THE CHANGING RETAIL LANDSCAPE

The revolving trends in the retail space continue to inform EPP’s strategy. Our projects have a strong presence in

Poland’s major cities and they continue to attract and capture footfall. Active asset management, driven by a

market leading team and well curated tenant mix, makes EPP relevant and attractive to both retailers and

shoppers. EPP continues to monitor these trends in order to stay ahead of the market and use our scale in Poland,

expertise and innovative approach to remain a market leader.

E-COMMERCE

HOW EPP IS RESPONDING

E-commerce and its impact on traditional

retail is a hot topic in the property industry.

As more people embrace smartphones and

tablets e-commerce has moved from a

futuristic concept to the mainstream.

However, the Polish market is unique in its

uptake of e-commerce and traditional stores

still have a strong place in the market.

The e-commerce market share of total retail

sales is estimated to be between 5% and

6% in 2018 and is expected to increase

to 7% in the next three years. This remains

relatively low compared to Western

European countries where the market share

exceeds 10%. Research has proven that in-

store sales remain very popular in Poland as

consumers prefer to “try and feel“ goods

before buying. Therefore more than 70% of

online sales in Poland are done through click

& collect. One of the additional reasons for

this is that people aren’t at home to collect

goods and traditional shopping centres

remain open at more convenient hours. The

click & collect concept is bridging the gap

between online and bricks and mortar and

provides a number of benefits including a

no cost collection option for consumers,

allowing brands to stay physically connected

to customers; incremental spontaneous

sales on collection and positions retail real

estate as more than a sales point but also an

awareness and fulfilment point. Over and

above this, Poles do not feel comfortable

with sharing personal data online and

therefore prefer to go into a store to pay for

and collect goods.

There is a demonstrated halo effect when

opening a new store, which not only

increases the brand awareness but also

stimulates online traffic. As a result many

Polish e-retailers, such as iperfumery by

Notino and e-obuwie, are opening traditional

stores to help increase brand recognition.

Top products bought online are clothes and

accessories (64%), books, CDs and movies

(54%), tickets (51%), shoes (44%), cosmetics

(43%) and home appliances (37%).

The uniqueness of Poland is also marked by

the lack of high street retail with shopping

centres across the country being the main

destination for shopping and leisure.

Sources: Savills; Colliers

Demand for retail space remains high in

Poland. EPP works closely with tenants to

adapt space to accommodate click & collect.

In addition we focus on driving footfall to

our centres by enhancing our leisure and

entrainment offerings. This not only includes

restaurants and cinemas but also fitness

centres and children’s play areas.

We have also identified a need for some

tenants requiring assistance in setting up

an online presence and we are

investigating ways to assist tenants in this

regard. This could include a platform for

them to sell their products. This concept is

currently under investigation.

EPP works closely

with tenants to

adapt space to

accommodate click

& collect.

Research has proven

that in-store sales

remain very popular

in Poland as

consumers prefer to

“try and feel“ goods

before buying.

28 EPP Integrated report 2018

Demand for food and beverage offerings

and variety in this space has risen in the

past few years. The expansion of food

and leisure offerings is a clear trend in

retail with the food and entertainment

offering in retail centres increasing from

5% 20 years ago to up to 25% today.

The perception of gastronomy has

undergone profound changes in recent

years. In fact, the range of food available

is no longer an addition to a pure

shopping experience, but now also is

part of the reason why customers

continue to visit shopping centres.

Sources: Savills; JLL

HOW EPP IS RESPONDING

EPP has advanced the redevelopment of

its food courts at Galeria Echo, Pasaż Grunwaldzki and Galaxy to ensure a more

modern, shopper-friendly environment

that encourages dwell time. The Galeria

Młociny development in Warsaw will

feature Dechy na Bielanach, a specially

designed roof garden offering a

gastronomic street with a wide array

of restaurants in wooden capsules

surrounded by greenery designed by

international architectural studio

Broadway Malyan. This feature is expected

to foster various interactions including

family get-togethers, meetings with

friends, new tastes and culinary

experiences as well as cultural, sporting

and open-air events (see shopping centres

as a leisure and entertainment destination

below).

Food and

entrainment

offering in retail

centres increasing

from 5% 20 years

ago to up to 25%

today.

FOOD AS THE NEW FASHION

29EPP Integrated report 2018

THE CHANGING RETAIL LANDSCAPE (CONTINUED)

In March 2018 the Sunday trading ban in

Poland was introduced whereby stores are

closed on two Sundays per month in 2018

and three Sundays in 2019 until 2020

when the ban will apply every Sunday. As

anticipated, customers adjusted their

shopping habits moving their shopping

days to Mondays, Fridays and Saturdays.

For the year the trading ban resulted in

20 closed Sundays resulting in Saturday

footfall in EPP centres increasing 12%;

Mondays up 9% and Fridays up 6% at

year-end.

Although it is too early to tell, to date the

Sunday trading ban has had a minimal

impact on operations.

HOW EPP IS RESPONDING

EPP has launched the EPP Shopping

Centres Social Activation programme

which is aimed at using the Sunday trading

ban to position our shopping centres as

places of social and cultural activity. This

has involved cooperation with public

institutions and the implementation of

non-commercial attractions focused on

cultural, educational, health and

technology events. This has helped drive

footfall on Sundays and attracted new

groups of customers to our centres. The

programme has better positioned our

assets and strengthened our competitive

advantage in local markets.

Examples of events at Galeria Echo

include the 18XI Sport Sunday in

conjunction with City Hall and main

sports clubs in Kielce, Independence Day

and Unplugged Games (educational

board games). The idea behind the

events was to offer customers an

attractive way to spend free time and to

encourage them to take advantage of

the food options available at shopping

centres on trade-free Sundays. All three

events generated an increase of between

90% and 128% in footfall on a trading

ban Sunday.

As anticipated,

customers adjusted

their shopping

habits moving their

shopping days to

Mondays, Fridays

and Saturdays.

EPP is positioning its

shopping centres as

places of social and

cultural activity.

SUNDAY TRADING BAN

30 EPP Integrated report 2018

Poland has experienced four advances in

shopping malls since the mid-1990s

having moved from hypermarkets with

relatively small shopping arcades usually

located in suburban areas, close to large

housing estates and near important

transport routes, to adding specialist

stores for home and garden, electronics

and clothing. This was followed by the

introduction of entertainment and leisure

and sports products as well as international

brands at the beginning of the 2000s.

Now shopping centres can also be

attached to offices and hotels and apart

from restaurants and cinemas they also

feature art galleries, concert halls, discos,

gyms, indoor climbing walls, hair dressers

and fun fairs for kids.

Shopping centres are no longer just retail

establishments but also a place where

people go to spend their free time. Studies

of Polish consumers show that young

people in particular enjoy spending their

free time in shopping centres. Modern

shopping centres are adapting their

offering to address these changing needs.

Source: Consumer preferences and

behaviour in shopping malls in Poland –

Anna Irena Szymańska and Monika Płaziak.

HOW EPP IS RESPONDING

Tenant mix is at the heart of EPP as this

remains a significant driver of footfall. As

part of our focus on tenant mix over the

past few years we have increased the

exposure to food and beverage in our

shopping centres. Polish consumers see

shopping as a leisure activity and place to

meet friends and therefore we want to

provide an environment that caters to the

needs of our consumers. We have

therefore set a long-term target that our

centres should have an exposure to food

and beverage and entertainment of

between 15% and 25%.

As part of our focus

on tenant mix over

the past few years

we have increased

the exposure to food

and beverage in our

shopping centres.

Shopping centres are

no longer just retail

establishments but

also a place where

people go to spend

their free time.

SHOPPING CENTRES AS A LEISURE AND ENTERTAINMENT DESTINATION

31EPP Integrated report 2018