beyondbrics

Nothing says confidence in future economic growth like laying out real money to build new shops – something that some of Poland’s leading retail operations are currently busy doing.

LPP, Poland’s largest publicly traded clothing retailer, is planning to spend 150m zlotys ($48m) to add 163 shops to its central European retail network by 2013 – bringing the total for the Gdansk-based retailer up to 1,055 locations.

The bulk of the new investments are aimed at Poland, Ukraine and Russia, while networks in Bulgaria, Romania and the Czech Republic (all countries grappling with slower economic growth) will be trimmed due to poor results.

Biedronka, a discount food chain that controls 10 per cent of Poland’s 250bn zlotys food market, is also pumping more money into expanding its network. After spending 1.3bn zlotys to build new shops last year, the chain, owned by Portugal’s Jeronimo Martins Group, aims to invest 2bn zlotys this year.

That means the company will open about 250 new shops this year, breaking past 2,000 outlets this summer, with the goal of having 3,000 outlets by the end of 2015.

Those kinds of investments make sense when taking a look at Poland’s retail sales numbers.

Poland’s doughty shoppers helped keep the country from falling into recession in 2009, and their continued spending was an important contributor to last year’s 4.3 per cent economic expansion.

Retail sales in January grew by an annual 14.3 per cent and Kredyt Bank commented that the data “confirmed still solid domestic demand”.

While analysts expect sales growth to slow – “Given the situation – growing unemployment and still mild growth of wages, high uncertainty and worsening sentiment, domestic fiscal consolidation – we expect to see a slowdown of retail sales throughout this year,” noted Erste Bank – Poland continues to outperform most of the rest of the EU.

In its latest growth predictions, the European commission expected the Polish economy to expand by 2.5 per cent in 2012, the fastest rate in the Union.

A recent presentation by the Polish finance ministry showed that from 2008-2011 (a period of deep economic turmoil), saw the Polish economy grow by more than 15 per cent. The runner-up was Slovakia at 8 per cent, while the EU as a whole contracted by 0.5 per cent over that period.

Decent growth means wealthier consumers, and that is who the retailers are hoping to ensnare.

Related reading:
Polish GDP growth: can it last?, beyondbrics
Poland’s shoppers to the rescue, beyondbrics
Optimistic Poles carry on spending, FT
The man who bet on tradition, FT