The start of the new year shows that the retail market in Poland faces many issues. Some are inherent to the local market structure, including inefficiencies caused by extreme fragmentation, especially in the grocery sector. Others are global challenges, like the growing importance of omnichannel strategies, the rise of marketplaces, the increasing power of private labels allied to unpredictability of the Covid-19 pandemic.
However, the most acute problem affecting the whole retail industry is inflation, which reached 8% in 2021 (year-on-year evolution). The new year already saw a huge increase in energy costs, especially gas and electricity. As a result, Polish consumers see purchasing power diminishing, which makes them adopt various saving strategies. It is also likely to cause political unrest. The government has introduced a half-cooked reform of the tax law, adding chaos to an already complicated system. For businesses, and retail in particular, it’s an unwelcome distraction and an additional factor driving higher costs due to the pressure on salaries. At Inquiry Market Research, we expect a new wave of grocery mergers and acquisitions (the last one involving sale of Tesco’s assets to Netto), increased price competition and brands withdrawing from the market (especially in the non-food sector).
That said, we can see many Polish retailers flourishing despite Covid-19. The two factors driving success are strong e-commerce presence and/or international expansion. Traditionally, retail expansion moves were limited to Western retailers entering Central and Eastern Europe, but these days, we can see Polish brands expanding into Western European markets. So, keep an eye on brands like CCC (and their ecommerce branch eobuwie.pl), Reserved, Answear (pure online player) or Pepco!