Their time has come

They consider Poland to be a promising country with substantial prospects for development and profiting from the retail business, which is why they are planning intensive expansions. Their stores currently feature in virtually every tenant mix of retail parks and centres in smaller towns – and elsewhere too. I am talking about clothing discount store chains KiK, TextilMarket and Pepco.

The customer is king
The latest of these to come to Poland is the KiK chain, otherwise known as Kunde ist König [“the Customer is King”]. The company is part of the Tengelmann group, the owner of TREI Real Estate, which is the investor behind the Vendo Park network. “We entered Poland in March 2012, where we had as many as 38 outlets at the end of 2013. The concept we provide works well and has been welcomed in Poland. Poles appreciate what we have to offer: good quality at a reasonable price. People see that fashion does not need to be expensive,” says Mariusz Kulik, the general director of the KiK chain in Poland. The owners of the other brands also agree that the presence of discount clothing stores in Poland makes financial sense. “The attractive value for money ratio is certainly a major draw. We can continue to adjust our offer to customers’ seasonal expectations and focus on the most popular product ranges. The growing demand for such goods creates a lot of room for the further development of our chain,” remarks Bogusz Kruszyński, the vice-president of the board of Redan, the owner of TextilMarket.

Even more shops
The financial results and planned new openings confirm that things are not at all bad in this segment. Redan, which is listed on the Warsaw Stock Exchange, is among those whose 2013 results bode well for the future of discount chains. TextilMarket generated revenue of PLN 238.8 mln – a 6.7 pct improvement on 2012. Things were even better at the end of January 2014, when its turnover amounted to PLN 15.7 mln – 10 pct more than a year earlier. KiK’s representative is also more than pleased. “After two years of operating here we are very satisfied with our results. And we have seen a considerable increase in the turnovers of comparable stores,” says Mariusz Kulik, who, however, has declined to reveal the company’s figures for the period. Nonetheless, the expansion of each of the brands speaks for itself. At the end of 2013, TextilMarket had 279 outlets with a combined area of 60,800 sqm. In January 2014 the chain added two more stores – a total of 281 outlets with a combined area of 61,200 sqm. “The growing profitability of such outlets is a more important indicator for us than their increasing numbers,” comments Bogusz Kruszyński – but he goes on to add that around 20 new shops will be added to the TextilMarket chain this year alone. “In line with the chain’s current strategy, the stores will mostly be opened in smaller towns. We are also moving our shops to better locations in terms of retail business. The prices of the goods are important for a discount chain. In order to keep them at an attractive level we only open stores in locations that guarantee access to a suitably large number of potential customers from our target group for the rental levels demanded. Such places may include retail parks and high streets,” adds the vice-president of Redan. KiK is planning to open another 40 stores. “We want to double the number of our outlets and bring it up to 80 by the end of the year. The minimum size of town for our chain until now has been 20,000 inhabitants. However, now we are not ruling out store openings merely on this basis. So far we have not been opening shops on high streets in Poland, but we hope to develop our concept in such locations in the future,” explains Mariusz Kulik. The development of the Pepkor group’s Pepco chain could serve as confirmation of the Polish market’s potential. In 2004 the company entered Poland with 14 stores in cities such as Bydgoszcz, Poznań and Gdańsk. Three years later there were as many as 100 openings and 200 in 2009. Subsequent store launches were also impressive. In 2011 Pepco had 300 retail outlets and launched 100 more over the course of the year. At the end of last year Pepco had in excess of 500 outlets, including 15 stores in Slovakia and five in the Czech Republic. The company is now looking to open 80–100 outlets across Poland, in smaller towns, shopping centres, retail parks as well as on high streets, in the belief that the brand has the potential to reach 600 Polish stores.