appearing in Ukraine, still regarded by Polish producers to be virgin territory.
Maciej Dyjas, president of the EM&F group, remarks: “It is a huge market of forty million people and has tremendous potential. In many respects the Ukrainian market is similar to that of Poland in the late 1990s, but I would say Ukraine will make up for lost ground over Poland much earlier than within 8 years.”
The Russian market is also promising though more expensive than Ukraine, with more than 200 shopping malls operating in Moscow alone. Renata Kusznierska, director of the Retail Space Department of DTZ Polska, notes that: “Though investment costs in Moscow are greater by as much as 30 to 40 pct than in Warsaw, invested capital in Moscow offers the possibility of a multiple return in the long term.”
Reliable friend
You must have a good local partner to have any chance of existing on a foreign market. Companies with brands recognised and respected on a given market are treated entirely differently than those of which nothing is known. Shopping centre operators do not always trust Polish firms and often prove difficult to win over as partners. German centres belonging to the ECE chain are among the exceptions, being firmly rooted in the Polish market and thus able to assess the reliability of potential tenants.
The absence of a business partner in a given country often excludes opening an outlet for the most prosaic reasons – e.g. in Russiaonly a citizen of the country is allowed to run a business.
Wojciech Fedorowicz of Gino Rossi confirms: “It is quite impossible to open outlets in Ukraine or Russia without good trustworthy local partners, while Belarus will still be a ‘wild country’ for many years to come in which nothing will be settled without encountering huge problems.”
Safe partners
Some Polish manufacturers refuse to take the risk and enlarge a foreign franchise chain instead of opneing stores. Artman which owns the House youth fashion brand, has plumped for franchising. Jan Pilch, Artman’s vice president, tells us that: “We have 36 such outlets in Austria, Russia, Estonia, Latvia, Lithuania, Slovakia and Ukraine which amount to 6,500 sqm total shopping space.”
The Polish Quiosqe brand, which operates on the Italian, Belarussian, Russian and Ukrainian markets is based on a franchise network.
Smyk toys, Empik books
The EM&F group has begun to feel that the strong position of the Empik and Smyk outlets is just not enough and that the time has come to conquer Poland’s eastern neighbours, in particular the Ukrainian market. The group paid more than PLN 11 mln for the controlling shares of two Ukrainian retail firms. EM&F acquired 65 pct of the shares of the Bukva company which owns 27 Ukrainian bookstores and also took over a Ukrainian retailing company belonging to the Kirilla Levin group. This company runs two outlets selling children’s goods under the name ‘Kinderland’. The Polish investor is to adapt these outlets with the purpose of unifying the whole chain and making it recognizable on the local market. Maciej Dyjas reveals that: “We should have at least three new large Smyks and also large Empiks in Ukraine by the end of next year.” These outlets will be almost identical with those existing on the Polish market. Katarzyna Górecka, EM&F’s communications director, adds: “The format of these outlets and the range of goods sold will be similar to those in Poland. We shall be making central purchases of many products traded in the Ukrainian shops, though some of the goods (e.g. books and newspapers in the case of Empik) will be purchased locally.”
Polish pioneer
The undisputed leader of international expansion is LPP, which owns such popular Polish brands as Reserved, Cropp Town and Henderson. This Gdańsk–based company owns more than 70 Reserved outlets and another 12 Cropp Town shops abroad. This company’s boutiques, as with most Polish showrooms abroad, can be usually found in large cities and in shopping centres. LPP manages sales outlets in Estonia, Czech Republic, Russia, Latvia, Lithuania and Slovakia and also owns 5 shops in Hungary, with further expansion of its foreign network planned.
Renata Kusznierska of DTZ remarks that: “A very rapid expansion of the LPP company has been evident of late, especially in Ukraine and Russia (11 outlets). LPP has announced it will be opening 40 new shops abroad by the end of 2006 (22 – Reserved, 18 – Cropp Town), half of which are to be in Russia.”
Westward bound
But many Polish companies have decided to move westwards, the German market looking particularly attractive and being often treated as a stepping stone to expanding to other western countries.
Renata Kusznierska says: “Polish companies are starting to penetrate the markets of Poland’s western neighbours. When we consider Berlin, for example, this helped by the advantageous level of rents compared with other European capital cities, and also by its very short distance – a mere 70 km – from the Polish border. The Berlin ECE Center shopping centre is a highly popular sales spot for Polish clothing firms. Out of the 150 sales outlets in this centre, four are Polish retailers.”
Gino Rossi which runs 90 outlets abroad, including around a dozen in Germany, has decided to open several outlets in Germany for the leather accessories and footwear it produces. It intends to open a total of around 100 outlets in Germany in the next 10 years. Wojciech Fedrowicz, exports director of Gino Rossi asserts that: “We have nothing to fear on foreign markets and have successfully found an opening in the west. We are creating a series of small outlets with professional staff for customers and such shops in the West are both expensive and also competitive. Our interest is addressed not only to the German market and are negotiating also in Austria and Hungary. We are also studying developments in Sweden and Norway. But having said that, our priority target is developing a strong network of sales outlets on the German market.”
It is not only this company that has an eye on the German market. Diverse, Bytom and Tatuum have also opened outlets there. But will neighbouring markets really succumb to Polish brands? Time will show, though the process will surely be neither simple nor rapid.
The priority task facing all Polish businesses is to create an awareness of Polish brands and that they become accepted recognizable features on foreign markets. When that is achieved they can start to think of conquering Europe and even other continents.
Zuzanna Wiak
