PRICE WAR ON POLAND'S CLOTHING MARKET GETS TOUGHER
- Online sales increase
Warsaw (GTAI) - More and more clothing and shoe companies are merging in Poland. Demand is growing, but the price pressure is increasing. Customers appreciate the quality of German brand products.
Sales of clothing and footwear in Poland are rising steadily. However, the price war is becoming increasingly fierce: off-price shops offering branded goods at low prices, online shops and outlet centers are putting pressure on retailers and lowering the average returns.
Demand will receive an additional boost at the end of the year, as clothing and shoes are popular Christmas gifts. According to a survey by the consulting firm Deloitte, Polish families want to spend an average of EUR 271 on the occasion of the 2018 season, - 6 percent more than in 2017. German branded products are highly valued for their quality.
Source: Euromonitor International
The US chain TK Maxx already operates 43 off-price stores in Poland. The assortment includes various goods - from household goods to clothing - which are greatly reduced. Neinver from Spain currently operates four outlet centers under the name "Factory" in Poland. There are two in Warsaw and one each in Krakow and Poznan.
Neinver plans to use the commercial park Futura Ursus in Warsaw commercially in the future. In total, there are a good dozen outlet centers in Poland. On the site of the Galeria Rumia shopping center in the town with the same name northwest of Gdynia, the Pomerania Outlet center is planning to open at the end of 2019 with 80 shops.
The German online retailer Zalando is with its shopping club Zalando Lounge for special offers present in Poland, It has set up a logistics center in Olsztynek (Hohenstein), primarily for further expansion in Europe with this concept. Discount chains such as Biedronka and Lidl are also offering inexpensive clothing.
The growing pressure of competition and prices is leading to further consolidation among domestic companies in the sector. Various mergers are emerging. The Vistula Group will take over its competitor the men's outfitter Bytom already in 2018. The antitrust authority UOKiK has already approved the merger. From 2020 on the Group expects this to generate additional revenue of around EUR 1.9 million to EUR 2.3 million annually.
The acquisition of the apparel company Simple Creative Products S.A. (Gino Rossi Group from Slupsk) with its brand Simple for upmarket women's clothing by Monnari Trade S.A. cracked in November 2018. Simple is represented with 63 salons and Monnari with 163 stores in Poland.
OTCF, a company specializing in sportswear, owns the sports brand 4F with over 200 stores in Poland. OTCF has a strong presence abroad. Gino Rossi owns a total of around 90 shoe salons in Poland, Lithuania, Latvia, the Czech Republic and Slovakia.
Market leader LPP expands
The largest clothing company, LPP from Gdansk, continues to expand. It opened its 20th store in September 2018 with the name of its largest brand Reserved in Germany. The LPP's shops are located in the capitals of the federal states and other commercial metropolises. LPP has set up its latest store in the Zeil shopping mile in Frankfurt. According to its deputy chairman, Slawomir Loboda, LPP with Reserved generated higher revenues abroad than domestically in the second quarter of 2018.
LPP not only wants to open further stores in Western Europe, but is also aiming for other markets. In November 2018, first sales salons of the LPP brands Reserved, House, Mohito and Sinsay followed in Almaty in Kazakhstan. These brands can be purchased in Germany via online trade. The German market is LPP's fifth largest foreign market in terms of turnover.
|Name of company||Revenue||Change|
|Gino Rossi (shoes) 1)||20.5||-8.4|
|CDRL (Coccodrillo chain for children's clothing) 2)||15.6||3.0|
1) without Simple; 2) in Poland
Source: Company data according to daily newspaper Rzeczpospolita
CCC does not rely on the online segment only
The country's largest shoe company, the CCC Group, which is also expanding strongly abroad - including Germany - already achieved a fifth (19.8 percent) of its turnover with its online trade in the first half of 2018. The online sales were very successful: In the first three quarters of 2018 the revenues on a zloty basis rose by 59 percent compared to January to September 2017 to EUR 150.3 million.
An important platform for CCC online trading is eObuwie.pl, in which CCC holds a 75 percent stake. There are plans to place eObuwie.pl at the Warsaw Stock Exchange. eObuwie.pl intends to use the result to expand and strengthen its logistics. At its location in Zielona Gora (Grünberg), eObuwie.pl is building a modern, automated warehouse.
Online shoe trade relies on 3D models of feet
According to eObuwie.pl chairman Marcin Grzymkowski, who holds 25 percent of the shares the platform wants to use the esize.me scanner in order to motivate more Poles to buy shoes online. This scans feet and creates accurate 3D models of them. Based on these, virtual shoes will be selected that guarantee the best possible fit. It is planned to place such scanners at around at 40 locations in shopping centers. So far, according to estimates by eObuwie.pl, only 10 percent of Poles buy shoes online, as the daily Rzeczpospolita reports. In spring 2019 eObuwie.pl plans to establish an e-shop for high-quality clothing.
CCC already ordered shoes from Gino Rossi to distribute them through eObuwie.pl. Now the group wants to offer these articles also in stationary shops at home and abroad. Therefore CCC intends to acquire approximately 120,000 pairs of shoes from Gino Rossi in 2019 and approximately 180,000 pairs in 2020. After all, orders are expected to increase to around 500,000 pairs per year. Gino Rossi has factories in Slupsk and Elblag.
CCC will also acquire the license to use and sublicense the Gino Rossi brand name. The group may design its own shoe models under this brand name. Special collections are to be sold in around 200 selected CCC stationary stores among other countries in Poland and the Czech Republic. Through the agreement with CCC, Gino Rossi plans to earn an additional EUR 3.5 to 4.2 million in 2019 and EUR 8.4 to 9.3 million in 2020.