News Article brand Cresa Poland report retail shopping
by Property Forum | Report

Poland is an attractive market to global investors. Its key strengths include the large population of nearly 40 million, a strategic location in Europe, strong economic growth and infrastructure developments, encouraging an increasing number of retailers to enter the Polish market. Contrary to appearances, deciding whether to expand is not an easy task even for the strongest corporations. Szymon Łukasik, Head of the Retail Department at Cresa Poland wrote about launching new brands on the Polish market.


Checking out the market
 
Large-scale businesses are always in search of new markets. When considering expansion options in Central and Eastern Europe, they are also likely to target Poland. They examine the local market and competition, consult lawyers and accounting experts, and only then – having the relevant facts – will they turn to real estate advisors and leasing agents. No binding agreements are made at this stage yet, the focus is rather on gathering the largest volume of market data.
 
Some businesses choose to launch brands on the Polish market on their own, which may prove a very daunting and time-consuming endeavour. Some brands that have successfully debuted on other markets have failed in Poland, largely due to choosing inappropriate store and distribution centre locations.
 
Today, most foreign brands entering the Polish market therefore seek support of commercial law specialists, tax consultants and real estate advisors.
 
An advisor’s role in launching brands on the Polish market
 
Commercial real estate advisors play a vital role in foreign investments. They initially present the entire Polish market, not knowing whether a foreign investor would want to work with them. They give an overview of logistics opportunities and real estate lease or acquisition options, and present an analysis of competitors and chances of success of the investor’s potential undertaking in Poland.
 
At the next stage, real estate advisors narrow down the scope of search for commercial properties for the investor. They first present an overview of regions and cities to later propose specific properties that would best satisfy business objectives of a new market entrant. At this time the investor also partners with Polish law and marketing firms, tax consultants and HR advisors.
 
Negotiations between tenants (investors) and landlords are often lengthy. An advisor representing the tenant works closely with a tenant-designated law firm and seeks ways to bring down lease costs e.g. by identifying an appropriate fit-out contractor or negotiating financial contributions.
 
Features specific to the Polish market
 
Investors may be taken aback by some Poland-specific phenomena which are absent in other countries. For example, the Polish market is dominated by shopping centres with a limited presence of high streets. This may be a major setback for some brands considering expansion into new markets.
 
Some investors are also likely to be surprised by the structure of fees for real estate brokers and lease advisors in Poland. On developing real estate markets, real estate brokers tend to be paid by landlords – also for tenant advisory services. By contrast, on developed and mature markets, tenants are usually aware of having to pay a fee to a real estate broker and advisor. On the Polish retail market, costs of professional real estate advisory services are borne by tenants. Therefore, foreign investors from countries with different market practices may find it difficult to adapt to the requirements of the Polish market.
 
Build a market position
 
Launching a brand does not end with putting the first products on the market. The retail chain is yet to be optimized and the first months of operation are a dress rehearsal for an investor.
 
Businesses entering the Polish market very often continue to work with real estate lease advisors at a later stage, looking for new store and distribution centre locations. Only after two or three years from the first lease is it possible to determine whether a market entry has been successful. Most debuts run according to schedule, but some foreign tenants choose to renegotiate leases with landlords. This is a stage where some brands may decide to withdraw from the Polish market.
 
With readily available information and the rapid development of advisory services, entering the Polish market today is much easier than it was a couple of years ago. Approximately 30 new brands representing various sectors make a debut on the Polish market every year. It may take an international investor a year and a half to a few years to explore the market and open the first stores in Poland.