A market commentary on the retail trends in Poland, Czech Republic and Hungary. Author: Dominika Jędrak, Director, Research and Consultancy Services, Colliers International, Poland
Do we shop differently?
Observing the cultural changes taking place not only in Poland but also in other countries in the region and their impact on the lifestyles and shopping habits of customers, it is obvious that we will soon “buy differently” than we did in the 1990s. Shopping centres will also be forced to change their image.
In the coming years, we can expect mainly qualitative changes in the comfort of shopping. Slowly, these changes are already becoming visible; this applies to both new projects and modernisations undertaken by the owners of older buildings. New solutions are being implemented aimed at improving the accessibility of centres for families with children, the elderly and the disabled. Toilets, food courts and relaxation areas are being refurbished, and information and navigation systems and security systems are being introduced. This is evident both in Poland and in the Czech Republic and Hungary.
Virtual vs real shopping
Innovations can also be seen in the rapid development of e-commerce and the growing number of retail chains opening new sales channels. Shopping centres will have to adapt to the changing strategies of retail chains and take up the related technological, organisational and financial challenges. Centres will rent, therefore, space for the “show rooms” of retail chains and “pick-up points” for internet sales.
In the near future, we will certainly see in shopping centres many new solutions that combine virtual and real shopping. Retail, like other spheres of life, is changing under the influence of the progressive technological and communication revolution. Retail facilities will start to use modern technology, communicating for example via smartphones with their customers. Beacons that communicate with customer’s tablets and smartphones using WiFi technology allow shopping to be personalised, NFC technology used for mobile payments, the “click and collect” system, quick access to price comparisons sites and communication via social media – these technologies are becoming increasingly popular and will soon appear in most shopping centres.
Evolution of food operators
We can also expect interesting changes in the food sector. Increased awareness of products, experimentation with different types of food, the need for diversity and higher quality products mean that customers are looking for new forms of food shopping. Shopping centres are increasingly organising bio-markets and regional food fairs. A good example can be found in some of Prague’s shopping centres, which have a much more developed food offer – healthy food zones are a permanent fixture alongside supermarkets. In Poland, they operate for the time being on a cyclical basis, but over time it can be expected that they will become a permanent feature in shopping centres, to complement supermarkets or hypermarkets. Traditional food operators will therefore be forced to seek innovative solutions to maintain their market position – a large selection of merchandise and the lowest prices are no longer enough for the conscious consumer.
Public space and service functions – a permanent part of a shopping centre’s offer?
The biggest changes, however, will affect the organisation of space in shopping centres. New generation facilities will meet the expectations of a “flexible lifestyle”, that is the increasingly frequent penetration of various kinds of activity, both in terms of its type (work, shopping, leisure) and location (home, work, shop). Therefore, the role of gastronomy, entertainment and recreation will grow, as well as public spaces and green areas, as inseparable elements of newly designed centres. Shopping centres of the future will be public places where people can eat, shop, work or spend time with friends.
An interesting aspect connected wit the introduction of new features to shopping centres is the approach of the financial market and investors to the evolution of shopping centre functions. The fact is that many of the these solutions, especially those with a cultural or entertainment character, are not treated as a stable source of income at a specified level. Medical centres, cinemas, children’s play areas and gyms are for financing institutions and investors functions with a value close to other shopping centre tenants. However, schools, co-working offices and art galleries are not stable tenants in their opinion, and financial projections and valuations cannot be built on them.
So the question arises whether new retail or service functions should be introduced to centres or not. The answer depends on many factors and it is not clear. With a limited number of tenants and low diversity, additional functions can be differentiator and help to define the brand positioning of a centre, the values that it represents, and how it responds to the needs of inhabitants within its catchment area. Understanding the needs of target groups and observing the changes to which they are subject is the foundation to decide whether complementary functions are worth the investment. If, therefore, the introduction of additional features is part of an integrated commercialisation strategy and long-term building of a centre’s market position, there is a greater chance and likelihood that they will become a permanent part of a shopping centre’s offer, thereby gaining acceptance from financial institutions and investors. In a situation where different forms of additional cultural, entertainment or social activities appear in a shopping centre as a reaction to rising vacancy rates for commercial space, it can be expected that they will not be long-term solutions that build the position and uniqueness of a centre.