The Polish apparel and footwear franchise sector is growing fast and shows a high potential for the U.S. franchises. Poland, with a population over 38 million people, is considered the largest consumer market in Central Europe. Best prospects exist for those franchising concepts that target market niches, fashioned products and novelties.
Financing is the most critical element for successful entry and penetration by U.S. franchisers. Willing and wellcapitalized Polish investors are difficult to identify. One of the best strategies for American companies is to establish a flagship operation in Poland or locate a partner in the U.S. or Europe willing to purchase a U.S. master franchise, and interested in pursuing the Polish market.
Market Overview/ Market Trends
The Polish franchise market is considered matured. The market is dominated by domestic networks, and Polish franchises are developing successfully abroad. In 2006 the turnover in franchise outlets amounted to USD 17 billion, almost 5% of the Polish GDP, an employment reached 175,000 people. The growth of this sector is projected at a rate of approximately 20% annually over the next several years.
According to PROFIT system, at the end of 2007 there were over 460 franchise networks and about 40 agency networks operating in Poland, an increase of 26% over 2006 (360 franchise and 38 agency networks). The most popular branch is fashion in retail trade and catering business in services. Among agency networks grocery shops and bank agencies dominated. In 2006 Poland witnessed 28 withdrawals from the market. The most common reason for this was acquisition or withdrawals of the very initial stage. In 2006, almost 17,000 franchisees owned 20,600 outlets and over 11,000 agents ran over 13,500 agency outlets. The average investment amounted to USD 100,000, however the most popular still were cheap franchise offers with a return on investment shorter than 24 months.
The whole apparel and footwear market is growing dynamically, especially the market for luxury goods. There is a growing expansion of foreign luxury brands, such as Cacharel, Deni Cler, Armani, Kenzo, Zegna, Boss, Burberry, Escudo, Tommy Hilfiger, Ralph Lauren, Lacoste, Versace, Iceberg, Roberto Cavalla, GianFranco Ferre, Chanel, Gucci and others. Most of these brands are being developed through partner systems.
At the end of 2007 there were 94 apparel and footwear franchising systems, including 9 lingerie franchises. This report analyzes a total number of 85 systems (excluding lingerie). In September 2007, the apparel and footwear franchise sector was represented by 3,847 retail outlets (2,248 franchised and 1,599 company-owned), a 16, 3 % increase over 2006. These companies are growing dynamically and expanding their networks.
There were only 8 footwear franchise networks present in Poland. They included cheap footwear for the whole family (Ambra, CCC, Boti), fashioned footwear (Rylko, Bagatt, Gino Rossi), and children’s/ teenagers’ footwear (Heavy Duty and Bartek). The apparel franchise segment is much more developed and includes fashioned apparel (19 networks), teenagers’ apparel (19), casual apparel (16), denim clothing (7), sporting clothing 93), outlets (2), used clothing (20 and niche apparel (1).
In 2007, seven new franchise networks entered the market, including 5 Polish brands (Moodo, 47 Sport Performans, No comment, Volcano, Boogie Nights), Sela from Russia and Petit Patapon from France. The following networks have decided recently to expand through franchise system: Quadri Foglio, LookAt, Balkan/Polish, Umbro/English and Prestige City Wear/Dutch.
By Ewa Bogdanowicz