Glitz in Poland
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Polish-Americans unjustifiably have been the brunt of Polish jokes for years. At least now in one small corner of the world where our ancestors come from - throwing off the yoke of socialism and a totalitarian regime of market control and central planning has provided a cornucopia of plenty, while other nations go wanting.
Purchasing of luxury goods in Poland is off the charts. It’s been that way for quite a while and right through the economic meltdown most western nations are experiencing. In the past five years almost all luxury item categories registered impressive double-digit sales growth. Brisk economic growth and the increasing number of high-earning households fuel the growing accumulation of high-end items.
Poles have the cash to spend and are continually seeking more sophisticated international brands. International luxury item producers rushing in to set up shop in Polish shopping malls confirm Poland’s strong taste for luxury goods. 2011 will see even more new glitzy and glamorous brands battle for the favor of Polish customers.
The Polish economy has undergone an extreme transformation since the end of Communism. Booming exports and increased investment made Poland the only economy in the EU to escape an economic recession in 2009 thanks in large part to its strong domestic consumption of consumer goods and the lack of credit crisis in banking as well as very low individual household debt.
Topping of the list of lavish item purchasing is jewelry including timepieces. This category has seen over a hundred percent increase in the past five years alone. The aggressive marketing campaigns have also dumped a tremendous amount of money into media and advertising agencies. So, radio, television stations, newspapers and billboard companies are experiencing nice fat numbers on their income statement bottom lines.
The second largest category includes fine wines, champagne and spirits. The 45% increase is helped along by the proliferation of new fashionable nightclubs, bars, and luxury boutique hotels all across the country. The secondary affect in the drinks category has been the synergy with commercial real estate and construction transactions as well as massive new hiring in the hospitality field.
The next largest market segment is designer fashions. Interestingly Polish designers still dominate the couture niche while brands such as Armani, Hugo Boss, Burberry and others are making a bigger and bigger dent in the top end clothing category. If you find it hard to believe Polish designers are fabulous, remember Oleg Cassini’s birth name was Oleg Loiewski.
While the global forecast for luxury goods is rather modest, the Polish market for luxury goods has become increasingly desirable and in greater demand. Success builds on success and encourages new players to enter the game. Italian luxury car giant Ferrari is a newcomer to Poland and Louis Vuitton is set to open its first Polish store this month. These established brands along with all the other merchants coming into the Polish market bring with them the development of new distribution channels and infrastructure further boosting a hot economy in terms of revenue and new hiring.
The growing disposable incomes of Poles will continue to boost demand for luxury goods and services. Bound to help this along is a newly introduced strategy in the Polish finance ministry. While other countries are trying to debase their currencies to address repayment of structured national debt, the Poles are contemplating actions to actually increase the value of the złoty. Although this topic is a subject for another column at a future date, suffice it to say that the Ferrari with the 300,000 złoty price tag just might come down to a number more easily reached by the upper middle class in Poland. Then there will be a huge market for new bumper stickers saying, “Inne moje samochodu jest Rolls Royce Silver Cloud.” (My other car is a Rolls Royce Silver Cloud)