On the growth path

Colliers International experts predict that annual dynamics of retail sales growth in Central and Eastern Europe will be between 4.2% and 7.6% (in EUR), driven by robust GDP growth, wage rises and inflation.

According to Colliers International report, Poland is Central and Eastern Europe’s biggest retail market (11.3 million sqm), ahead of Romania (3.65 million sqm) and Czechia (3.45 million sqm).
The highest density ratio is in Estonia (598 sqm/1,000 inhabitants). Among capital cities, Bratislava (Slovakia) and Tallinn (Estonia) are most saturated, with 1,194 sqm/1,000 inhabitants and 978 sqm/1,000 respectively.

Traditional shopping centres, located primarily in capital cities, are the most dominant scheme format in the CEE region. The exceptions are Poland and Czechia, where most of the stock is located in big regional cities (86.7% and 77.7% respectively). Retail parks are relatively popular retail scheme format. The highest number of retail parks is observed in Poland (with the biggest retail parks in the CEE - Aleja Bielany in Wrocław, Targówek in Warsaw and Matarnia in Gdańsk), as well as in Czechia, Romania, Hungary and Slovakia.

“Availability of modern retail space in CEE countries in both capital and regional cities is a vital reason for international retail chains to expand into these markets,” says Katarzyna Michnikowska, Associate Director, Research and Consultancy, Colliers International.

Stock increase

A number of international and domestic developers are interested in Central and Eastern Europe. Highest developer activity is concentrated in mature markets (Poland, Czechia, Estonia), but also in emerging markets (Belarus, Ukraine). Colliers International experts estimate that in total even over 1.5 million sqm of new space might be delivered to the shopping centers market in Poland, Belarus and Ukraine by 2020 (over 0.5 million sqm in each country). New space is also expected to be delivered to Czechia, Estonia, Romania and Serbia (over 200,000 sqm in each market).
Most of the pipeline stock is planned in the capitals, although new projects are scheduled to appear also in regional cities, for example Forum Gdańsk (62,000 sqm) – one of ten biggest retail schemes being developed in the region.

Dominant sectors

According to Colliers International report, fashion brands dominate in tenant-mix of a typical shopping center in CEE (30%). Shoes, leather, health and beauty brands are also important tenants.

Fashion brands dominate in terms of the number of debuts on the CEE markets. In 2015-2016, the highest number of debuts was observed in Poland (e.g. Forever21, Victoria’s Secret) and Czechia (e.g. Karl Lagerfeld). Polish LPP Group, from fashion industry, also expanded internationally, having debuted on the Croatian, Serbian and Belarusian markets. Also, Wojas, Polish shoes brand, enjoyed its international debut, after opening its stores in Czechia and Romania. Moreover, Sizeer opened its new stores in the Baltic countries, and 4F appeared in Riga.

Food sector consolidation

Food sector consolidation is one of the most noticeable trends on the retail market in majority of CEE-13 countries. An example is the acquisition of Profi (shops in 250 cities in Romania) by
Mid Europa Partners and the purchase of Żabka chain (4,500 convenience shops in Poland) by CVC Capital Partners. The most active players are Lidl, expanding dynamically in six countries and planning to enter new markets in the region, as well as Kaufland, operating in five countries.

New dimension of shopping

With the dynamic development of e-commerce, the role of gastronomy, leisure and entertainment is expanding in shopping centers in CEE.

“This is observable especially in Poland and the Baltic countries, where existing schemes invest in modernization and space expansion to set up cinemas, kids playrooms, fitness clubs, and new dining areas to provide clients with attractive and diverse possibilities of spending free time,” says Marta Machus-Burek, Partner and Director of Retail Agency at Colliers International.

More information on the report is available at: https://goo.gl/5L3gH5

[1] Belarus, Bulgaria, Croatia, Czechia, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, Serbia, Slovakia and Ukraine.