Will there be enough room for everyone?

During the opening ceremony held a few weeks ago for the eleventh Carrefour hypermarket in Poland and the fourth in Warsaw, Guy Iraeta, director of the French retail chain, said there was still room for more large-scale retail outlets in Poland. "France has over 2,000 hypermarkets, whereas in Poland there are only about 120. Development possibilities are, therefore,  immense." DTZ's Magdalena Gniazdowska, however, does not see an increase in hypermarket development in the near future.

Does this mean we can expect a rapid increase in the number of such developments in the future? "I don't think so. After all, we cannot compare the Polish market with the French one, which is much bigger," says Magdalena Gniazdowska, retail specialist at DTZ. In her opinion, about 20 new hypermarkets ought to be built in Poland in the next two years. In fact, this is the number of developments under construction or in the final stages of arranging permits. Katarzyna Dziewulska of Jones Lang LaSalle is just as sceptical. In her opinion, in order to assess how many hypermarkets the Polish market could absorb, comparisons must be made between the amounts that Poles spend on food and hypermarket turnover. She claims that no such an analysis has been undertaken yet.

Acceptance by Poles
In Poland big retail chains control about 25 percent of retail trade, whereas the European Union average is twice as high. This data is considered to be positive by Renata Juszkiewicz, head of Metro AG in Poland. Her company is planning to open 6-8 new stores this year. "I am convinced that the Poles have got used to hypermarkets. Family visits to supermarkets at weekends have become a popular pastime."
Indeed Poles seem to have accepted the existence of hypermarkets, although not all of them are located sensibly. Some cities are becoming saturated with large-scale units, which results in fewer customers per shop, and causes rents to fall. This is the case in Łódź where 2 Geant hypermarkets already exist and construction of a third is about to start. ,I think that investors will concentrate on opening new stores in cities which haven't been oversupplied with retail schemes," predicts DTZ's Magdalena Gniazdowska.

Modernising to survive
The hypermarkets built today do not have much in common with those that appeared in Poland several years ago. They were built of steel sheet, and comprised a food hall and a few other units. Hypermarkets built today are part of so called third generation retail centres (Wola Park, Galeria Mokotów, Auchan at Miasteczko Wilanów - all in Warsaw), with as many as 100 units in the shopping gallery.
Will older developments survive competition from the newer ones? Will some go bankrupt? ,We must consider this. But we should also remember that the investor, who paid USD 25-27 mln for scheme, was prepared for this situation," explains Katarzyna Dziewulska. In her opinion, most of the older hypermarket developments have or will be extended by expanding shopping galleries and leisure facilities.
"I think that players already present in the market will survive, although smaller chains may sell out to bigger ones," thinks Krzysztof Zieliński, development director of Auchan Polska.

The Spanish way
Although the Carrefour boss compared Poland to France, many analysts think that a comparison with Spain would be more appropriate where there is a comparable consumer market of 40 mln. In the last 6 years, Spain has seen the number of retail centres grow by 30 %, from 290 to 420. Visible trends include; bigger shopping galleries located by hypermarkets and increased importance of entertainment and leisure centre operators. These trends are expected to follow in Poland in the near future.

Obstacles
Katarzyna Dziewulska of JLL thinks that an act, which gives local authorities the power to decide on locations for big retail developments, will create problems for developers when acquiring new sites. Local officials are known to side with local tradesmen, unfriendly towards hypermarkets.
As well as local authority officials and protests from smaller retailers, holding back hypermarket development, MP's want to pass an act prohibiting price fixing. What do retail chains representatives think about it? ,If it applies to everyone, then why not? But what for?" wonders Carrefour's Guy Iraeta. ,Hopefully these regulations will not become more restrictive than those passed by the European Union. They are more likely to harm consumers, not us," says Renata Juszkiewicz of Metro. ,I think the chains will respond to this by establishing their own trademarks whose prices can be determined by them at any level, not only as promotional prices," says DTZ's Magdalena Gniazdowska. MP's, however, want to limit hypermarkets capacity to offer their own product.