E-commerce is becoming increasingly popular as people are
buying a wider range of goods online. They can buy groceries,
a new pair of shoes, or purchase a piece of furniture for
their living room, without leaving their homes. According
to the US Census Bureau, e-commerce sales accounted for
c. 8.4 percent of total retail sales in the United States in the third
quarter of 2017 – and this percentage is expected to almost
double within the next five or six years. The appeal of online
shopping is attracting customers from all around the world,
and Poles – both as customers and as businesses – do not
want to get left behind.
Many retail companies in Poland have come to the conclusion
that developing online sales channels is crucial to their further
growth. The Polish e-commerce market is currently worth
around PLN 35 – 40 billion (approx. USD 9.7 – 11.1 billion)
and is expected to achieve double-digit growth in the
coming years. As a result, many companies (both local and
international) have decided to accelerate their plans to
commence – or develop their existing – online operations.
This dynamic is particularly visible in the fashion segment,
where offering online sales is no longer an option, but a must.
In Poland, internet sales are already having a tangible
effect on traditional sales channels. For example, shopping
centers – which still remain very popular – are starting to see
a decreasing number of customers. Many customers now
visit shops just to see, touch, and try on products, before
finally purchasing them online, where retailers can offer
competitive prices and provide convenient home delivery.
Other customers use the Internet to compare prices or check
product availability in convenient locations, where they can
collect the purchase at their leisure. Shopping centers, as well
as traditional shops, are gradually becoming showrooms or
‘logistics hubs’ for online shoppers – a phenomenon which is
now well understood by leading fashion retailers in Poland.
So what does the future hold for
fashion retailers in Poland in the
light of
e-commerce expansion?
Where are the opportunities?
First of all, Poland’s vibrant economy (expected to grow
by around 4 percent in 2017 – according to a recent World Bank
study), fueled by private consumption, has built a strong
foundation for the entire sector. Customers remain optimistic
about their financial situation, which translates into sales
and increasing turnover for retailers. E-commerce will
undoubtedly benefit from this situation as customers seek
more efficient and convenient ways of shopping.
Secondly, irrespective of the rapid expansion of online sales,
fashion retailers do not expect traditional channels to be
marginalized. They will gradually start playing a different
role and become a place for meetings and entertainment,
with an important element of shopping activity. Traditional
fashion shops and new online sales channels will increasingly
complement each other, with omni-channel strategies
becoming ever more crucial. The interaction between online
and bricks and mortar operations is seen by many retailers as
the ideal strategy going forward, and one which can generate
incremental growth.
Thirdly, e-commerce offers Polish retailers an opportunity
to expand internationally (within the EU) without having to
establish multiple legal entities in different countries (provided
that all the legal and tax conditions are met). Many have
already taken advantage of this opportunity and many more
will surely follow.
Are there any challenges on
the horizon?
There is no imminent risk of an economic downturn in
Poland, hence the outlook for the entire retail sector, and for
the fashion industry in particular, is positive. Nevertheless,
there are specific legislative changes that may cause some
turbulence in the near future.
The first one is related to the introduction of a Sunday
trading ban in Poland. The new legislation concerning trading
restrictions was passed by the Lower Chamber of the Polish
Parliament on 24 November 2017 and is planned to come
into force as of 1 March 2018. According to the new law, in
2018 trading will be allowed on the first and the last Sunday of
each month. From 2019 trading will be limited to one Sunday
per month, and from 2020 onwards the ban will concern
all Sundays with some exceptions (i.e. seven Sundays in a
year, including those before Christmas and Easter holidays).
According to the current wording of the bill, which is still
subject to further legislative process (including signing by the
President), the online trading will not be affected. Potential
amendments to this legislation, however unlikely, may still be
adopted, hence one should wait until the bill is signed by the
President to see what impact it will have on e-commerce.
However, this may end up boosting sales, as customers may
spend more time shopping online on Sundays, as they won’t
be able to visit their favorite shopping malls.
The second one is related to data protection. Retailers often
highlight the value of the information that they gain through
their online businesses. They are able, in real time, to analyze
customer behavior, identify shopping patterns, and take swift
action on the basis of this data. Having access to this valuable
data allows retailers to run their businesses more efficiently,
but it also entails data protection responsibilities. The General
Data Protection Regulation1
(GDPR) is a European-wide
regulation that retailers should be well aware of. It is often
presented as a challenging, internationally applicable law that
will revolutionize the world of personal data protection and
may result in the imposition of severe penalties if not adhered
to. The GDPR increases a data controller’s information
obligations; however, by providing its customers with clearly
defined, accurate information, retailers may also gain an
advantage, i.e. a customer is likely to be more loyal towards a
retailer which is transparent and complies with all of its legal
obligations. This is especially important in Poland, where the
level of consumer awareness with regard to personal data
protection is relatively high. With respect to the distribution
of newsletters or other forms of online marketing activity,
it can be anticipated that fewer people will wish to sign up
for such materials or continue to receive them having read
all the information about the conditions of personal data
processing. Nevertheless, those who sign up should be
considered as solid sources of highly valuable data, which is
particularly important in the fashion sector, where retailers
gain their advantage through add-on services such as mobile
apps, loyalty programs or special offers that are tailored to
specific customers.
The GDPR disciplines the data controller to structure a well-organized
and useful personal data collection and processing
system – one that has appropriate security arrangements
but also allows for an easier exchange of data. In addition, it
will also simplify international operations, as retailers will be
required to provide the same privacy notices to customers
in various jurisdictions. As a result, they will be able to design
an effective international data flow system and gain greater
certainty about the validity and quality of the data that they
are handling.
Although the GDPR will require significant effort from
retailers, and its implementation may be burdensome, it
will set equal standards for data protection requirements
within the EU, and will most likely facilitate international trade
within the EU.
The future in bright colors
The retail sector as a whole, and its fashion segment in
particular, have strong foundations for sustainable growth in
Poland. Dynamic economy, strong private consumption, and
positive outlook for the future, create a stable environment,
which traditional and e-commerce businesses can benefit
from. Retailers should remain mindful of ongoing, as well as
potential changes in the legislation (eg GDPR, Sunday trade
restrictions etc.), as they look to grow their businesses in this
competitive sector. As for the e-commerce itself, it does have
a bright future ahead… as Poles – both as customers and as
businesses – do not want to get left behind.
1 Regulation (EU) 2016/679 of the European Parliament and of the Council of 27 April 2016 on the protection of natural persons
with regard to the processing of personal data and on the free movement of such data, and repealing Directive 95/46/EC.