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LPP and CCC stores are expected to load outlets in Central and Eastern Europe
Changing pandemic invitation strategy
Opportunities for local players as Western brands online
* Consumer spending returns to expansion in some East economies
By Anna Koper and Michael Kahn
WARSAW / PRAGUE, 17 September (Reuters) – Poland’s leading clothing and footwear stores, LPP and CCC, are re-entering Eastern Europe, evaluating opportunities to climb physical retail outlets as foreign competition focuses on online pandemic sales.
LPP – Eastern Europe’s reaction to H
These plans have stagnated because the pandemic has affected customer spending, but with Eastern Europe more resilient to the crisis than Western economies, the store sees more in the region of its home.
“Our expansion technique has been replaced by the epidemic,” LPP Deputy Director General Przemyslaw Lutkiewicz told Reuters. “We hope that from next year we will return to the expansion of new stores, but basically in the east markets. “
The LPP increase occurs when some of the major Western brands, which flocked to the region around 2000 to take advantage of emerging revenue and immediate economic expansion, have closed retail establishments in Central and Eastern Europe.
French fashion store Camaieu, looking for a customer in their fight for the coronavirus crisis, is preparing to close 27 outlets in the Czech Republic and has closed 25 in Poland, among others abroad, as it focuses on its domestic market.
Meanwhile, Inditex announced in June that it would close up to 1,200 small outlets in two years, adding a component of its Zara and Pull outlets in Europe.
Analysts say that in difficult times, it makes sense for Western European stores to access their key markets.
“The fact that high-level players restrict their presence (in emerging markets) opens up opportunities for Polish brands,” said Grzegorz Laptas, pwC Warsaw’s spouse.
The CCC shoe and handbag store, whose products include Sprandi shoes and Lasocki and Jenny Fairy shoes and handbags, has reduced its expansion plans this year, but plans to make further investments in Eastern Europe next year.
“We will open retail stores in Romania or Russia because they are smart markets,” Reuters Marcin Czyczerski, managing director of CCC, one of Europe’s largest footwear manufacturers, told Reuters.
Central and Eastern Europe has prospered in recent years thanks to the EU budget and global trade investments benefiting from lower wages and a professional workforce, and the region has noticed fewer cases of COVID-19 than major European countries.
Retail sales expanded again in July in Poland, the Czech Republic and Hungary, and Poland is expected to be the highest-strength economy in the EU this year with GDP below 4. 6%, according to European Commission forecasts, at 8. 7% for the euro area.
LPP, in Gdansk, which sells its largest “Reserved” logo in 25 countries, has been particularly affected by maximum prices and low sales in Germany, where it has 19 stores.
The store expects its total sales to fall by as much as 30% in 2020, contrary to a pre-pandemic forecast of double-digit growth, but plans to build its sales area by more than 10% next year, basically in Europe of the This.
The apparel and footwear market in Poland, Romania and Russia, with around 55. 2 billion euros in 2019, is less than part of the combined length of Britain and Germany, according to the knowledge of Euromonitor International.
However, in line with the expansion of capita spending at constant exchange rates in markets such as Poland and Romania, faster at 19% and 43% respectively between 2015 and 2019, compared to a 6% increase in Britain and a 1. 5% decrease in Germany.
BRAND RECOGNITION
In Eastern Europe it is perceived that Western logos provide incredible quality, which led LPP to use an English call for its Reserved logo, associated it with the place to eat, considered a luxury in Poland when the logo was created in 1998.
In 2015, an examination conducted through GfK Poland showed that only about 10% of Poles knew that Reserved a Polish brand.
By investing in physical stores, LPP and CCC are betting that Eastern consumers prefer to shop in-store rather than online.
According to Euromonitor data, the percentage of e-commerce in Poland, Romania and Russia in 2019 accounted for between thirteen and 14%, with 25% in Germany and 27% in Britain.
For many Russian and Eastern European consumers, online donations from fashion stores are insufficient.
“Online, I can’t see things, see how they go,” said Yekaterina, a Muscovite who buys groceries in the Russian capital. “And once delivered, they hardly ever meet expectations, you have to make returns. “
Habits are also changing, accelerated by the pandemic.
LPP says its online business is now another precedence after its global online sales increased to a third of its total sales in the first quarter, from less than 12% to last year’s total, due to store closures. However, it still expects online shopping to take off only gradually in Eastern Europe.
“The east markets are otherArray . . . consumers prefer classic grocery shopping methods, so let’s open more retail outlets there,” Lutkiewicz said.
The CCC has also noticed an increase in online sales globally, but sees the possibility of gaining a smaller local competition market percentage in the region through the unloading of the store area due to the pandemic, at a low cost.
“There are many entities that have a dozen or more than a dozen retail outlets in their portfolios that will go bankrupt or close their operations, allowing others to recover the shares without having to invest in points of sale or without higher expenses,” the ceo said. Czyczerski said. (Additional report via Sonya Dowsett in Madrid, edited through Susan Fenton)