Retail Sans Frontieres

“After Poland entered the European Union, the general confidence in Polish companies as stable business partners grew. The products of Polish manufacturers can increasingly be found in shops abroad and are much more recognised by foreign customers,” claims Marek Janeczko, the chief operating officer and board member of the Smyk chain. The opening of outlets outside your own national borders requires familiarisation with the local market, adjustments to its calendar and to its economic and political situations as well as to the local customs. In spite of these and other difficulties, as well as the risks involved in expansion to other countries, many Polish brands have decided to take on the challenge. These include Smyk, the LPP group, 4F, Kazar, CCC, Simple and Gino Rossi.

Smyk having fun over at the neighbours’

Children’s goods chain Smyk, which sells footwear, clothes, toys, accessories and books, opened its first stores abroad in 2006, in Germany and Ukraine. Now it has 89 shops outside Poland that operate under the Smyk brand (21 in Russia, 8 in Ukraine and 3 in Romania) as well as the Spiele Max brand (57 locations in Germany). “Smyk also has two own-brands: Cool Club and Smiki. The first of these can be bought in shops operating under a franchise/wholesale basis in four locations in Armenia, one in Georgia and one in the Czech Republic, with two locations to be opened in Slovenia over the next few weeks,” reveals Marek Janeczko. The company is currently focusing on its expansion on the domestic market, but is very satisfied with the results it has achieved abroad. “Around 50 pct of the revenue of the Smyk group is currently generated abroad – including through the Spiele Max brand on the German market. And if you compare 2005, when we only operated in Poland with a revenue of just over PLN 150 mln, our 2014 revenue amounted to nearly PLN 1.3 bln,” explains the chief operating officer of Grupa Smyk. “We listen to the needs of our clients, which is why we adapt our range to the specific customs and calendars of local markets. We analyse foreign markets and their consumers carefully while adjusting our offer to their local needs. In addition we carry out a number of promotional campaigns, designed with the specificity of a given market in mind,” adds Marek Janeczo.

Tallinn for starters

The LPP group, which is the owner of the Reserved, Cropp, House, Mohito and Sinsay clothing chains, started its foreign expansion in 2002 when it opened a Reserved boutique in Tallinn. In the same year the company opened more outlets of its flagship brand in the Baltic States as well as Russia and Hungary. It now has 966 shops in Poland and almost 570 in 16 CEE countries, Germany, the Balkans and the Middle East. The company is planning to continue its expansion in Germany, Croatia and the Middle East; however, it has temporarily suspended openings in Russia and Ukraine. “Because of the political and economic situation, LPP has made the decision to temporarily suspend the growth of the chain in Russia and Ukraine while existing stores in these markets will operate as usual. The company is not planning to pull out of these markets. This is a very important region for LPP and sales in Russia are very good, which is why the company is carefully monitoring the investment conditions and is not ruling out the further development of the chain in these countries over the next few years,” reveals Marta Chlewicka, the acting spokesperson of LPP.

The most intensive expansion will be of the Reserved brand, which will be present in 17 countries on three continents by the end of this year. In H1 outlets of the brand were opened in Egypt, Qatar and Kuwait. In September Reserved will make its debut in Saudi Arabia and before the end of this year it will also enter Belarus and Kazakhstan as well as open stores in the Middle East and Germany. The German market is the key location for the LPP group at this time, where four more shops are to be opened in Q4, bringing the total up to twelve in the country. The interior design of the chain’s outlets does not usually differ between markets but there are locations where it is necessary to move away from the norm. “Specific layouts are mostly given to stores in Kuwait. Due to the local traditions that require separate areas for women and men, the female changing room is located on the ground floor of the outlet while the men’s is located on the first floor. In other markets we implement the same interior design for each brand,” adds Marta Chlewicka.

Time for details

Sports clothing and accessories retailer 4F has also taken the decision to sell its products abroad. So far it has opened more than 300 shops in Poland, but in other European countries has so far only been available wholesale. “The 4F brand is currently available in 24 European countries,” says Małgorzata Gabryś, the brand’s development and investment director. “At this time we are present abroad only through wholesale, by cooperating with distributors or directly with chains offering professional sports equipment and clothing. However, in the near future, that is, in 2016, we also want to develop our own retail chain,” she adds. Next year the company is to extend its operations into the Latvian market and will open its stores in Riga, among other locations. Over the next year it will also be appearing in other European markets. The brand is owned by OTFC, while Colliers International helps in terms of selecting locations for the development of its chain.
The development of Polish chains abroad is mainly taking place in neighbouring countries but it is increasingly often also happening in countries further away from the home market. This is the situation with the CCC, Kazar, Gino Rossi and Atlantic brands.

The sky is the limit

The idea to expand Kazar beyond Poland’s borders was conceived in 2012. “We noticed that the Polish market was quite saturated, which makes it more difficult for us in premium locations that are off-focus. Because of this we decided to look around at foreign markets,” explains Sebastian Lenard, Kazar’s new market development and expansion manager. The chain currently has four stores abroad. All of its foreign outlets have been opened in cooperation with partners – master franchisees. “We are striving to get involved with strong groups that operate retail chains in their own market and in this way extend our presence outside Poland,” says the representative of the brand.

The company’s first choice was Romania. “At the time the market over there was developing strongly and it was clear to see that there was a need for high quality products. Our first shop was opened in November 2013 in the newly-opened Promenada Mall in Bucharest,” remarks Sebastian Lenard.

The next step of the Polish chain was its cooperation with the Landmark Retail Brands group, which is the largest franchisee in the Arab region. That move bore fruit in the form of new stores in Abu Dhabi and Dubai in the first half of 2015. “In Abu Dhabi we operate store in the Yas Mall, the largest shopping centre in terms of area in the United Arab Emirates. This is the kind of centre we are interested in for our foreign expansion. It attracts crowds of city dwellers and tourists. Meanwhile, in Dubai we have a store in the Dubai Festival City Mall. Together with the Landmark group we want to open another two or three stores in UAE in H1 next year. We are also in negotiations for future openings in Qatar. Dubai is a hub for us, a place where we can present our products to the whole world. Thanks to our openings in the United Arab Emirates we can intensify the recognisability of the brand, its reach and strength,” emphasises Sebastian Lenard. Furthermore, the chain is planning to open new stores in Central and Eastern Europe. Its boutique in the Allee Shopping Center in Budapest is already open. Kazar is also in negotiations over future locations in Hungary, including its first shop on the high street. Meanwhile, on November 20th the company is opening a shop in Latvia, in the Alfa shopping centre in Riga. The Baltic states represent the next step in Kazar’s expansion. “I do not see any obstacles in terms of the development of the Kazar chain in this part of Europe, either. From 2016 our products will also be available in our own-store in the UK, in Westfield shopping centre. We are also negotiating with partners who operate on the Ukrainian market. This is a good direction for us because there are still many affluent people in Ukraine who want to spend their money on the best products. We might enter Russia and we have also not ruled out new locations in the Czech Republic, Azerbaijan and Slovakia. We are a strong brand, a market trendsetter, which provides us with great development possibilities. In addition we have strong recommendations from landlords. As far as expansion is concerned, the sky is only the limit in our case,” boasts Sebastian Lenard.

Polish fashion ventures abroad

In 2015 the Gino Rossi group announced the entry of its Simple brand onto foreign markets. The first outlet was opened in Lithuania followed by one in the Czech Republic. Meanwhile its plans for the Gino Rossi chain envisage openings of two new outlets in the Czech market and in Slovakia, where the second own-store of the chain will be launched. Gino Rossi shops also operate in Lithuania and Latvia. Another two stores are to be opened, bringing up the total to eight by the end of 2015.

CCC’s plan for 2013–2015 involve dynamic expansion in the Czech Republic and Slovakia. There are also development plans for Slovenia, Croatia, Romania and Bulgaria as well as Austria and Germany. At the end of 2015 these activities are expected to bear fruit in the form of a twofold increase in its retail area (a net growth of app. 200,000 sqm).