Warsaw Business Journal Nov-Dec 2018 #49

WARSAW

BUSINESS JOURNAL E c o n o my | Te c h

N e ws | Re a l E s t a t e

NOVEMBER/DECEMBER 2018 ~ No. 11/12 (49)

For daily news visit us at wbj.pl

IN FOCUS: RETAIL

From hypermarkets to discount stores – how do Poles shop? Sunday trade ban’s impact on retail Gastronomic revolution – more restaurants in malls than ever

1918-2018

A CENTURY OF POLAND’S FREEDOM Wars, protests and transitions – the country has come a long way over the last 100 years

EMISSIONS UP FOR DEBATE

SCOTT

DWYER ATRIUM GROUP’S COO LOOKS AHEAD TO THE FUTURE OF SHOPPING

As the COP24 approaches, what is Poland’s stance on curbing pollution?

ROBOTICS & AUTOMATION | TRADE SECRET PROTECTION | 2018 ELECTIONS | APARTHOTEL MARKET

NOVEMBER/DECEMBER 6

IN REVIEW

News highlights from the previous month from wbj.pl

OPINION

Trade secrets protection................................18 Tax law changes..............................................19 Logistics industry............................................20 Chocolate market............................................21 Interview: Michał Kleiber...............................22 Interview: Monika Sadkowska......................24

FEATURES

Greener emissions standards vs. cars........26 100 Years of independence............................28

Tech Insights – Robotics

Tech news 53 Feature: Robot assistants 56 Interview: Teaching innovation – Digital University 58

LOKALE IMMOBILIA

Real estate news.............................................61 Apartment hotel market boom.....................66 Industrial style fit-out.....................................70 Interview: Alina Badora..................................72 Interview: Polonia Palace Hotel....................74

EVENTS

European Forum for New Ideas....................76 IT Future Expo..................................................78 PRCH Awards...................................................79

LAST WORD

Halloween office parties................................80

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In Focus – Retail

Feature: Discounts on the up 35 Feature: Restaurants in malls 40 Feature: Sunday trade ban 44 Cover Interview: It’s all about catchment – Scott Dwyer 46

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FROM OUR EDITOR Morten Lindholm

Time to take stock

Editor-in-Chief/Publisher mlindholm@valkea.com

Beata Socha

Managing Editor

bsocha@wbj.pl

Adam Zdrodowski

Managing Editor, Lokale Immobillia

azdrodowski@wbj.pl

Kevin Demaria Art Director

Stanisław Chodorowski Graphics Designer

Michael Evans Copy Editor

Contributors

IT IS THAT TIME OF YEAR again when we compare our results and achievements with the plans, wishes and resolutions we made at the beginning of the year, also while making new budgets, prognoses and goals for the year to come. Last year, in this very column, I predicted that 2018 would be a year of more shareholder satisfaction, positive market growth and new opportunities – and I guess to a large extent I was right. What’s in store for 2019 then? Judging from the present atmosphere in Poland and the market temperature in general, I expect more of the same. However, it also seems that higher volatility and somewhat lower robustness are to be expected in the toughening reality we will face. Another big milestone worth reflection is Poland’s 100 years of independence. In this issue we have lined up an overview of some of the major issues, successes and challenges Poland has faced over the past century that shaped what is now one of Europe’s fastest developing and most interesting countries and markets. This year has also brought some changes, such as the Sunday trading ban, whose effects we are now beginning to evaluate. In the run-up to the COP24 summit in December, we examine whether Poland can finally get on track to solve the clean air issues that hang like dark clouds over the country. It’s also worth pondering how the recent local elections are going to play out in the light of the political turmoil that Poland has faced over the past couple of years. 2019 is coming and with it more changes, and we look forward to covering more stories and keeping you up to speed with how the markets, the people and the money flow are shaping Poland. As usual I wish you a great read and hope you find something here to make your day and business better – and if you have a story to tell, please do not hesitate to contact us – we are always looking for positive stories about and from Poland’s movers and shakers. MORTEN LINDHOLM

Ewa Boniecka Konrad Krzysztofik Sergiusz Prokurat Anna Rzhevkina Kamila Wajszczuk Alex Webber Sales

Magdalena Klimiuk mklimiuk@valkea.com Katarzyna Pomierna kpomierna@valkea.com PR & Marketing

Agata Wolny awolny@valkea.com Book of Lists

Monika Rozner mrozner@valkea.com Magdalena Czopur Subscriptions

mczopur@valkea.com Krzysztof Wiliński Print & Distribution

dystrybucja@valkea.com Magda Gajewska Event Director, Valkea Events

mgajewska@valkea.com Contact: phone: +48 22 257 75 00 fax: +48 22 257 75 99 e-mail: wbj@wbj.pl

WBJ.pl WarsawBusinessJournal

@wbjpl

All photographs used in this issue are courtesy of partners and companies unless specified otherwise.

Copyright © 2018 by Valkea Media SA All rights reserved. This publication or any portion thereof may not be reproduced or used in any manner whatsoever without the express written permissionof the publisher.

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NEWS HIGHLIGHTS OF THE PAST MONTH FROM WBJ.PL

This is another stage of the judiciary reform that has been carried out, a very important one. It is restoring the foundations of confidence in the judiciary. Paweł Mucha, deputy head of president’s chancellery said, commenting on the appointment of 27 new judges to the Supreme Court by President Andrzej Duda on October 12, despite the court’s ruling to suspend the procedure until the European Court of Justice passes a verdict on that matter.

WORLD BANK raises Poland’s GDP growth forecast The World Bank expects Poland’s GDP to grow by 4.7 percent this year and 3.9 percent in 2019. This is 0.5 percentage points higher for 2018 and 0.2 percentage points higher for 2019 compared to April’s forecast. “Both in Poland and in Poland’s largest trading partners, the economic situation is very good. In addition, government expenditures are growing rapidly, and investments have also been reflected,” the World Bank representative for Poland and the Baltic states Carlos Piñerúa said in the statement. The risks for the Polish economy include worsening of the deficit to GDP ratio. This year, the deficit may amount to

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1.6 percent of GDP and approach 2 percent in 2020, mainly due to rising social spending and a decrease in the retirement age.

other major ratings agency Moody’s kept its rating for Poland at A2 with a stable outlook. ECONOMY

S&P upgrades POLAND’S RATING to A-

NBP increases GOLD RESERVES to record level

Ratings agency S&P has upgraded Poland’s long and short-term rating in foreign currencies to “A-.” The ratings’ outlook is stable. “The upgrade reflects solid achievements in the form of economic growth and fiscal prudence, and well as economic diversification and competitiveness,” S&P said in a report, adding that the growth appears to be “balanced and strong.” The shift in the rating from BBB+ reverses the agency’s decision to downgrade Poland two and a half years ago. On the same day,

Central Bank NBP has increased its reserves in gold to the highest level in at least 35 years, data from the International Monetary Fund showed. Reserves grew from 4.4 metric tonnes in August to some 117 tonnes in September, which according to the fund is the highest growth since January 1983. According to economists, this is in line with recent trends where central banks have started buying up more gold in light of the rising USD prices and the US-China trade dispute.

ECONOMY

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SHUTTERSTOCK, PAP

ECONOMY

FOREIGN INVESTMENTS fell by 56% in 2017 – NBP The inflow of foreign direct net investments in 2017 fell by 56 percent y/y to PLN 34.7 billion, according to final data of Poland’s Central Bank (NBP). Most investments came from Germany (PLN 12.8 billion), Luxembourg (PLN 12.4 billion) and Cyprus (PLN 5.5 billion). The largest withdrawals of direct investors were observed in Italy (-PLN 8.4 billion), the Netherlands (-PLN 7.2 billion) and France (-PLN 3.9 billion). The sectors which received most foreign direct investments in 2017 were industry (PLN 15.6 billion) and finance and insurance (PLN 12.4 billion). ECONOMY

About 880,000 workers in ‘GRAY ZONE’ in 2017 – GUS In 2017, undeclared work was carried out by 880,000 people, i.e. 5.4 percent of employees – the Central Statistical Office (GUS) has announced. For 47.7 percent of those 880,000 the work was the main professional activity, and for the rest (460,000, i.e. 52.3 percent) undeclared work was additional employment. Work most often performed in the “gray zone” include gardening and farming. A large group was also involved in renovations, construction and installation repairs. ECONOMY

723 companies went BANKRUPT in 9 months In nine months, as many as 723 companies went bankrupt in Poland, Euler Hermes reported. This is a 7 percent increase compared to 673 bankruptcies in the corresponding period of last year. Euler Hermes expects the number of bankruptcies to grow by about 10 percent annually in 2018 and a subsequent increase by about 3 percent in 2019. M&A

51 MERGERS AND ACQUISITIONS in Q3 – Fordata In Q3 there were 51 mergers and acquisitions in Poland, nine more than in the same period of 2017, Fordata analysts stated in the M&A Index Poland report. The biggest number of M&A activity was recorded in Media/IT/telecommunications (16 percent), the industrial sector

DOMESTIC

PiS wins LOCAL ELECTIONS but loses in most major cities According to the exit polls conducted by Ipsos, the ruling Law and Justice (PiS) party has won the local elections held on October 21, with 32.3 percent. Second was Koalicja Obywatelska (Civic Platform and Nowoczesna) with 24.7 percent, followed by Polish People’s Party (PSL) with 16.6 percent. Kukiz’15 had 6.3 percent of the votes, the same as Bezpartyjni Samorządowcy. Democratic Left Alliance got 5.7 percent support. However, in major cities, PiS lost the mayoral vote. Out of 18 of them, only in Katowice Marcin Krupa, who, while not a PiS member was supported by the grouping, won in the first round. In two other cities, Kraków and Gdańsk, the party’s candidates got into the second round trailing other politicians. Overall, in 13 cities, including high-profile campaigns in Warsaw and Łódź, no second round will be needed as the winners got over 50 percent of the votes. Most of the winners were either unaffiliated or from Koalicja Obywatelska.

(14 percent) and FMCG (12 percent). The largest transaction was the acquisition of 100 percent of Solaris Bus & Coach by Construcciones y Auxiliar de Ferrocarriles (CAF) for about PLN 1.3 billion.

Q3, one was on the WSE main market (Silvair), while the other three were on the small-cap, alternative NewConnect market (Creepy Jar, Medinice and Passus). SOCIETY

ONLY 4 IPOs on WSE in Q3 – PwC

POLAND 30TH in the World Bank’s Human Capital ranking

There were four IPOs on the Warsaw Stock Exchange in Q3, according to PwC “IPO Watch Europe” report. Their total value stood at €8 million. In Europe, there were 64 IPOs, valued at €3.9 billion, which is 53 percent lower y/y. “IPO activity in Warsaw is the weakest since 2003 and once again one of the smallest in Europe. The GetBack floatation and its effects had a deep impact on the Polish market, already affected by low valuations, falling liquidity, and constant uncertainty regarding the employee capital pension plans (PPK). The latter is certainly a positive signal, but it will not have a significant real impact on the market in the short term,” said PwC’s capital markets director Bartosz Margol. Out of the four IPOs in

Poland ranked 30th out of 157 countries in the first-ever World Bank’s Human Capital Index. On a scale of 0 to 1, Poland had 0.75 points. Singapore had the best score (0.88) followed by South Korea and Japan (both on 0.84 points). Last on the list were Mali, Liberia and Nigeria. The ranking, which was published for the first time, measures youth mortality, schooling and health. “Human capital is a key driver of sustainable, inclusive economic growth, but investing in health and education has not gotten the attention it deserves. This index creates a direct line between improving outcomes in health and education, productivity and economic growth,” said World Bank Group President Jim Yong Kim. The

STOCKS

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In Review Human Capital Index measures the amount of human capital that a child born today can expect to attain by age 18, given the risks of poor health and education that prevail in the country where he or she lives. Globally, 56 percent of all children born today will grow up to be, at best, half as productive as they could be; and 92 percent will grow up to be, at best, 75 percent as productive as they could be. A 0.5 result would translate to 1.4 percent annual GDP loss over the course of the next 50 years.

TRENDING STATS

The number of parcels sent by individual customers is also growing; in the first eight months of the year, the increase was 23 percent y/y. As part of the construction of a new logistics architecture, this year Poczta Polska opened a forwarding and distribution warehouse for package shipments and a new sorting plant in Łódź, an additional hall in Olsztyn (soon also in Koszalin). In October, Poczta Polska also launched a modern parcel machine in Zabrze in the second largest sorting plant in Poland. The value of the parcel market has jumped from PLN 24 to PLN 40 billion in Poland in the last five years. Last year, Poczta Polska handled approximately 120 million e-commerce items.

5.7%

Unemployment rate in September (GUS)

7.1%

Increase in new orders for exports in September

RETAIL

SMALL STORES sales up 5.7% y/y in September

SOCIETY

EC draws attention to GENDER PAY GAP Women in the European Union earn an average of 16.2 percent less than men. That would be the equivalent of women working from October 26 to the end of the year for free. In Poland, the average gap in earnings between women and men is 7.2 percent, which places the country fifth overall among EU countries. However, in 2010, the discrepancy in earnings was only 4.5 percent. In the EU, the trend is reversed, but the dynamics are slow – the gap went down from 16.4 percent in 2010 to 16.2 percent in 2016. Eurostat data shows that the pay gap is not affected by geographical location or the country’s wealth. The best result in the EU is recorded by Romania (with 5.2 percent gap), followed by Italy with a gap of 5.3 percent. Luxembourg stands with 5.5 percent difference, followed by Belgium, where the gap is 6.1 percent. The countries with the largest pay gap are Estonia (25.3 percent), the Czech Republic (21.8 percent), Germany (21.5 percent), the UK (21 percent) and Austria (20.1 percent). RETAIL

Number of E-COMMERCE DELIVERIES up 19% in 2018 The increase in the number of deliveries for e-commerce business customers exceeded 19 percent in the first eight months of 2018, results from Poczta Polska data show.

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(y/y, GUS)

In September, sales in small format stores (up to 300 sqm) grew by 5.7 percent annually and declined by 9.7 percent monthly, the Polish Chamber of Commerce (PIH) estimated. The sales were positively impacted by September warm weather. However, August was much hotter, therefore sales in categories correlated with the weather declined month-on-month, PIH specified. The average transaction value in September amounted to PLN 13.79, which is 0.9 percent less than in August and 4.5 percent more than in September 2017. PHARMA

PHARMACY MARKET sales reach PLN 2.8 bln in September

1.4%

Public deficit in 2017 (% of GDP, GUS)

50.6% Public debt in 2017 (% of GDP, GUS)

4,771.86 Average gross wage in the business sector in September (in PLN, GUS)

In September sales in the pharmacy market in Poland amounted to over PLN 2.82 billion, up by 4 percent y/y and 1.5 percent

6.7%

Wage increase in the business sector in September (y/y, GUS)

3.2%

Employment growth in the business sector in September (y/y, GUS)

m/m, a report prepared by PEX PharmaSequence stated. An average pharmacy turnover in September was PLN 191,000, a 5.8 percent y/y growth. The retail price of an average item was PLN 21. PEX PharmaSequence estimates that in 2018 the pharmacy market in Poland will grow by 2.5 percent to PLN 34 billion.

1.9%

CPI inflation in September (y/y, GUS)

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SHUTTERSTOCK

WBJ

HEALTH

Poles spent PLN 386.5 mln on PRIVATE HEALTH INSURANCE in H1 Almost 2.3 million Poles had additional health insurance at the end of H1, 14 percent more compared to a year ago. The total value of acquired private health insurance amounted to PLN 386.5 million, a 19 percent increase y/y, according to the Polish Chamber of Insurance (PIU). PIU reported that only slightly more than 38 percent of respondents use only health services financed by the National Health Fund. Half of the respondents use both public and private medical care. ENTERTAINMENT

PwC: Media and ENTERTAINMENT MARKET in Poland will be worth $13.4 bn by 2022 The media and entertainment market in Poland will grow at an average annual rate of 3.5 percent to reach the value of $13.4 billion at the end of 2022 compared to $10.6 billion at the end of 2018, according to the PwC report “Prospects for the development of the entertainment and media industry in Poland 2018-2022.” Internet advertising in Poland will grow at an annual average rate of 12.5 percent and at the end of the period its value will amount to nearly $1.7 billion compared to $1.1 billion at the end of 2018. OTT, i.e. video on streaming websites without the participation of television operators, will have an average annual growth rate of 13.3 percent.

ENVIRONMENT

Poles waste 9 mln TONS OF FOOD annually The average Pole wastes some 235 kilograms of food annually, which places them fifth in the EU, according to a report released by consultancy Deloitte. Around 9 million metric tonnes of food are wasted annually in Poland. Deloitte emphasizes that Poland has huge potential in agricultural production, as evidenced by the fact that 13 percent of its exports are agri-food products. “These are extremely important problems, because two billion people in the world suffer from malnutrition. In developed countries, to which Poland can also be included, the discussion is currently about the fact that too much food that could be used is wasted,” said Irena Pichola, partner at Deloitte, leader of the Sustainability Consulting Central Europe team. Deloitte reminded that in the Polish parliament, the draft law on counteracting food waste is in the works. It imposes retail outlets with an area of over 250 sqm, where the revenues from the sale of foodstuffs account for at least 50 percent, an obligation to have a contract with a non-governmental organization and free transfer of food for charity purposes. The project also sets an annual fee of PLN 0.1 per 1 kg of wasted food. According to Deloitte experts, the project is an important step, but it also has its drawbacks as it only tackles the retail part without addressing issues at production level and at consumer level.

BRAVE NEW DIGITAL WORLD

W B J NOVEMBER/DECEMBER 2018

In Review and offer support whenever it is possible and has an economic justification. The development of Polish assets in the CEE region is important to us. We are analyzing investment opportunities in new chemical technologies and production installations in the Czech Republic,” said Orlen’s CEO Daniel Obajtek.

TOURISM

PORT OF GDAŃSK shows record number of visiting ships Port of Gdańsk has noted a record number of ship visits from around the world during this year’s tourist season. There were 67 ships with more than 30,000 people aboard. The season began on April 18 with the visit of MS “Astoria,” the oldest passenger ship in the world, launched in 1948. Port of Gdańsk continues to develop infrastructure and is planning the construction of a new passenger terminal available for larger ships, Michał Stupak from the port’s Commercial Department said. Port of Gdynia also summarized the 2018 tourist season: the port recorded 50 large cruise ships, with more than 100,000 passengers. ENERGY

PGNIG to finalize two US LNG deals by end-2018 WSE-listed, state-run gas giant PGNiG hopes to sign at least two new long-term contracts for LNG supplies from the US by end-2018, deputy CEO Maciej Woźniak said. “In July this year, we announced 20-year contracts for LNG purchases, on the basis of ‘we buy this gas and buy it where we deem it appropriate,’ … totaling 4 million metric tonnes, which after re-gasification will reach nearly 5 million tonnes. We want to finalize these contracts later this year,” Woźniak said. He stressed that this gas is cheaper than Russian gas offered in Poland.

ENERGY

ELECTRICITY PRICES grow in Q3 – URE

Thanks to this we can increase our refinery yields and margins. … If tests confirm the assumed yields structure and margins, further oil supplies from Nigeria will be a viable option,” he said. ENERGY

PGNIG buys interest in Tommeilten discovery for $220 mln PGNiG Upstream Norway, part of PGNiG Group, has signed an agreement to buy an interest in Tommeilten Alpha gas and condensate field in Norway from Equinor. The purchase price was agreed at $220 million. According to PGNiG estimates, the acquisition will enable the increase in gas production output from Norwegian portfolio by 0.5 bcm per year in the first six years. In addition, Tommeliten Alpha will allow PGNiG to extract about 0.5 million tonnes of oil and NGL in the peak production year, the company said in a statement. Tommeliten Alpha discovery is located in the North Sea in the direct vicinity of large, already developed fields, including giant Ekofisk. The production is expected to commence in 2024.

Poland’s volume-weighted average electricity price on the competitive market grew to PLN 183.69/MWh in Q3 compared with PLN 174.23 in the previous quarter and from PLN 167.16 one year ago, energy market regulator URE said. The price was calculated on the basis of data submitted by power generation firms. The volume of surveyed transactions reached 21.35 TWh. AUTOMOTIVE

Tauron and KGHM to build infrastructure for ELECTRIC CARS Tauron and KGHM have signed a letter of intent to cooperate on the construction of charging infrastructure for electric vehicles, development of car sharing services and pro-ecological activities, Tauron said in a statement. In the first stage, the companies plan to set up quick charging stations in “strategic” locations for both groups. By December, Tauron expects to launch a system of 22 electric car charging terminals. This basic infrastructure will serve, among others, car sharing services, the company said.

ENERGY

ORLEN buys oil in Nigeria

ENERGY

WSE-listed fuel giant Orlen purchased 130,000 metric tonnes of crude oil from Nigeria and expected the delivery in midOctober. The order is due to “an increased demand” for oil on the Polish market, which according to its CEO Daniel Obajtek has gone up by 30 percent. “This forces us to increase the processing of crude oil with characteristics other than the Russian REBCO.

WSE-listed power utility Tauron and fuel giant Orlen have signed a letter of intent to build a power and heating plant in Czech Neratovice on Orlen’s premises. The unit would provide the refiner’s subsidiary Spolana with technological steam. “State-run companies should cooperate with each other

QUOTE OF THE MONTH

TAURON AND ORLEN To build powerplant in Czech Republic

“We want this madness to end. There’s no reason to continue this strike – it’s illegal and it generates costs,” Rafał Milczarski,

president of Polish Airlines LOT, said about the two-week long strike of the airline’s staff following the sacking of the head of a cabin crew trade union.

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SHUTTERSTOCK

WBJ

W B J NOVEMBER/DECEMBER 2018

LEADERSHIP 2018 WBJ: UBM has been restructured and rebranded. What has changed at the

company? Sebastian Vetter: Over the last two-three years, UBM has gone through a number of changes. The biggest change was our merger with Strauss & Partner, formerly a subsidiary of construction company PORR. PORR used to have a 40 percent stake in UBM, but currently it does not hold any direct shares in the company. We also renamed and consolidated our various subsidiaries and now operate as UBM Development in all the markets where we are present. The restructuring and rebranding process took a lot of time, but it is now complete.

SHIFTING towards hotels Austrian developer UBM Development earlier this year completed a restructuring process and introduced changes to its business strategy. We talked to board member Sebastian Vetter about the company’s plans in Poland for the near future INTERVIEW BY ADAM ZDRODOWSKI

Granary Hotel, Gdańsk

NOVEMBER/DECEMBER 2018 W B J

What was the aim of the process? The main aim was the optimization of costs across the four European markets in which we are active. Also, we aimed to achieve better cooperation within the company. Our new slogan is “One goal, one team, one company.” In general, the restructuring of the company allowed us to refinance ourselves and to reduce our net debt. We have secured a better market position, which is reflected in the share price that has increased significantly since the moment the process was started. Did the makeover also entail a change of business strategy? Yes, we are focusing on our three core markets of Austria, Germany and Poland and we are still active in the office property market, but our main focus is currently on the hotel sector. Why? There are two main (related) reasons for that. On the one hand, there is a company in our group that is called UBM Hotels, which has been active in the hotel sector for many years now. This means that we already have a lot of experience; we have the know-how and proper people on board. We are now building a total of more than 3,000 hotel rooms across Europe and we are one of the leading European hotel developers. So, growth in this sector is one of our strategic goals. This is also reflected in the pace of finished projects per year. While before, we developed 50 hotels in 25 years, we are now actually developing 12 hotels in

in cooperation with Warsaw Business Journal three years, which is an increase from two to four projects per year. On the other hand, with UBM Hotels being part of the group, we are able to exit a hotel investment at a very early stage, which is an option that not all developers have. We complete a hotel project and UBM Hotels takes over the management of the scheme even before a stable yield is achieved. By comparison, in the office market, you can usually only sell a completed development for a good price when it has already been fully leased out. This, of course, takes some time. What will the shares of the particular asset classes in your portfolio look like? Europe-wide, offices, apartments and hotels will account for approximately 40 percent, 30 percent and 30 percent of the portfolio respectively. In Poland, hotels and offices will account for around 70 percent and 30 percent of the portfolio. We will no longer have any residential projects in the country.

Above: Hotel Młyńska, Katowice; Left: Granary Hotel, Gdańsk

You are currently developing a hotel scheme in Gdańsk. When will it be completed? The 240-room hotel will open in June next year. It will operate under the Holiday Inn brand. What will be your next hotel project in Poland? We are planning a hotel project in Katowice which will be located in the very center of the city, close to the main railway station and the Galeria Katowicka shopping mall. The four-star hotel will offer 268 rooms and will operate under the Mercure brand. We are now awaiting a building permit for the scheme and hope to be able to launch the construction work in the first quarter of next year. The hotel should open for business 22 months later, at the beginning of 2021.

Are you currently looking for more hotel sites in Poland? Yes, we are now looking at a very prestigious site in the center of Kraków which could house a four-star hotel. In Poland, we are only focused on the construction of three- and four-star hotels. In Warsaw, we are currently looking at two sites, both of which are located in the CBD. We also see Poznań and Łódź as interesting markets, although we have not secured any sites there yet. In total,

We are able to exit a hotel investment at a very early stage, which is an option that not all developers have

we can spend around €18-20 million on hotel site acquisitions by 2019, which translates into three-four new projects in Poland. As for office projects, will the Poleczki Park complex be expanded? Yes, the next phase of the complex, which will comprise 7,000 sqm of GLA, is now being designed. We want to start building it next year, but we need to sell some of the existing buildings first. The complex is over 95 percent leased out and the sale process is already underway. What about your other office plans in Warsaw and the biggest regional cities? We are looking at the center of Warsaw; we are interested in launching a project there, which would combine office and hotel space. We are now also discussing a potential scheme in Wrocław, which we view as a very attractive office market.

W B J NOVEMBER/DECEMBER 2018

B U Y, R E S T, M A K E M O N E Y – IT’S POSSIBLE Earning a passive income is the key to achieving financial freedom, and enjoying stability and security. At a time when the bank deposit interest rate is low and there is uncertainty in the stock market, our ability to earn a passive income seems to be shrinking. More than half of Poles with surplus funds already invest in real estate, which has been regarded as one of the safest ways of allocating capital for many years now. But can we speak of making a truly passive income when the owner rents an acquired property themselves? Apartment owners complain about numerous rental-related inconveniences, including the need to take care of costly renovation and maintenance, as well as dealing with occupants who do not abide by the terms of the agreement… Something that has recently gained in popularity is short-term rentals, which are an alternative to hotel stays and are often chosen by both leisure and business travelers. In the case of this kind of rental, the apartment’s owner also needs to take into account the need to promote the property, be constantly in touch with the guests and take care of the reservation procedures. In such a case, can we still speak of earning a passive income, which – by definition – involves the lack of the investor’s ongoing involvement in the undertaking?

MARIUSZ POŁAWSKI Vice president of the board, Marvipol Development

THE RENDERINGS ARE FOR ILLUSTRATION PURPOSES ONLY

Maintenance-free rental – the guarantee of stress-free earning Maintenance-free rental is a solution which allows one to earn a truly passive income. This is a model that Marvipol Development has chosen for its new investment on ul. Grzybowska. What is it about? Unique Apartments is a complex of luxury apartments featuring a complete hotel infrastructure, accommodated in one of Warsaw’s tallest residential buildings. The units are earmarked for rentals that will be managed by the developer on a day-to-day basis. Such a business model, based on safe conservative calculations, will allow investors to achieve an annual return on investment of 7 percent – irrespective of the occupancy rate at the given unit, or even at the entire complex. This means that the buyer’s involvement ends the moment he or she signs a ten-year rental agreement (with an extension option). Buyers can devote their precious time to more time-consuming business projects, while at the same time enjoying a constantly growing income from their rented properties. This is the true recipe for passive income earning.

Still more possibilities The “owner stay” option, which allows owners to use the prestigious apartments for their private purposes, is another – from the buyer’s perspective – advantage of investing in Unique Apartments. Additionally, the apartments are being sold as housing units, which not only means that one can register in them and that the owner can have an 8 percent VAT deduction, but that they will also be easier to sell in the future. This unique solution is particularly attractive for those who want to take advantage of the investment potential of the dynamically developing Wola district, which is quickly becoming the new business center of Warsaw. Experts expect the area to see high property value growth, which opens the door to a double gain – from the rental of the apartment and from the apartment’s subsequent sale.

UNIQUE APARTMENTS Warszawa, ul. Prosta 32 22 536 50 44 www.marvipol.pl

THE RENDERING IS FOR PURPOSES W B J ILLUSTRATION NOVEMBER/DECEMBER 2018 15 ONLY

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Opinion EXPERT VIEWS ON CURRENT BUSINESS AND SOCIAL TRENDS

A pro-business tax overhaul is on the horizon

A new grassroots environmental initiative that is making waves – interview with Monika Sadkowska

How much can you get if your trade secrets are stolen?

Michał Kleiber’s view on Poland’s role in EU migration policies, Polish-Ukrainian and Polish-Russian relations

20-21

SHUTTERSTOCK

Find out industry experts’ views on challenges and opportunities in logistics and in the chocolate market.

W B J NOVEMBER/DECEMBER 2018

WBJ

Opinion LEGAL Courts rarely decide to award damages … when the company has no evidence at all that it has suffered financial loss

How much are your secrets worth?

A key change has been omitted in the implementation of community law on the protection of trade secrets

n September 4, 2018, an amendment to the Unfair Competition Act came into force. The act was amended due to the required implementation into Polish law of Directive (EU) 2016/943 of the European Parliament and of the Council of June 8, 2016. The directive relates to the protection of undisclosed know-how and business information (trade secrets) against their unlawful acquisition, use and disclosure. The principal goal of the directive is to ensure a uniform level of protection of knowhow throughout the EU and introduce solutions to facilitate the operation of the R&D sector and cross-border technology transfers. From the very beginning, the Polish Unfair Competition Act provided that trade secret infringements constituted acts of unfair competition, and gave the company being infringed upon the right to, among other things, request the ceasing of the infringements and redress of the damage caused. The recent amendment to the Act contains modified prerequisites for infringements, a more precise definition of protection of trade secrets, a list of situations where the defendant’s actions may not be treated as an act of unfair competition, and a broader list of claims for trade secret infringement.

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SCOPE OF DAMAGES Unfortunately, the legislator has completely omitted the fundamental change provided for in the directive regarding the scope of damages, i.e. the requirement for the court to take moral prejudice into account when determining the amount of damages. In the previous legal framework, it was very difficult to obtain damages for trade secret infringement. The injured party, even if aware of the unauthorized disclosure of its trade secrets, was often unable to demonstrate whether and to what extent it had suffered financial loss as a result of the disclosure or use of the secret by a competitor. The possibility (provided for in the Code of Civil Procedure) of the court awarding an appropriate sum in a situation when the amount claimed by the claimant cannot be proved precisely could to a certain extent ease the position of the injured party. However, current practice shows that courts rarely decide to award damages under this provision, in particular because the company often has no evidence at all that it has suffered financial loss. Introducing a solution that enables a company to claim damages while also taking into account moral prejudice would significantly strengthen the position of the injured company in a possible dispute with an infringer. The injured company could receive compensation even if it could not precisely demonstrate whether

and to what extent it had suffered financial loss or lost profits as a result of a confidentiality breach. Thus, proper implementation of the directive would significantly strengthen the position of the injured party when seeking payment from the infringer. Failure to introduce the obligation to take account of moral prejudice when determining the amount of damages significantly weakens the legal position of the injured party. In relations where confidential information is provided on the basis of a contract or as part of the performance of a contract, it is recommended to secure an obligation to keep trade secrets confidential and to limit their use through the application of appropriate contractual penalties. The use of contractual penalties enables the injured party to claim payment from the infringer independently of the value of the loss suffered, which is often the sole avenue to obtaining financial compensation for breach of confidentiality.

Agnieszka ChoromańskaMalicka Advocate, Senior Associate Kochański, Zięba & Partners

WBJ

Opinion TAX ADVICE Year after year, new tax privileges are granted for innovation

Why is it worth paying taxes in Poland? The current Polish government is in the process of overhauling tax legislation. But what changes have been introduced and will they really be effective in boosting business?

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he Polish economy, in view of political turbulence, has been put to the test for quite some time now. At the same time, the Polish tax system has been going through some major changes, some of which have already been implemented and some which are to come into force in 2019. Despite the general Europe-wide tendency to clamp down on tax leakage, the Polish legislator sometimes takes a different tack and equips taxpayers with tools enabling them to reduce the amount of tax they pay in Poland. Among the new solutions being considered there is a notional interest deduction (NID); the possibility to deduct fictitious “costs” of a business’ own financing, equivalent to the costs of debt financing. This scheme is only known in some juris-

dictions, and while it’s a great move by the Polish government to attract new capital, at this stage the level at which interest can be expensed is quite low (only PLN 250,000). Another revolutionary incentive shall be 9 percent CIT rate for small businesses. Currently they enjoy a 15-percent CIT rate (instead of 19 percent). Additionally, the group of those who qualify for the lower rate will be expanded and include taxpayers with a revenue threshold of €2 million, instead of the current €1.2 million. Year after year, new tax privileges are granted for innovation; in addition to R&D incentives, which allow businesses to double or triple the deductible qualifying costs, a scheme called “Innovation Box” will be introduced. It enables a reduction of the CIT rate to 5 percent, applicable on income derived from property rights such as patents and protective rights for utility models.

Introduced in 2018, the new income tax due on real estate, called “minimum tax,” if paid by real estate owners, will be eligible for a refund. On the one hand, from 2019 it will encompass a broader scope of real estate, with a lower tax-free amount, but on the other hand, taxpayers will have the right to apply for a refund of the total amount paid. ASI (alternative investment schemes) might enjoy income tax exemption on sale of shares. This will greatly contribute to the popularization of this investment vehicle. Another interesting one, the Polish Real Estate Investment Trust, might be ready for implementation next year, granting attractive tax rates applicable on distributed income from lease profits. Those who accumulate tax losses will be allowed a one-off deduction of up to PLN 5 million. Losses that have arisen in any of the previous years, eligible for setoff, may be included in this amount. The remaining loss amount, as it is now, will be settled within five consecutive years, up to 50 percent in one year. The above changes, although some of them still under legislative works, are proof of the Minister of Finance’s pro-business attitude. However, he is not indifferent to behavior aimed at tax avoidance. Such behavior is subject to sanctions, like in the case of transactions with related parties, with prices below market value, or to the split payment mechanism, aimed at eliminating fraudulent practices.

Katarzyna KlimkiewiczDeplano Managing Partner, Tax adviser Advicero Tax Nexia

W B J NOVEMBER/DECEMBER 2018

WBJ

Opinion LOGISTICS

Partnership and dialogue – key factors in the supply chain

The process of getting fresh produce from “farm to fork” is a long one, involving numerous steps, various entities and extensive regulation. Communication is the key to success

he supply chain of fresh food delivered under controlled temperatures in which the producer (product supplier), logistics operator and the recipient participate, is subject to constant changes. These changes are influenced by food safety laws, new technologies, high expectations regarding the highest quality standards at every stage of the supply chain as well as the needs of the fast-changing market. The key role of a modern logistics operator is no longer exclusively transport and storage of goods. Leading logistics players should monitor and observe the market from a broader perspective, being aware of their impact on other participants in the supply chain. Each link is an individual unit that has its own conditions, limitations and ways of working. However, in this individualism there must be a place for mutual cooperation, support and – above all – trust, without which, individual links in the supply chain would not have a chance to exist on the market. A logistics operator standing in the middle of the product route “from farm to fork” has the opportunity to observe the whole process, and thus notices the needs

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of both suppliers and recipients, combining the interests of these two entities. Logistics companies should consciously cooperate and establish partner relations not only with their direct contractors, but they should also be engaged in all activities, besides business, that are focused on optimizing the supply chain as well as emphasizing the role and importance of transport and promoting the food sector in the international arena. Furthermore, each participant in the supply chain can succeed only by engaging in joint action and synergy which is based on cooperation and, most importantly, through mutual trust. The overarching priority for every entity in the supply chain should be to ensure the best quality of the product that goes “to fork.” The key factor guaranteeing a high quality of service is primarily dialogue, as well as mutual understanding and an awareness of the market situation. In recent months, several trends have been intensified, including the increase in labor costs, low unemployment resulting in a shortage of drivers and warehouse employees, rising energy costs, as well as limited availability of transport and new legal regulations. Our partners, who understand the dif-

ficult situation in the transport, shipping and logistics (TSL) sector industry, are involved in optimization projects, so that the final consumer, which is us, can find fresh and, most importantly, safe food in the supermarket. Last but not least, if we all follow the same direction, we must understand and support each other. This is the new dimension of logistics; focused not only on the core competences of the logistics operator but concentrated on mutual complementation and interpretation of the common priorities of each participant in the supply chain. If all three entities, i.e. the producer, the logistics company and the recipient, recognize that their main goal is to provide the consumer with fresh food, then this is the best basis for optimization of the supply chain.

Marcin Turski Sales and customer service Director Fresh Logistics Poland, Raben Group

WBJ

Opinion CHOCOLATE MARKET

2019: Turning challenges into opportunity

Prices of raw materials and energy will grow, labor costs will increase, and sales will drop due to further Sundays trade limitations – this is what we can be sure about in the confectionery industry in the upcoming year. We should be prepared for the unexpected, because innovation and the introduction of new product categories are necessary to develop or maintain a market-leading position

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he Polish chocolate market has already become mature, so we don’t expect dynamic growth in the near future. In 2017 the market’s value increased by 8 percent; however, it was a one-off effect connected with the government’s introduction of social programs. This year, the growth dynamics returned to 1-2 percent and we expect a similar pace in 2019. Due to the market maturity, producers have to focus on their offer development and search for other growth directions e.g. export, introducing product innovations and portfolio extensions, including entering new categories. At the same

time, producers have to face challenges from increases in the prices of raw materials, for example, last year milk and butter prices changed rapidly. Also, the cocoa market can fluctuate dramatically. There are also some other trends that we have been able to observe for some time. They are mainly challenges; however, some of them can be turned into chances if managed properly. First of all, we can be sure that the “health and wellness” trend is going to become more and more popular. LOTTE Wedel has found an opportunity for development there. This year, we introduced a new range of dark chocolate bars (TAK PROSTO) with high-quality Ghana

cocoa and healthy ingredients like quinoa, muesli or cranberries. The second trend is the stronger switch to high quality – consumers are willing to pay a higher price for high-quality sophisticated products that they personally like and which they trust. The number of consumers who often buy more expensive, premium products is growing rapidly. This can be observed by the growing market share of branded producers, and on the other hand, the decline of cheap private label products. Consumers have higher and higher expectations, so market leaders have to be more flexible and quickly respond to their needs. Today this is crucial to maintain a market-leading position. As I already mentioned, the need for innovation is one of the biggest challenges that producers have to face. More complex production requires flexible solutions and investment in new technologies. It also impacts human resources management – companies are looking for highly qualified employees and developing R&D departments. Due to the lack of employees on the market and the dynamic growth of people costs, production will have to be automated. However, combined with the recent energy costs growth, retail prices will inevitably grow as well. After the 2018 regulation change, we already know that the Sunday trade limitations have led to a significant sales drop. The regulation will be more strict next year (only one Sunday a month with free trade), so we can expect further negative sales impact. In impulse categories (like sweets) this is a serious issue. We can also expect more cooperation between big companies and start-ups. The number of new ideas and innovations, especially in a digital world, is enormous. This knowledge exchange is particularly important. The key to success is to make the right choices and to turn challenges into opportunities.

Maciej Herman Managing Director LOTTE Wedel

W B J NOVEMBER/DECEMBER 2018

Opinion POLITICS

SHUTTERSTOCK

WBJ

Discussion instead of partisan cliché

A renowned scholar, former Minister of Science in two governments, but never a member of any political grouping, Michał Kleiber has long called for a healthy and practical debate. WBJ asked him about his views on the biggest political issues facing Poland: the country’s place in the EU, mass migration and relations with Ukraine and Russia

WBJ:

Do you think that Polish politicians understand the changes happening in the world and in Europe and respond to them appropriately? Michał Kleiber: In the euphoria following the system transformation, the world seemed calm and open, offering us unprecedented rapid growth. Unfortunately, we are now becoming increasingly disillusioned. The world around us has once again become unstable, a number of different threats to our future are stacked before us. What threats do you have in mind? Perhaps somewhat naively, the thing that scares me the least is military threats, and nuclear in particular. My hope is rooted in NATO’s powers and the common awareness of how dramatic the consequences of

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any military intervention beyond the local level would be. It does not, however, mean I do not condemn the actions of aggressor states in the conflicts in Ukraine and Syria. Granted, the equilibrium between the nuclear power of the East and the West that was used to maintain peace for many decades looks quite different now: there are new countries that have nuclear weapons at their disposal. Still, the bottom line is that if any of these weapons were to be used, it would mean an unthinkable disaster. There will continue to be hard international disputes, and local unrest will continue to dominate world media. Controlling the threat of biological and chemical weapons will become increasingly important, particularly in the context of preventing brutal terrorism.

What can Poland do to improve these tensions? Let’s remember that conflict in today’s ever more globalized world stems from growing inequalities within and between individual social groups. These problems have always existed; however, now – as a result of universal access to information – the awareness of historical injustice, both objective and even just subjective, has become ubiquitous. Alleviating the unrest is a great challenge for all of us, and for the richest countries in particular. The problem of mass migration, which is far from being solved any time soon, is a clear example of how we need to change the way we think of the countries that were once called “third world.” The need these societies have to join the “first” world,

INTERVIEW BY EWA BONIECKA

which they have seen in detail on the internet, is not going away and it requires a completely new mindset from global and local leaders among politicians and the media.

action. It is key that Ukraine comes to terms and reconciles its past honestly, but we also shouldn’t demonstrate our prejudice so emotionally – the stakes are too high to continue the dispute forever.

Do you think Poland will change its position on migration? I can understand the reserve the majority of Poles feels towards the influx of migrants with different cultural backgrounds. I believe this reserve can be traced back to the post-World War II period when, through no fault of our own, we became an ethnically homogenous country with a single dominant religion. Seeing migrants as aliens is what makes us different from many EU societies, where migrants of different skin color and religion have coexisted and worked together for decades. I believe that in time, we will gradually see a change in our society’s mindset. Our deeply ingrained need to render humanitarian aid, effective aid to those in need in their own countries, good examples of how migrants can assimilate when proper safety measures are applied, and economic reasons in general will facilitate that change. Our attitudes towards our eastern neighbors seem to be very compelling evidence of that change. But for it to happen, the EU has to show some degree of understanding towards the different and historically determined mindset of our region’s societies.

How do you see the relations between Poland and Russia from the point of view of our society’s interests and Poland’s status as an EU and NATO member? Russia is a powerful neighbor with imperialist ambitions, which is a clear problem in terms of mutual contact. But due to its

What are Poles’ attitudes towards Ukrainian migrants then? I know many Ukrainian academics and they talk of large-scale corruption in state administration, a mafia-like economic reality. It hinders proper cooperation. Another issue that that divides us is the Bandera cult, a Ukrainian nationalist who, granted, fought for his nation’s freedom during World War II, but also inspired his troops to murder Poles, which led to the Volhynia massacres. It cast a long shadow over our relations, even though Poland has condemned Russia’s aggression in Ukraine and has supported the country’s European aspirations. It’s a historic paradox that our political relations today are as bad as they are, despite both countries’ acute awareness of how important friendly relations between these two neighbors are, also for the whole of Europe due to the political and economic potential of the two countries. Improving these relations requires swift and decisive

Alleviating the unrest is a great challenge for all of us, and for the richest countries in particular

role in global politics and our economic interests, we have no choice but to try to maintain these relations. I would be the last one to disparage undertaking a variety of cooperation efforts on many levels. I know many positive examples of fruitful scientific cooperation, although it has been insufficient in recent years. I am under no illusions: with vast political tensions dividing the two countries and with all international contact being influenced politically in Russia, it will be a long time before our economic, academic and cultural relations can be seen as normal. Do you think that the discontent between Warsaw and Brussels will continue or is there a chance for improvement? Poland is today deeply embroiled in the conflict between those in favor of integration on the one hand and those supporting separatist views, and the crux of the dispute between Warsaw and Brussels is the issue of court independence. Emotions run high in the debate, which mirrors our own Polish reality and can be traced back to both sides’ attitudes. Poland’s ruling party is being unwise by underestimating the threats to Poland’s EU membership and how much it benefits our country. They have rushed ju-

dicial system overhaul without a proper and sound debate, which Brussels has deemed to be inconsistent with the values that are at the core of the union. EU politicians, on the other hand, have taken a non-conciliatory and highly critical stance instead of engaging in a reason-driven process within clearly defined legal norms. We are all losing as a result of the protracted conflict and it is high time that was understood, both in Warsaw and in Brussels. A strong, pro-EU Poland that is respected is what both sides need. Another, though no less important, issue is what type of union we are talking about. We can’t be unconcerned with such widely recognized facts as the lack of social legitimization of key EU bodies, the dominance of the strongest countries in decision-making, the insufficient solidarity on matters such as foreign policy and energy security, or the ever-growing bureaucracy at various levels. The EU needs to undergo some changes, which is a major challenge for all European politicians. But Poland is not taking part in debates about the future of the EU. That is exactly the problem of our country’s role in the community. And we are talking about fundamental issues here; about the future shape of the EU. The actual debate on matters of vital importance has yet to begin. We still don’t know what the eurozone will look like in the future. We have no solution to the problems of mass migration. I have a feeling that the indecisiveness we are seeing is caused by the fact that we are awaiting the new elections to the European Parliament and other EU bodies. In the long run, however, I am convinced that the EU will one day become a much more integrated organism than it is today, including a common currency. The way we make this happen is also crucial. Making rushed decisions today could turn out to be counter-productive and delay integration and rational consolidation.

Michał Kleiber PhD, former Science Minister 2001-2005, former president of the Polish Academy of Sciences 2007-2015

W B J NOVEMBER/DECEMBER 2018

Opinion CLIMATE

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WBJ

We need to divert the coal train

Discussion about the coal industry’s impact on the environment is a real powder keg in Poland. Yet, it is possible to keep it civil and productive. Monika Sadkowska and a team of volunteers organized the Climate Camp (Obóz dla Klimatu) in July in Świętno. The event attracted around 400 people who debated the steps we need to take to reduce the effects of climate change

WBJ:

Climate Camp was organized to “unbury the hatchet” – with whom? Monika Sadkowska: Our attitude was to welcome a variety of groups to the camp and find a common link. It turned out that there’s no real conflict of interest when you start facing the effects of climate change – especially when you take a long-term perspective. Wouldn’t we all like to live as long as possible? Let’s divert the train that is heading in the wrong direction. We

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all are on the same train – the miners, the poor and the rich. What do you expect from the miners who are revolting against their employers? Most miners have a technical education. We would like them to contribute to building a vision of a better tomorrow. We owe the miners our help in making a “just transition.” The community of miners won’t be able to stop that train on their own. We would like to listen to their ideas, allow

them to contribute to our vision, which is free from non-renewable energy resources. We need to make them ready to adapt to change and to realize that Silesia doesn't just have to rely on its coal resources. Poland is yet to settle on its energy strategy and catch up with the times. Considering the geological conditions in Poland, what should the strategy be? Our conditions are similar to those in Germany. The opportunities are out there but

INTERVIEW BY KONRAD KRZYSZTOFIK

we still aren’t quite ready in socio-political terms. We were made to think that the government would take care of priorities, at its own pace. Then, after the fall of communism, we turned to our short-term needs and consumerism. The problem is that Germans mine three times as much brown coal as we do. I’m not intending to glorify the German energy strategy. Nonetheless, it was in Germany where a coal commission was recently implemented. The commission is to regulate and eventually phase out coal mining. Can Poland do without such a commission? The EU regulates the greenhouse gas emissions of all its member states. The EU won’t be able to clean our air just by brandishing hefty fines. A great deal of mines are privately owned. Oftentimes, investors choose to pay the fines and continue taking profits from mining. Coal may just become more expensive and so the end users will eventually pay off all the EU fines. Can eco-business then become a mine of wealth? Absolutely, more and more people set up and invest in their pro-eco enterprises. There is an increasing demand on photovoltaic panels and electric cars. However, Polish regulators haven’t really caught up with the times and still do not make it easy to transition to renewable energy resourcing. Maybe it’s time to appeal to the government instead of us, the plastic-bag carriers? That’s what we had in mind when organizing the Climate Camp. We were glad to see politicians from local government and a local voivodship vice-marshal. We had anarchists, locals, politicians and NGO workers debating in the same tent. There were also visitors from South America, who told us about the persecution against eco-activism in Columbia. Did you turn to the Polish government for support in organizing the Climate Camp? I didn’t consider it, and I wouldn’t rule it out for next time. We should join forces.

What was your objective when setting up the Climate Camp? We hoped to have 150 participants. Around 400 turned up. We aimed to involve a variety of influence groups, to create a safe space for discussions and hear all points of view. We set a rule that a difference of opinion must not lead to conflict. We didn’t accept any aggressive argumentation, no door slamming allowed in the camp, which – by the way – wouldn’t be easy to do in a tent! What’s the state of Polish awareness of environmental threats? Around 89 percent of Poles are in favor of moving away from coal mining, according to the Center of Public Opinion Research (CBOS). People are aware of air pollution in cities, and that temperatures can be extreme in the summers and winters.

There are three swear words starting with ‘K’ in Polish. ‘Klimat’ is just one of them

However, that’s not enough to make us act. There are three swear words starting with “K” in Polish. “Klimat” is just one of them. With it being a taboo, how should we react when we see our grandparents shoving old shoes in the furnace? There’s plenty of information on the do’s and don’ts of domestic waste disposal on the internet. Nonetheless, it’s hard to find tips on how to reach other people’s consciousness without sounding patronizing. It takes practice, a good understanding of the problem and calm reasoning. We just need to keep our common goal in mind. President Andrzej Duda said recently that the EU is an “imaginary community.” Following his comments, we can conclude that Polish people are no

different to such a community. The magic lies in what connects us, how we communicate and the values we share. It’s easy to put up barriers and divisions, but it takes years of effort to unite communities. Who spearheaded the Climate Camp and how did the idea come about? I was the most visible person in the process, but the fact is that it was all teamwork. Most of those involved worked voluntarily. The idea began in the Czech Republic last year, during “We Are the Limits” (“Limity Jsme My”). Locals got together to protest against mines which exceeded limits of coal mining and gas emissions. We were inspired by our neighbors’ empowerment and the force of making a positive difference. While sipping tea, someone asked: “why not do it in Poland.” Are you planning to continue the debate about protecting the environment next year too? Let’s make it clear. It’s not about protecting the environment. I am part of the environment. I am not some alien being that is disconnected from the environment. I owe four out of every 10 breaths I take to plankton. If I poison my external lungs, then my own are of no use. I need to protect myself. As for the Climate Camp – yes, I’d like to continue it next year. What will you do differently next time? The objective won’t change, I think. The effects of climate change are a complex matter and so we shouldn’t run debates without a board of experts. We’d like to engage a wider team of authorities, involving more professionals from the mining industry. We will continue our culture of holding an open and safe space for discussions. I am not sure if the Climate Camp will be held in the same location next year, we will need to wait and see.

Monika Sadkowska Actor, cultural manager, climate activist against open-pit mining, co-organizer of Climate Camp

W B J NOVEMBER/DECEMBER 2018

FEATURES

Ahead of the United Nation Climate Change Conference (COP 24) scheduled in December in the Polish city of Katowice, the EU has decided to tighten CO2 emission standards for cars and light commercial vehicles. The decision, pushing for development of low-emission vehicles, has raised concerns among car producers, but it may pave the path for the EU to compete on a global level

Will greener EU norms lead to an ELECTRIC CAR BOOM? BY ANNA RZHEVKINA

THE EUROPEAN COUNCIL agreed that by 2030 new cars will have to emit 35 percent less CO2 on average. In addition, the EU has agreed on incentives for manufacturers of zero- and low-emission vehicles such as electric cars or plug-in hybrid vehicles. The decision came shortly after the Intergovernmental Panel on Climate Change (IPCC) – the leading international body evaluating climate change – warned about the threat to human health. The new norms urged for cleaner solutions in the transport sector, the only major industry in the EU in which greenhouse gas emissions are still rising. CARMAKERS UNDER PRESSURE Countries where the automotive industry is a major employer, including Germany, Poland, Hungary and the Czech Republic, saw the targets as too ambitious. The European Automobile Manufacturers’ Association (ACEA) warned of the risks of a negative impact on industry competitiveness, auto workers and consumers. “Consumers cannot be forced to buy electric cars without the necessary infrastructure or incentives in place,” ACEA Secretary General Erik Jonnaert said. Conversely, France, Sweden and some other countries argued for even higher targets. They stressed that stricter emission rules would give the European auto industry incentives to be more competitive globally. The car market has already felt the pressure of the “worldwide light vehicles test procedure,” or WLTP, which took effect in September 2017. The new test is

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designed to measure emissions in conditions closer to a real-life environment. In September the new passenger car market in Western Europe declined by over 20 percent in annual terms. The number of car registrations in Poland fell by 22.4 percent on a yearly basis after dealers rushed to sell non-compliant models in August, Market Research Institute Samar reported.

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E-MOBILITY IS THE FUTURE The number of electric cars in Poland is still negligible and accounts for only about 0.1 percent of the market. In the whole of Europe, 2.1 percent of all cars are electric, while in Norway their share reached 45.2 percent, the highest figure globally. “We know very clearly that the future is electric,” Maros Sefcovic, Energy Vice President of the European Commission told the Financial Times. The electromobility development in Poland should help reduce air pollution, which is greatly exacerbated by transport in many cities, as well as aid in decreasing dependency on oil imports. However, currently there is little in the way of incentives for Poles to buy electric cars, which are still much more expensive compared to regular vehicles. In contrast to some other European countries, there are no tax deductions or subsidies for zero-emission vehicles. Another issue is the lack of infrastructure for drivers. At the end of 2017, the European Alternative Fuel Observatory registered only 552 charging points in the entire country. The incentives for customers, the creation of clean transport zones reserved for low-emission vehicles and EU support for the Polish electromobility development plan are needed to accelerate e-mobility growth, Samar analysts concluded. NO CHOICE BUT TO ADAPT The EU push for battery-electric vehicles has raised concerns in countries like Poland, where carmakers focus much more on internal-combustion engine vehicles. The Polish Automotive Parts Producers and Distributors Association (SDCM) underscored the need to use all possible solutions to cut emissions, not just focusing on one single option. “Electrification, hybrid technologies, alternative fuels, eco-innovations and other energy efficiency solutions play an important role in the integrated approach to reduce CO2,” the SDCM wrote in a statement. Some experts, however, are skeptical about the future of plug-in hybrids. ING estimates that sales of battery-electric vehicles (BEV) will overtake traditional (internal-combustion engine) cars within ten years. With the technology development and breakthrough of BEVs, it may be nearly impossible for hybrids to remain cost competitive. The auto industry faces an electric shock, and it looks like carmakers have no choice but to adapt and find new opportunities. According to an ING forecast, only electric passenger cars will be sold from 2035 onward.

W B J NOVEMBER/DECEMBER 2018

FEATURES

Jรณzef Piล sudski, head of the newly formed Polish state, receives a military parade around 1919-1920

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A POLISH CENTURY This year, Poland is celebrating 100 years since it declared independence after World War I. The past century has featured both successes and hard times, in every aspect of life BY KAMILA WAJSZCZUK

W B J NOVEMBER/DECEMBER 2018

ere’s a picture many Poles have of November 10, 1918. Józef Piłsudski – a socialist politician and founder of the Polish Legions military corps – arrives in Warsaw. A day later, Poland declares independence. November 11 is be celebrated as Independence Day from then on. Piłsudski took power and led efforts to form an independent Polish state after World War I and after more than a century of foreign rule. Within a couple of months, the country had a parliament and a provisional constitution, but it would not have fixed borders for another four years. Ukrainians were not willing to give up Lviv, Silesia was land that Germany had claims to, Vilnius was to be taken by a “rogue” Polish general and the east was under threat from the Bolsheviks. The border in Silesia was settled after the Upper Silesia plebiscite and three uprisings. The eastern border was confirmed by way of the Riga peace treaty in 1921. Only in 1923 did the international community officially accept Poland’s new geographical shape. INDEPENDENCE AND HOPE This was, however, not the only challenge the Polish authorities had to face. Political tension was high. The country’s first president, Gabriel Narutowicz, elected in accordance with the so-called March Constitution, was assassinated by a nationalist party supporter only a few days after the swearing-in ceremony. Less than four years later, Piłsudski and his supporters carried out the so-called May Coup,

seizing power from a democratically elected government. Piłsudski did not assume any official post but remained influential until his death in 1935, the same year that a new constitution was pushed through. Governments changed but Poland’s two presidents from this period – Stanisław Wojciechowski, a cooperative movement activist, and Ignacy Mościcki, a chemical engineer – are well remembered. Adding to Poland’s political problems was its ethnic composition. About one third of the country’s population were non-Poles. The mainstream narrative was patriotic Polish, fueling existing conflict. Nevertheless, in many towns and cities, various nationalities led a peaceful coexistence. Several regional politicians stood out with more modern ideas of dealing with ethnic minorities, but on a national level the situation was increasingly tense. The economy was initially in a difficult situation too, especially in the first decade of independence. It took years before a currency reform put an end to hyperinflation. The reform’s designer, Władysław Grabski, is a major figure of his time, as is Eugeniusz Kwiatkowski, the initiator of the Gdynia port facility. The small village of Gdynia was to become Poland’s “window to the world” and an economic icon. Other notable investments included the steelworks in Stalowa Wola – at the core of what was to be named the Central Industrial Region – and the chemical plant in Tarnów. Housing problems were another issue, especially in the largest cities. The need to solve this problem was one of the factors behind the development of the cooperative movement, a new form of own-

1923

1920

Treaty of Versailles confirms Poland’s independence; Sejm names “lech” as Polish curPoland rency, later declares its changes it to independence “złoty”

1922

Poland wins a war against Soviet Russia

March Constitution

First Polish president is sworn in and then assassinated

International recognition of Poland’s borders; Opening of the first provisional port in Gdynia

Władysław Grabski’s currency reform

May Coup

April Constitution

1918 1919 1920 1921 1922 1923 1924 1926 1935 30

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ership, targeted at the less wealthy. The movement also flourished in other areas, such as farming and food processing. DISASTER We all know what happened next. September 1939 brought an end to the era of a young, independent Poland. Nazi Germany invaded from the west and the Soviet Union followed shortly from the east. Times of occupation were difficult for almost all Polish citizens and life-threatening for those of Jewish origin. The city of Warsaw was ruined, and the area of the ghetto was razed to the ground after the famous uprising. Liberation from Hitler’s army came from the Soviets, who had become allies with the West. A pro-Soviet government was formed in July 1944, marking the dawn of a new era, in a new geographical shape. Following talks in Teheran and Yalta, Poland was “shifted” to the west. Its former eastern borderlands were transferred to the Soviet republics of Lithuania, Belarus and Ukraine. At the same time, land that had been in the east of Germany – with cities such as Stettin (now Szczecin) and Breslau (now Wrocław) became Polish.

“ THE COUNTRY’S FIRST

PRESIDENT, GABRIEL NARUTOWICZ, WAS ASSASSINATED BY A NATIONALIST PARTY SUPPORTER ONLY A FEW DAYS AFTER THE SWEARING-IN CEREMONY

A NEW SYSTEM The new communist government was backed from the outside but had to cope with resistance from its own citizens. The Stalinist period, terror included, started in the late 1940s and was only fully over in late 1956 when Władysław Gomułka took over as first secretary of the communist party.

1943

Central Industrial Region construction begins

1945

World War II breaks out; Poland is occupied by Germany and USSR

Warsaw Ghetto Uprising

Proclamation of USSRbacked Polish Committee of National Liberation; Warsaw Uprising

1956

World War II ends; Poland ends up in the USSR-led Eastern bloc

Construction starts at Nowa Huta

Stalinist constitution affirms rule of “worker and peasant masses,” gives people right to have “personal belongings;” official name change to Polish People’s Republic

Poznań worker protests; “Thaw” and change of power

Warsaw court pronounces death sentence in “meat scandal”

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FEATURES

“ NATIONWIDE STRIKES IN

1980 WERE THE SPARK THAT STARTED THE SOLIDARITY MOVEMENT, THE BEGINNING OF THE END FOR COMMUNISM IN POLAND

In economic terms, the new regime would change almost everything. Private ownership of almost anything but personal belongings was banned, factories were nationalized. Land was also taken from owners of large estates but, unlike in the USSR, collective farms were to become only a small part of total agricultural land. Whoever was in the way risked their freedom or life. Farmers had to give up set quotas of their produce. Small businesses were marginalized. Working in a state-owned enterprise was not fully safe either. The regime needed to blame someone for its lack of efficiency. In a now notorious trial of 1965, people were sentenced to death for fraud in the meat processing sector. Regardless of that, the communist party liked to proclaim success in many economic areas. Rebuilding much of the country, especially its capital, after the war was indeed an effort. New industrial plants and new cities were to come next. The most talked-about example was Nowa Huta, a town built to house steelworks employees, which later became part of Kraków. Then, in another blame game, the nationalist wing of the party surfaced in 1968 and forced a large number of Poles with Jewish origins to leave the country. The so-called March events were some of the final notes of Gomułka’s reign. Yet he was to be overthrown only in late 1970. After price hikes, workers protested in the north of Poland. Reacting to the demonstrations, the regime had the military shoot into a defenseless crowd. Poland’s communist authorities claimed they represented the “worker-peasant masses,” yet those same proletarians were among

1981

1989

1971

Student protests. Anti-Semitic campaign forces many Poles of Jewish origin to emigrate

Tri-City workers shot at by the army following protests

Gierek’s administration takes loans, announces “new fiveyear plan;” start of the “Gierek decade”

Workers’ protests in Radom and Ursus

Strikes in major industrial plants, including the Gdańsk Shipyard; August Agreements signed; Solidarity officially registered

Poland declares insolvency; Martial law starts

Economic reform initiated by Industry Minister Mieczysław Wilczek; private entrepreneurship legal again

Round Table talks and first elections with a choice; Official namechange back to Republic of Poland

April 111 days of radical economic reform – the so-called Balcerowicz Plan

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the least satisfied. State propaganda could easily decry protest letters from intellectuals, but what was it supposed to do with strikes and protests by workers in Poznań in 1956, Gdańsk and Gdynia in 1970, Radom and Ursus in 1976, and finally across the country in 1980. The latter strikes were the spark that started the Solidarity movement, the beginning of the end for communism in Poland. The 1970s are remembered by some Poles as a decade of economic comfort. Unfortunately, all investment was financed from debt that the country was unable to handle and, in 1981, Poland was declared partly insolvent. The 1980s – colorful in the West – were predominantly dull and gray in Poland, especially after martial law was declared. Store shelves were often empty and ration stamps were gradually introduced for most consumer goods. ANOTHER FORM OF INDEPENDENCE The only hope for a dysfunctional economic system was a regime change and that is what came as a result of the Round Table talks of 1989. The communist party gradually gave up power but made sure its members would not be jailed. Following advice from Western economists, liberal-oriented finance minister Leszek Balcerowicz pushed through a set of radical reforms now known as the Balcerowicz Plan. These changes set Poland on a path towards market economy, but they also caused a wave of bankruptcies and increasing unemployment. It took years before the economic system became stable enough to withstand crises. What may be surprising is that it now is hailed as being based on

small and medium-sized companies, a huge change compared with what it was in the breakthrough year. Poland’s political system was initially equally unstable, with parliamentary elections every couple of years. Political fighting led to divisions within the post-Solidarity political grouping and it was only a few years after the Round Table of 1989 that the postcommunist party rose to power again and formed a government. In 1997, the country received its current constitution. The 2000s were years of rapid growth, increasing prosperity and deepening ties with the West, marked by Poland’s accession to the European Union in 2004. The young market economy, with less than two decades under its belt, was in fact robust enough to withstand the tides of the 2008 global financial crash. It was the only European country to maintain positive growth throughout the downturn. The current decade has seen continued eceonomic development, but it has not been without certain political turbulences. In 2010, the Smolensk air crash killed President Lech Kaczyński and more than 90 other people. It also changed political discourse for years to come. Today, Poland is struggling with political and social challenges, but in many ways it is more modern than anyone could have imagined in 1918 or even in 1989. It boasts a modern banking industry, many innovative start-ups and a computer gaming sector that sells its products worldwide. All this thanks to its most important asset – the people who never give up.

2004 1991 Re-establishment of Warsaw Stock Exchange, shares of first five companies quoted; Warsaw Pact and Comecon dissolved

2010

Redenomination Last Soviet – PLZ 10,000 Army soldiers becomes leave Poland PLN 1

Launch of privatization process, Ministry of State Treasury established

Poland joins NATO

Poland joins European Union

Poland only mildly affected by credit crunch

Smolensk air crash

UEFA Championship in Poland and Ukraine

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BY SERGIUSZ PROKURAT

DISCOUNTS ON THE UP

Over 50 years ago, the founder of Walmart, Sam Walton, coined the motto: “Low prices every day.” Not only has it maintained its topicality, but it has also become a slogan used by the largest discount chain in Central Europe – Jeronimo Martins (i.e. Biedronka). From local corner stores, huge hypermarkets, discount stores and back to convenience stores, the retail landscape in Poland has seen many changes over the past three decades. Where is it headed now?

>>>

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IN FOCUS RETAIL INDUSTRY

THE AGE OF DISCOUNT STORES

Nowhere else in Europe have discount stores developed so rapidly. In the last five years the share of discount stores in the European market has increased by 2 percent, while in Poland their growth is at a staggering 17 percent. Currently, in Poland we have five discount store chains: Netto, Lidl, Kaufland, Aldi and Biedronka. In total these chains have almost 4,500 stores across the country. Over 55 percent of Polish customers have indicated that they do their basic shopping in discount stores, according to a study conducted by GfK Shopping Monitor 2018. Hypermarkets and small local grocery stores are placed further down the order. Our last choice is supermarkets and delicatessens. At first, discount stores seemed to dominate the lower to middle-income neighborhoods, while the upper-middle income areas featured upscale delicatessen stores, such as Alma and Piotr i Paweł chains. But as time passed, discount stores figured out a way to successfully venture into these neighborhoods too, effectively undermining the position of upscale stores with a widening offer and significantly lower prices. After appropriating the segment of local stores and delicatessens, discount stores went after an even larger player. They have been successfully undercutting the hypermarket segment as well, a feat that would have seemed unthinkable a decade ago or so. After all, hypermarkets enjoyed the same – if not better – bargaining position with suppliers, and the quantity of goods they sell allowed them to

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“ The average Pole

spends about a third of their monthly earnings on basic needs. operate at extremely low margins. One might ask: how are discount stores more competitive? The short answer is location and a carefully planned and executed marketing strategy.

A WELL-TAILORED STRATEGY

Their basic advantages – such as standardized stores, effective processes for replenishing goods in shelf-ready packaging, maximum simplification of logistics with flat organization of logistics centers, and continuous pursuit of products desired by the customer by the skillful rotation of shelves – went hand in hand with the understanding of the Polish market. Discount stores have even started to establish cooperation with known brands such as CocaCola, Milka or Ferrero, which now offer products dedicated to discount stores. This became attractive for an increasingly wider groups of people, who were able to buy well-known brands for even less than in hypermarkets. The virtue of offering goods that earlier seemed inaccessible has become the main domain of Lidl and Biedronka. Lidl was the first chain to include Wittchen bags or Crocs shoes in their periodical sales offer. Both chains have revolutionized the delivery of fruit and vegetables to shelves and established a close cooperation with food producers, creating their own private labels. Poles love discount stores, which currently constitute a 27-percent share of the market. This result is backed by offering a range of fresh and premium products. Biedronka and Lidl have 2,000–3,000 items in their range of products, with the share of private labels below 50 percent, so as to maintain their discount nature. The market leader, Biedronka, has been also carefully building its image as a chain that promotes Polish brands.

MASS MARKET

Over the last five years, the visiting rate at discount stores has increased significantly. Today, customers not only visit for minor food purchases, but also come for larger shopping trips. Discount stores are strong competition for each type of store; you can buy bread and rolls baked on the premises, freshlysqueezed juice or fresh fruit, vegetables and meat – all at prices way more attractive than in special-

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upermarket chains appeared in Poland at the beginning of the 1990s, when – after the systemic and economic transformation in 1989 – Poland welcomed foreign capital accompanied by corporations, set on transforming the retail landscape. After decades of austerity and pervasive shortages of virtually all kinds of consumer products, Poles were all too eager to take advantage of the lower prices and much bigger offer that large-surface stores could offer. Carrefour, Auchan, Real and Tesco hypermarkets quickly gained market advantage and slowly but systematically crowded out nearly all small local stores. At the beginning of the 21st century the country saw an even more dramatic increase in their number. Ten years ago, the number of hypermarkets in Poland exceeded 370. Their triumph was, however, short lived. The past few years has seen another unprecedented growth spur in the retail sector – that of discount stores. Poles have been doing shopping in discount stores for 20 years, as the first ones appeared in Poland in 1995 – but their genuine metamorphosis has dominated the current decade. They have evolved from places synonymous with embarrassment, riddled with cheap, low-quality products into locations visited by Poles from every social group.

2,850 stores

650 stores

Top 3 biggest discount chains in Poland 360 stores W B J NOVEMBER/DECEMBER 2018

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ist stores. The ever-wider range of products and an attractive promotional offer now almost rival those of hypermarkets, but are much more conveniently located. Since in discount stores – often situated very close to residential areas – you can buy almost anything, why waste time going to a hypermarket? Discount stores offer something more than just price cuts. The introduction of limited seasonal offers makes the customers feel that they are buying something special, rare and unavailable in other stores. Poles love special offers and are keen to hunt for bargains – which discount stores are acutely aware of and have been the most successful in using to their advantage.

THE PUSH-BACK

Hypermarkets are now focusing on increasing profitability of their existing facilities by taking a page out of the discount stores’ marketing handbook. Tesco – similarly to Carrefour – is focusing on the development of own-brand labels. Last year they decided to introduce over 1,000 such products. The share of own-brand labels in the Polish market has already reached 20 percent and is constantly growing. Different stores introduce different types of ownbrand labels and the example of the UK, where Tesco also sells its own-branded medications, shows that this tendency spans across many market segments. Today, in almost every hypermarket and discount store we will not only buy food, but also clothing, naturally at lower prices than at a clothing chain.

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CORNER STORES COMEBACK

Despite the growing dominance of discount stores, there is still room for local convenience stores, where we can do basic shopping in under 15 minutes. Granted, they are no longer the quaint family stores that Poles remember with some nostalgia. They are predominantly franchise stores, operated under brands such as Żabka, Freshmarket, abc and Carrefour Express. Their appeal is more than just close proximity. As they are often operated by individual owners, they are allowed to remain open on Sundays when the trade ban is in effect. They rely heavily on impulse buying, e.g. featuring ice cream freezers prominently during the summer heatwave, which allows them to put a significant mark-up on their prices. Currently, the Żabka chain has over 5,000 convenience stores, coming in second after the market leader: Eurocash’s abc franchise chain with over 8,500 stores. At the same time there is a small number of delicatessens (K&M, Piotr i Paweł), which try to claw back their share of the market offering premium products, at higher prices. The risky nature of such a strategy has already taken its toll with Alma’s bankruptcy in 2017. Meanwhile, Biedronka is taking over Piotr i Paweł stores. In September of this year, five Piotr i Paweł stores were rebranded as Biedronka (two in Wrocław, one in Tychy, Poznań and Kalisz each). This goes to show how the strategy of discount stores to move upmarket has been undercutting the delicatessen market. The new stores

have maintained the upmarket appeal of the former brand, with separate aisles with cheese, meat and cold cuts, a rare occurrence in other Biedronka stores.

WHEN AND HOW?

KEEPING AN EDGE

Despite the apparent prosperity, retailers have seen their share of challenges this year and more are on the cards. The law forbidding trade on Sundays has not been a boon for the industry. Paradoxically, the good condition of the Polish economy and low unemployment are posing another difficulty. Despite steadily increasing wages and improving working conditions, the shortage of workers is particularly tangible in the retail industry. Large chains try to solve it by hiring employees from Ukraine in the short term and by intensifying their efforts to implement automatic cashiers in the longer perspective. There is plenty to fight for. The average Pole spends about a third of their monthly earnings on basic needs. As creatures of habit, the majority of Poles are loyal customers and prefer to shop in a specific store. In order to win the battle for customers, retail chains have to stay open to innovation. One of the incentives may be the online shopping sector. In 2015, online shopping represented only 0.2 percent of chains’ turnover. Now it is growing dynamically, particularly in large cities. Ordering products via a convenient website, or a mobile app, no need to leave one’s home, fast and easy methods of making payments are strong incentives for busy city-dwellers. The rapid development of e-commerce has intensified competition in the retail sector. In the fight for customers they are looking for ways to optimize delivery times, driving up demand for warehouse properties within the largest agglomerations.

In Poland, 7 percent of respondents do everyday shopping (not only foodstuffs) using their smartphone, 17 percent make such purchases weekly. The Chinese are the leaders of purchasing goods with the use of smartphones – 52 percent of them make a purchase this way at least once a week. For comparison, 16 percent of Americans and 22 percent of British people shop via smartphones once a week.

THING OF THE PAST

Do Poles miss small, local or countryside family stores? They may tell you they do, particularly at a time when economic patriotism is heavily promoted politically. But facts are facts, Poles prioritize their wallet and taste over the origin of the capital behind the store. The majority of the largest players on the retail market are of foreign origin: Portuguese (Biedronka), French (Auchan, Intermarché), British (Tesco), German (Real, Kaufland, Lidl) and Danish (Netto). Meanwhile, Lewiatan and Stokrotka, which represent Polish capital, are not among the leaders. American writer Frank Bettger once wrote: “I do not think that anyone is born with a flair for trade.” He could not be more wrong. The evolution of retail chains is the story of building brands over generations, take Jeronimo Martins and his children for instance, or the founder of Tesco, Jack Cohen, and his descendants. It is the flair with which they generate added value in retail that has put them on top. And as the retail landscape keeps transforming, there will always be niches to fill, innovations to implement and efficiencies to take advantage of.

According to the analysis of the value structure of household expenditure on FMCG products, we mostly shop during the week (74 percent of respondents). More than a quarter of us (26 percent) do our shopping at the weekend.

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IN FOCUS RETAIL INDUSTRY

NOVEMBER/DECEMBER 2018 W B J

DEVOURING MORE SPACE

The restaurant areas of shopping centers around the world have been expanding in recent years. The latest developments in Poland’s malls increasingly reflect the global trend BY ADAM ZDRODOWSKI

hopping center owner, manager and developer Atrium Group last month opened a new restaurant area at its Atrium Promenada mall in Warsaw, which is one of the company’s flagship assets in Poland. Called Republika Smaku (the Republic of Taste) and accommodated in a newly completed section of the center, which has gone through a major modernization and extension process, the food court houses 11 popular restaurants featuring complementary menus. A number of ongoing shopping center modernization and extension projects across Poland will also involve the development of additional dining space, with mall owners increasingly paying attention to and seeing value in having a quality restaurant offering. A properly chosen mix of restaurants generates bigger footfall and increases the time that visitors spend in a shopping center. It also increases the amount of money that those visitors will spend in the mall, argued Joanna Tomczyk, an analyst at JLL.

GLOBAL TREND

The ongoing expansion of restaurant areas in shopping centers is a global phenomenon. According to a recent report by JLL, by 2025 tenants from the food and beverage sector could account for as much as 20 percent of the total leasable space in malls across Europe. Changing trends in the retail property market, including an increased focus on so-called “shopping experience,” have led

the share of restaurants in the aggregate GLA of shopping centers around the world to grow in recent years. This has been happening in Poland, too. JLL data show that the food and beverage sector currently accounts for 12.5 percent of the GLA in major shopping centers in the Tri-City, while in Łódź, Kraków, the Silesia agglomeration and Warsaw the figure stands at 7.5 percent, 6.8 percent, 6.8 percent and 6.6 percent respectively (see graph). Poles are eating out more and more often. According to the country’s government agency Statistics Poland (GUS), restaurant and hotel services now account for 4.6 percent of households’ expenditures, up from 1.8 percent in 2005.

GASTRONOMIC EVOLUTION

Magdalena Sadal, head of retail research and advisory at Cresa Poland, noted that in the more than 20-year history of modern retail property market in Poland, the restaurant areas of shopping centers have – just like other parts of malls – undergone a radical transformation. The country’s first grocery hypermarketanchored centers featured few gastronomic establishments which typically occupied some 3-5 percent of those centers’ retail areas. Then the classic food court area housing several chain fast food restaurants emerged. It was located in the center (in single-floor malls) or on the top floor (in multi-story malls) of the building and took up even 10 percent of the GLA. Over time, the

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IN FOCUS RETAIL INDUSTRY

chosen “ Amixproperly of restaurants generates bigger footfall

importance of this component of the tenant mix continued to grow. Today, in new shopping center projects and in existing malls that get modernized or/and expanded, the share of restaurant areas in the total leasable area amounts to more than 10 percent to even 20 percent. Food courts accommodate more than ten tenants. They are surrounded by regular restaurants and the latest gastronomic concepts. Apart from the dedicated restaurant areas, modern shopping centers also feature single smaller establishments such as ice cream parlors and cafes that are distributed across all the malls’ floors. In dominant shopping centers, the number of tenants from the food and beverage sector amounts to 30-40, which accounts for about 12-16 percent of the total number of tenants, Sadal said. In Galeria Młociny in Warsaw, 50 gastronomic establishments have been planned. Interestingly, shopping centers are increasingly becoming places where foreign brands and concepts debut in Poland, Sadal pointed out. A number of such openings – including Max Premium Burgers, Blue Frog and Black Real Burgers – have taken place in the last two years. Japanese restaurant chain Menya Musashi will soon open its first two Polish locations in Warsaw’s Blue City and in Forum Gdańsk. As the country’s malls offer more and more restaurant space, other newcomers may be tempted to make similar debuts in the near future.

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GROWTH PROSPECTS

The size and type of the restaurant offering of a given shopping center depends on the mall’s specific nature and location. Centers located in downtown areas and close to office buildings, for example, often offer more sophisticated cuisine as their visitors include businesspeople. In general, more and more non-chain restaurant concepts are appearing in shopping malls in response to the expectations of clients looking for original ideas, for instance those featuring vegetarian and vegan cuisine, said Mariusz Majkowski, head of retail leasing at CBRE. Apart from shopping centers, food services are also becoming increasingly available in other retail formats. Retail parks usually include stand-alone buildings housing restaurants of popular fast-food chains. Food trucks, too, can be seen in such locations more and more often. Beside their single restaurants, ice cream parlors and cafes, some outlet centers now also feature small food courts. Admittedly, the growth of dining areas in such schemes has its limitations as they are mainly visited at weekends.

Meanwhile, a new retail format has emerged in the market in which gastronomy is the dominant function. Such projects are usually located in historic properties in downtown areas with examples including Hala Koszyki in Warsaw. They predominantly house non-chain restaurants that have already been around in the given region for some time as well as restaurants whose offer is targeted at clients looking for a particular cuisine or dish, Majkowski said. Often, one can also shop for bio products there. Real estate experts predict that the expansion of dining areas in shopping centers and other retail formats will continue. According to CBRE’s “Shopping Center 4.0” report published last year, every fourth visitor sees a restaurant offering as an important feature of a mall. The development of food services is part of the most spectacular trend in the retail market – the drive towards “convenience.” Such services will naturally follow clients to the places where they spend the most time, including to where they do their shopping, Sadal maintained.

SUPER SIZED

Share of restaurant areas in the GLA of major existing and under-construction shopping malls Tri-City Łódź Kraków Silesia metro area Warsaw Poznań Wrocław Szczecin

12.5% 7.5% 6.8% 6.8% 6.6% 5.3% 5.1% 3.7% Source: JLL

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JEWELRY BY ELLA ZUBROWSKA, PHOTOGRAPH BY OLA WALKOW

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Small stores at risk amid Sunday trade ban

The Sunday trade ban introduced in March has reshuffled the retail market in Poland. The idea behind the ban initiated by Polish Trade Union Solidarność was to give workers some more time with their families and to support small stores. However, it has turned out quite the opposite BY ANNA RZHEVKINA

oland decided to introduce the trade ban gradually, leaving two trading Sundays per month this year and one trading Sunday per month in 2019. From 2020 onward stores will only be open on seven Sundays in the year. Trade limitations have caused unquestionable chaos on the Polish retail market for both the market players and consumers. Retailers have had to make sure they comply with the ban on non-trading Sundays, while customers need to follow the new schedule and adjust their shopping habits.

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DISCOUNTS WIN CUSTOMERS

Large discount stores, however, quickly adapted to the new rules. They introduced extended opening hours on Friday and Saturday, reorganized logistics and invested millions of złotys in advertising to educate consumers. Poland’s largest discount supermarket chain, Biedronka, added 2 percentage points to its market share in the first half of 2018, while sales grew by 8.7 percent to €8.4 billion. “It doesn’t look like the discount stores have a big problem with the ban. They have increased expenses for advertising and cleverly used the ban to build a competitive advantage,” General Director of the Polish Chamber of Commerce Maciej Ptaszyński said. Conversely, the ban seems to be creating new risks to small stores, despite the intention to support them.

NO IMPROVEMENT

Small stores (less than 300 sqm) have a mere 33-percent share of the Polish market, while about 28 percent belongs to four main discount chains. Clearly, family stores don’t have the budget to compete with the aggressive promotional campaigns of the big players. Oftentimes, the prices quoted by their suppliers are higher than the end prices charged by discount stores to their clients. And even if on Sundays they are the only option available to clients, the balance is still off. “On Sundays there is an increase in turnover, but it doesn’t compensate for declines during other days of the week,” Ptaszyński explained.

The Polish law allows only store owners to work on non-trading Sundays. This makes the situation particularly difficult for the average format stores, which need more than one or two staff to keep operations running. According to the Polish Chamber of Commerce, small store sales rose annually by 5.4 percent in June, 7 percent in July and 5 percent in August. This growth is not much different from 2017, when sales increased by 5.6 percent, 3.3 percent and 8.8 percent in the same months respectively. Considering that the market develops at about 3 percent annually, and inflation is about 2-3 percent, the net growth is close to zero, Ptaszyński said. He added that summer sales this year were helped by the hot weather, which led to many compulsive purchases. “It is very hard to prove that the situation for small stores has improved as a result of the ban. In my estimation it cannot be proved,” Ptaszyński concluded.

For example, in the UK the ban does not apply to stores with an area below 280 sqm. In some European countries, such as the Netherlands, local authorities decide whether the ban will apply. In Poland there are 32 exceptions to the ban. The ban is not applicable, among others, to stores at railway stations and airports, for bakeries, confectioners and ice-cream stores as well as post offices. The rules raised many questions – for example, whether having an in-store bakery in a supermarket is enough to remain open on Sundays – and gave advantages to some players. One Biedronka store located in an old bus station building proved in court its right to trade on Sundays. Żabka stores, on the other hand, where clients can also collect their parcels, used its status as a post office to get around the ban. The Polish National Labour Inspectorate wrote that after auditing Żabka stores, 182 applications were sent to court. As of September 5, in one case the owner paid a PLN 1,500 fine. For 64 applications the court declared there had been a ban violation; however, most stores appealed against the decision. In eight cases the court did not find any violation of the ban. And it’s not like Żabka stores just decided to turn into post offices overnight once they caught wind of the ban coming into force. “In the case of Żabka franchisees, their status as a post office results from agreements that have been signed since 2012. Consequently, this status was a fact even before the work on the bill began. … There are no legal reasons why franchisees should limit themselves and not use their right,” Żabka replied to our enquiry. After eight months, the ban on Sunday trade seems to be less effective than originally anticipated. In some cases, it is clearly unenforceable. And where it is, the results are probably not what the regulation’s creators intended in the first place, which was to protect employees against exploitation and help out smaller family-owned stores. It may be not without cause that Western European countries have been abolishing Sunday trade restrictions over the past years, Trzeciakowski concluded.

“ The ban seems

ONLY BASIC SHOPPING

to be creating new risks to small stores, despite the intention to support them

With the introduction of the ban, customers are getting used to doing the majority of their shopping on Saturdays, and only being able to buy basic products on Sundays. The margins for such products are very low. Store owners, however, often have to engage the entire family in work instead of spending the day together, Magdaleną Frątczak from CBRE said. She added that employees of stores that are closed on non-trading Sundays may feel extra pressure and workload on the other days of the week. Solidarność argued that, according to the employee survey, 53 percent of female store employees felt less tired, while only 11 percent claimed to be worse off after the trade ban came into force. However, about one-third (32 percent) of the women polled admitted that they work more in the days before non-trading Sundays. The union is considering extending the ban to Saturdays (from 10 pm) until Monday (until 5 am) to avoid shops staying open long hours or opening right after the clock strikes midnight on Sunday.

RETAILERS USING EXCEPTIONS SMARTLY

The trade ban in Poland is much stricter than in many other countries, an economist at the Civil Development Forum (FOR) Rafał Trzeciakowski said.

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IN FOCUS RETAIL INDUSTRY

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INTERVIEW BY ALEX WEBBER | PORTRAIT BY MARCIN CZAJKOWSKI

It’s all about catchment Shopping centers are transforming to meet new demands and fulfill different functions, but change rarely happens without risks. From new locations and digital revolution through to new concepts and pop-ups, Atrium Group’s COO, Scott Dwyer, discusses the changes to Poland’s retail landscape

WBJ:

The retail sector has undergone major changes in the last few years, how have these impacted Atrium’s strategy? Scott Dwyer: In terms of our portfolio, we’ve moved out of both Romania and Hungary to concentrate on two countries: the Czech Republic and Poland. We’re now focusing on major urban locations, with Warsaw seeing heavy reinvestment from us, and which at the start of the year accounted for one-third of our Polish portfolio and we plan to grow that to over 50 percent through acquisitions and redevelopments. You already have a sizeable presence in the Polish capital, what’s the continuing draw towards it? At Atrium, we’re not interested in planting flags around a country, what interests us is catchments areas and that’s what Warsaw can offer. Take Atrium Promenada as an example; the district has grown by 10 per-

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IN FOCUS RETAIL INDUSTRY

“ I like to think that at cent in its number of residents, while local purchasing power has risen by 20 percent. As I speak, 900 apartments are being added close by. Here, all the microeconomic factors that are of interest to us are present. Elsewhere, we’ve got Targówek, which used to be little more than a field – now it’s a major urban location, while the area around Reduta has emerged to become the most densely populated area in the country. Across Poland we’ve seen a situation where many centers are expanding, while other, more niche, centers are opening. Where does Atrium stand among all this? For us to be relevant we need to be of a certain size. We need to be able to offer the right entertainment options, diversify and add to our gastronomic offer. Right now, across the market, the underlying ethos is to either go big and try and offer everything or go small and niche. People are short on time, when they visit a center they

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want to do so in the knowledge that they can have and do everything they want. For a few years now, there has been talk of shopping centers moving more towards fulfilling a social role… Right. We see ourselves as offering the community a valuable service, and as such we want our visitors to view us as a community center. Opening hours are being extended; in the morning people can visit a medical service or a gym, while at night they have cinema or restaurant options. For as long as I can remember there’s been talk of a cinema in the area of Reduta, but now we’re finally implementing that ourselves with the launch of a 3D cinema in November. In the future, we’re aiming to look beyond the four walls of our centers and perforate outdoors more by opening public spaces. Harnessing outdoor areas, improving their entertainment offer, etc. Across

Atrium we have a different approach and try things that others don’t

the board, centers are trying to do something different… We have to. The industry has to take more risks. We need to be adventurous as that’s the only way to learn what works and what doesn’t. That’s one of the biggest advantages of having a large shopping center – our size allows us to experiment on the fringes. I like to think that at Atrium we have a different approach and try things that others don’t. On the subject of innovation, what have we seen from Atrium? A good example is the Carrefour in Atrium Promenada. It’s highly digitized, with all

items accessible online, cash registers at the back and a section in the center offering made-to-order food. It’s a completely new concept. When it comes to trying “new things,” how do you view pop-up stores? For us, pop-ups are a great way to test a retailer, whilst for the pop-up, being present in a center is a good test of consumer demand. From 15 pop-ups, maybe four or five will eventually convert into real tenants. For us, pop-ups aren’t about making money, they’re about embracing space. How has the partial ban on Sunday trading affected the industry? Footfall is slightly down but sales have remained stable. There are mixed issues here. A retailer who now only opens six days a week will tend to actually make more money because they have lower variable costs. It’s not been the doom and gloom situation some people predicted – people have redistributed their shopping habits and will now spend more on a Saturday or Monday. We haven’t had to recalibrate. What does the future hold for you? In the short term, we’ve got a 8,600-sqm extension of Targówek opening soon, not to mention a new leisure offer in Reduta. And, of course, looking further down the line, there’s Wars Sawa Junior. There’s plenty going on, and while we don’t like to put a timeline on things, I think by 2021 you will definitely see a “new us.” You mentioned Wars Sawa Junior. Being in the heart of the city, does this mark a change of strategy for you? Not at all. Though not in the heart of the city, we’ve already got two very urban locations in Prague. As I say, we’re interested in catchment areas, and with Wars Sawa Junior you have an estimated 60 million people who will pass it each year. Clearly, this is a long-term project we have on our hands, and while I’m currently limited to how much I can say about it, we know full well that this will compliment our other assets and not overlap them. Broadly speaking, it’s a great piece of real estate in an excellent location that will be something of a hybrid: a shopping center with high-street elements. We’re always on the lookout for the right asset, and Wars Sawa Junior is exactly that.

W B J NOVEMBER/DECEMBER 2018

THE ONLY INVESTMENT IN POLAND â&#x20AC;&#x201C; AN APARTHOTEL ON THE SLOPE!

FIVE TIMES MORE THAN A DEPOSIT The condo system is a popular form of investing capital, allowing for steady and long-term returns from a single investment. Investors buy turn-key hotel apartments, which are then rented out when the owners are not staying in them, bringing substantial profits to both parties. Investing in prestigious hotel properties always pays off and results in higher profits than standard investments.

SOUND ARCHITECTURAL CONCEPT INFINITY Zieleniec ski & spa is a 40,000-sqm aparthotel which will be a split-level three-piece structure sitting on one of the Zieleniec slopes. The entrance level overlooking the top floor,

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COMFORTABLE INTERIORS The complex features spacious, comfortable one-, two- and three-room apartments, most of them with balconies or loggias with a picturesque view of the mountains. All units are sold in turn-key condition with top-of-the-line equipment and a parking space assigned to the apartment. The apartments offer between 28 sqm and 118 sqm of space

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and the ownership is stated in the land and mortgage register. Guests will be able to enjoy a pool with a spa & wellness area, restaurants, many attractions for children and an underground parking lot. The extensive conference facilities within the complex will be ideal for training and team-building events. The complex will also offer ski locker rooms and an après-ski area.

A DEVELOPER THAT KNOWS MOUNTAINS The project is being delivered by Czarna Góra Apartamenty, a Polish developer with a lot of experience in building condo-hotel facilities in the mountains. The company is the co-creator of the Czarna Góra Resort, a leading ski resort in Poland. The developer has completed, among others, Apartholtel Czarna Góra, Apartamenty Czarna Góra, Hotel Morawa, Villa Czarna Góra, Alpine Coaster Czarna Żmija, ski lifts and cable railways, including Luxtorpeda, the fastest six-person cable railway in Poland. The work is done in a sustainable way, so that the new facilities form a natural part of the surrounding landscape.

EXTRAORDINARY LOCATION AND UNIQUE MICROCLIMATE There is a specific microclimate in Zieleniec which is similar to that found in the Alps. It has a positive impact on the body and boosts red blood cell production. The region has 160 days of snow cover, which allows you to enjoy the beauty of the winter season when the snow is lacking in most other ski resorts. Zieleniec Ski Arena is one of the largest and the most recognizable ski resorts in the country. Guests appreciate the excellent landscape: over 22 kilometers of ski trails, five cable railways, 24 ski lifts, a snow park and a half-pipe. Thanks to its picturesque location and a large number of attractions, Zieleniec is the optimum location for leisure at any time of the year. The Bystrzyckie and the Orlickie mountains are a great place for individual and family trekking and bike trips. The area features all-year-round cable railways, DiscGolfPark, Mountainboard, SkiGrass, an equestrian center and a trout fishery.

annual profit of 7 percent on their net investment, regardless of whether the apartment is occupied or not. All rental-related costs (utilities, property management, insurance) are borne by the experienced operator. The owner can use the apartment during the “owner stay,” when they also have access to the spa & wellness area as well as the pool area at preferential rates. As part of a loyalty program, the owner will be able to enjoy discounts for the Czarna Góra Resort and the INFINITY Zieleniec ski & spa. A wide choice of dates for the owner stay lets you enjoy the apartment both in the winter and in the summer, all the while making money on it.

INVESTING IN PRESTIGIOUS REAL ESTATE ALWAYS PAYS OFF AND BRINGS HIGHER PROFITS THAN STANDARD INVESTMENT FORMS SUCH AS BANK DEPOSITS.

INVESTMENT, PROFIT, LEISURE

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The condo system guarantees the ownership confirmed in the land and mortgage registry. The rental agreement with the operator gives the owner an

+48 74 306 76 06 infinity@czarnagora.pl www.infinity.czarnagora.pl

TECH i n s i g h t s Medicalgorithmics to review strategic options WSE-listed medical diagnostic device producer Medicalgorithmics has launched a review of its strategic options, including possible strategic or financial investors and strategic alliances, the company said in a market filing. “The review will allow for the identification of possible directions for the group’s development, and consequently the selection of the best way to achieve the group’s long-term goal of providing the best possible position on the market of advanced cardiology systems and maximizing value for the company’s shareholders,” the company’s release said. The company will now pick advisors to help with the review process.

PRESS MATERIAL

>>>

TECH NEWS W B J NOVEMBER/DECEMBER 2018

TECH

Ultimate Games Q3 prelim. net profit at PLN 0.6 mln Ultimate Games recorded preliminary revenue of PLN 1.3 million and net profit of PLN 0.6 million in Q3. In the nine-month period, preliminary revenue stood at PLN 2.9 million, while net profit amounted to PLN 1.2 million. Ultimate Games is a unit of game developer and incubator PlayWay. In June, Ultimate Games debuted on the NewConnect market and in 2019 the company plans to transfer its shares to the main market.

1C Entertainment mulls IPO Video game studio 1C Entertainment is considering an IPO on the Warsaw Stock Exchange, the company’s CEO Nikolay Baryshnikov told the ISBnews press agency. “We want to grow organically – we see great growth potential especially in the games production segment and in specialized services for the video games industry. I do not exclude taking over good studios in Poland and abroad,” Baryshnikov said.

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‘Castle of Heart’ will debut in Japan on Nov 29 – 7Levels Kraków-based producer of games for the Nintendo Switch 7Levels said its game called “Castle of Heart” will debut in Japan on November 29. According to the press release, the Japanese company Rainy Frog is responsible for the edition, marketing and distribution of the title. The price of the game has been set at 1,800 yen, i.e. at a higher level than previously agreed with the publisher. The developer’s vice-president Krzysztof Król said 7Levels expects a surge in revenue after updating the game and its premiere in Japan.

TECH NEWS

Five winners selected for InCredibles accelerator Sebastian Kulczyk, an investor and one of Poland’s richest people, has once again selected five start-ups that will take part in the InCredibles acceleration program. Over the next few weeks, the selected projects will meet with mentors, visit Silicon Valley and look for financing options. In the second edition of the InCredibles accelerator, over 300 start-ups from 34 countries applied to the competition. The majority of applicants were from the CEE region and are active in software, HealthTech and FinTech. “I am glad that despite setting the bar so high last year, so many strong projects decided to apply to InCredibles this year. It’s yet another signal that our program is seen as a good opportunity that can help companies grow. The acceleration program I initiated is a partner project aimed at building value, not only for the companies taking part in it, but also an attempt at setting a new quality standard for the entire start-up ecosystem in Poland,” said Kulczyk. This year, the judges were looking for companies that have already taken part in an acceleration program, have a working prototype of their product or service, a solid team and are ready for international expansion. The winners of the competition are: Avocode, Neuron Soundware, Nuadu, Infermedica and Genomtech. Each of the companies will receive a grant of $50,000, as well as opportunities to build a network of contacts and mentor support. Over the next six weeks they will meet with experts from Singularity University. They will also take part in investor consultations and several workshops with specialists in all the industries in which the companies are active. They will also participate in accounting, legal, HR, public relations, marketing and sales workshops. “As part of the acceleration program, the winners will also visit Campus London, where they will meet international experts and have one-on-one meetings with local investors. The companies will have an opportunity to try out their sales skills on potential clients,” the foundation stated. The first edition of InCredibles, organized in 2017, saw as many as 426 applicants.

W B J NOVEMBER/DECEMBER 2018

TECH

AT YOUR SERVICE

THEY ARE PROGRAMMED TO PERFORM MULTIPLE TASKS AND AT FAR GREATER SPEED THAN A HUMAN. THEY DO REPETITIVE TASKS AND NEVER COMPLAIN. SOON WE WILL ALL HAVE ROBOTS WORKING SIDE-BY-SIDE WITH US, MANY OF THEM AS OUR PERSONAL ASSISTANTS BY BEATA SOCHA

usiness is now all about robotics. They first appeared 4-5 years ago but the trend reached Poland only last year. “Today, business is dominated by robotics, we can definitely talk about a boom here,” said Nina Twardowska, CEO of Impel Business Solutions. The company already employs 30 fully automated processes and another 50 concepts are in line for implementation. Few people need convincing how much robots can do for a business. They are 100 percent accurate, they work

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24/7 and don’t complain when doing the same repetitive things over and over again. All that translates into financial gains. Robots can already do a lot. They can search through PDFs and websites for information. They can e.g. easily sift through entire news archives in PDF format and generate a report with the relevant information. They can read and create documents, help with HR and accounting, even with social insurance filings. They can work anywhere without limitations – as long as they get digital records.

TECH ROBOTICS

ROBOTS ARE 100 PERCENT ACCURATE, THEY WORK 24/7 AND DON’T COMPLAIN WHEN DOING THE SAME REPETITIVE THINGS OVER AND OVER AGAIN Create your own robot

How do you create such a helpful assistant? It’s easy enough for an IT developer to write a set of rules that will ultimately imitate the activities of a human. You can easily create a robot that will log into a bank account every morning, download a bank statement and save it in a designated place. All it needs is a set of instructions: “Go to this account every morning, select all data for bank transfers and save the information of how much money has been paid out to desktop or send an email or text message with the information. Finally, send a notification that the task has been completed.” In a large company that handles accounts, you go through thousands of bank statements each with hundreds of records. A robot settles all of them, unless it encounters a problem. That’s when it notifies an employee about the items it was unable to complete. “Then a human employee has to look at the problem and figure out why the error occurred. With all the freed-up time, the employee can improve their skills and specialist knowledge rather than copying and transferring data for most of the day,” explained Twardowska. “After all, who is a better specialist: a person who processes 150 documents a day without paying too much attention to their contents, or a person who analyzes three and assesses the risks associated with them?” she added.

What about us?

All the progress in robotics seems to reinforce the oftrepeated question: will they someday replace all of us in our jobs? The short answer is: probably most of us. But not in the nearest future. We are at a stage where robotics is all about humans working together with machines. It is us who provide the stimuli for robots to act. It is still us – at least for now – who make decisions. Of course, at some point robots will learn to make decisions too. Robotics and automation are developing incredibly quickly. “We can already see the first attempts at combining robots with Artificial Intelligence. Based on a number of repeated activities, the robot will be able to adjust its course and learn simple things. It will have two-three options to choose from and will select the best one,” Twardowska stated. Only a few years ago, stores were cautiously introducing self-service checkouts as a cost-saving measure. With Sunday trading increasingly problematic, labor costs shooting up due to overwhelming shortage that no

migration surplus can solve, retailers are open to any and all technologies that will give them the upper hand. The Żabka chain has recently unveiled its AI-filled “store of the future.” And though its CEO states that people won’t be replaced entirely, he admits the number of cashiers will be lower in the future.

Personal assistants and co-bots

In the not-so-distant future, almost every single office employee, regardless of their position in the corporate structure, will have an assistant, something that thus far has been reserved for top-level management. That is of particular significance to people working in accounting, HR and logistics. It will be possible because employing another assistant will bear negligible cost, as they will all be robots. “People delegate to robots tasks such as: sending emails, copying data, filing sick leave etc. We are headed for a work environment where every employee that can prove that a robot assistant would help them save time and become more efficient and creative in their work will be able to get one,” claimed Ewa Piotrowska, sales director at Impel Business Solutions. Some call them robotic personal assistants, other call them co-bots – as in robots collaborating with people. It is their cognitive functions that make them different from machines we already use in factories. They can interpret, make predictions and imitate human behavior, learning by observing us perform repetitive tasks. For production managers their ability to learn is a real breakthrough, as they will be able to save on costly programming. “We are entering a new dimension of automation, where robots will work hand in hand with humans to an extent never seen before. Opportunities thus far only available to the biggest players will become accessible to small and medium-sized companies. This is thanks to the synergy between several technologies, including cloud computing and Artificial Intelligence,” said Piotr Rojek, CEO of DSR, an IT firm. Robotics is undoubtedly changing companies, and the economy itself. Working with robots will require a new, expert set of competencies. “People want to work in a flexible environment and they value work-life balance. Robotics makes that easier. We will become the creators of solutions based on new technologies. We will no longer need to adjust to what is available on the market,” Twardowska stressed.

WE ARE ENTERING A NEW DIMENSION OF AUTOMATION, WHERE ROBOTS WILL WORK HAND IN HAND WITH HUMANS TO AN EXTENT NEVER SEEN BEFORE W B J NOVEMBER/DECEMBER 2018

TECH

TEACHING INNOVATION

WHILE SOME JOBS WILL INEVITABLY DISAPPEAR IN THE NEXT FEW YEARS, THERE IS A HOST OF PROFESSIONS THAT ARE ONLY JUST EMERGING. SCHOOLS ARE MORE FREQUENTLY FOCUSING ON TEACHING PROGRAMMING AND ROBOTICS, BUT THAT MAY NOT BE ENOUGH. THE WAY WE TEACH, AND LEARN, IS AS IMPORTANT AS THE SUBJECT MATTER ITSELF. WBJ TALKED TO JOWITA MICHALSKA, FOUNDER OF DIGITAL UNIVERSITY, ABOUT WHAT SKILLS ARE AND WILL BE NECESSARY TO KEEP UP WITH THE TECHNOLOGICALLY DRIVEN JOB MARKET INTERVIEW BY BEATA SOCHA

WBJ: Automation is making inroads into almost every business.

Do you think Polish companies are embracing the technology? Jowita Michalska: Automation, intelligent factories and digital transformation – most companies across the world are discussing these trends: some are preparing, others are already implementing. In Poland, we are only now looking at more advanced markets to be able to imitate their solutions, but we do not have many examples of these technologies being implemented.

I can name a few companies that are already on that path: Intercars, Adamed, PKN Orlen, eobuwie and Żabka, the latter of which is working on a fully automated store of the future. For the scale of these implementations to be larger, education of our domestic corporations is key, particularly at C-suite and managerial board levels. It is by observing examples – so-called “case studies” from other markets, not necessarily in their own sectors – that companies can help themselves in preparing to introduce these new technologies. Our partners in technologically advanced countries like

BY 2023 OVER 70 MILLION JOBS WILL DISAPPEAR, BUT ANOTHER 133 MILLION NEW ONES WILL BE CREATED THANKS TO NEW TECHNOLOGIES 58

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the US, Israel and Singapore agree that the most difficult part of the digital transformation is the “transformation” and not the “digital” aspect. It means that it is much easier to buy and implement hard tech, but much more difficult to change the mindset of the people. That is what Polish companies should focus on in the coming years. The technological leap that we need to make in the nearest future will require large groups of wise, brilliant and open managers who understand technology and know how and where to apply it to produce the optimal effects. That is what the Singularity University, a prestigious think tank from California which we represent in Poland, teaches. The interconnectivity between machines and a higher degree of automation is said to be making human skills obsolete. Do you agree? We talk a lot about Artificial Intelligence and robotics, because these two technologies will in fact replace people in some parts of the labor market. Just listen to

T E C H E D U C AT I O N

SHUTTERSTOCK

the people from Silicon Valley and MIT that will come to Poland for the “Masters and Robots” event [held in Warsaw on November 13-15 – ed.]. The changes are happening in industries where simple and repetitive, but also dangerous and highrisk activities are carried out. Of course, it doesn’t mean that people will stop working. The labor market will change substantially, particularly in the long term and we will need a new set of competencies. As a technology enthusiast I do not believe that people will become obsolete. The future will require that we requalify and remain positive about change. By 2023 over 70 million jobs will disappear, but another 133 million new ones will be created thanks to new technologies, which is a very powerful message from the latest World Economic Forum on the future of the labor market. One of its key conclusions is that within the next five years we should devote approx. 100 days to education and learning new skills. What are the skills that the labor market will need five to ten years from now? Is there any way to anticipate the changes? Naturally, it is difficult to tell which technologies will develop and by how much in the next decade. We are not sure which jobs will be replaced, but we do know what we need to start learning to adapt to the new labor market. These are in fact not just technological competencies, but there is a lot of talk about the need for “soft skills” that will continue to strengthen the advantage people have over machines. I’m talking about cooperation, creative problem-solving, adaptability to the changing environment, and empathy. On the technological spectrum, we should all learn a programming language, not necessarily to become a programmer, but to begin to understand how machines communicate. Soon we will be surrounded by machines at work, as well as in our private lives, e.g. at the doctor’s clinic. The medical profession is definitely going to change dramatically. Over the next five years, the profession of radiologist will most likely disappear, because these competencies will be taken over by a machine. However, we will continue to need nurses who will take care of patients’ comfort and well-being. Doctors will be able to base their diagnoses on Artificial Intelligence

WE SHOULD ALL LEARN A PROGRAMMING LANGUAGE, NOT NECESSARILY TO BECOME A PROGRAMMER, BUT TO BEGIN TO UNDERSTAND HOW MACHINES COMMUNICATE predictions and devote the time saved on patient care and psychological support.

own. The teaching staff are only there to provide them with the tools to do so.

How should we teach technology to younger generations so that they can take full advantage of it? We need to start education from the basics. Children should start learning entirely new things compared to what they learn now. In most schools, individual work and derivative work still dominate. Meanwhile, the youngest need more interactive education and group work. The teacher should be there just for extra support as a mentor, and children should learn on their own through project work, putting as much of the theoretical knowledge into practice as possible. I talked to an amazing teacher recently who runs a high school in Israel. The school, attended mainly by kids from rural communities, has the country’s highest acceptance rate to prestigious universities. The key to success is the way these young people work and find solutions on their

Can we in fact teach children technology better than they can teach themselves, being that they are raised with technology from the earliest years? We often allow ourselves to think that our children, as “digital natives,” understand technology better than we could. That is not entirely true. The fact that a child knows how to use a smartphone or a tablet from a young age does not mean they can defend themselves against a hacker attack or from dangerous content on the internet. What we need to become aware of is that we are responsible for our own and our children’s education. Neither our employer, nor our kids’ school will do it for us, because these institutions usually have not caught up with the necessary changes yet. Teaching robotics and engineering is still sub-par in Poland, and programming classes for kids are often of poor quality.

JOWITA MICHALSKA

Jowita Michalska is the founder of Digital University, a foundation specializing in the development of strategic digital competencies. Digital University is the organizer of the “Masters & Robots” conference and the sole representative of Singularity University in Poland. Jowita has over 20 years of experience as business strategist, marketing and media manager, mainly in the ICT industry. She has been responsible for brand building, HR strategy development, client service and building new business models.

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EVENTS

We organize events which stay in the memories of participants for a long time. We involve ourselves in the complex strategy, conception and production of events, large and small, recurrent and one-off, for many recipient groups â&#x20AC;&#x201C; from big-city opinion makers to demanding business leaders. See more at www.events.valkea.com

Latest news in the retail, logistics and office sectors

Boom in the apartment hotel/condo hotel market

Challenges in fitting out industrialstyle interiors

Interview with architect and interior designer Alina Badora

Interview with Paweł Lewtak of the Polonia Palace Hotel

Investment market Atrium finalizes €301.5-mln WARS SAWA JUNIOR acquisition Shopping center owner, operator and re-developer Atrium Group, whose flagship Polish assets include the recently extended Atrium Promenada mall in Warsaw, has finalized its acquisition of the Wars Sawa Junior retail center in the downtown of the Polish capital from PFCEE, a fund managed by CBRE Global Investors. The transaction was announced in August this year and is valued at €301.5 million. Originally Warsaw’s first department store, Wars Sawa Junior was built in the early 1970s and has since then gone through a number of modernization, remodeling and extension processes. It offers 26,000 sqm of retail GLA. “As one of the most popular and well-established retail centers in Poland, with an annual footfall of over 60 million in and around the asset, Wars Sawa Junior is a fantastic addition to our portfolio. This asset complements our three other assets in the Polish capital,” commented Atrium Group CEO Liad Barzilai.>>>

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LOKALE IMMOBILIA | NEWS

Investment market (continued) BRIEFS LOGISTICS ASSETS POPULAR WITH INVESTORS – REPORT

Warehouse and industrial properties in Poland are attracting more and more investor interest, with the transaction volume in the sector having seen an average annual growth of about 20 percent over the last three years, according to a recent report by Savills. In the first half of 2018, approximately €337.8 million was transacted in the warehouse and industrial real estate market in the country, which is the best H1 result in the market’s history, the study said. The most active buyers include German funds such as DEKA and GLL, as well as American investors such as Invesco, Hines, Hillwood and CBRE GI. Since 2015, a number of major Asian investors – including China’s CIC, Malaysia’s EPF and Singapore’s GIC – have entered the market. In July, South Africa’s Redefine made its first acquisition in the Polish logistics property market. The company bought nine assets from Panattoni Europe for a total of around €200 million.

RECORD INVESTMENT ACTIVITY IN RETAIL SECTOR

The total value of investment transactions closed in the retail property market in Poland in the first three quarters of this year amounts to more than €2.1 billion, according to JLL data. This is a bigger volume than the one recorded in the retail sector in the whole of 2017. Taking into account the availability of product and the number and value of ongoing transactions, one can expect the combined 2018 retail investment volume to exceed €3 billion, said Adam Kiernicki, associate director, retail investment CEE, at JLL.

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Ghelamco sells Warsaw Spire offices for almost €100 mln Developer Ghelamco Poland has sold building “C” in the Warsaw Spire office complex in the Wola district of the Polish capital to Austrian real estate investor CA Immo for almost €100 million. The seller was advised by JLL, CBRE and Dentons, while the buyer was supported by Greenberg Traurig, KPMG and Arcadis. Building “C” was completed in 2016 and comprises 21,700 sqm of GLA. The property is currently fully leased out. The entire Warsaw Spire complex offers a total of approximately 100,000 sqm in three buildings. CA Immo last year acquired building “B,” which comprises 21,600 sqm of leasable space and was also offloaded for approximately €100 million. The tallest part of the complex – the 220-meter building “A” that comprises over 64,000 sqm – is co-owned by Ghelamco Poland and Madison International Realty. The latter company earlier this year acquired a 50 percent stake in the tower, with the value of the skyscraper having been estimated at some €350 million.

Over €5 bln the total value of investment transactions closed in the commercial property market in Poland in Q1-Q3 2018 Source: JLL

Retail

Over 37,000

BRIEFS sqm

the amount of commercial space accommodated on the ground floors of residential buildings in the Miasteczko Wilanów neighborhood in Warsaw Source: JLL

CONSTRUCTION ON NYSA'S DEKADA MALL GETS UNDERWAY

Developer and investor Dekada has obtained a building permit for and launched construction work on its eponymous shopping center project in Nysa in south-western Poland. The scheme, which was designed by the JSK Architekci studio, will comprise a total of 19,000 sqm of leasable space on two floors and will house approximately 70 stores, a restaurant, cafes and a four-screen movie theater. Nysa's Dekada is being commercialized by BOIG Property Consulting and is scheduled to be completed in the autumn of 2020.

BUILDING PERMIT GRANTED FOR ŻORY CENTER

Atrium’s Warsaw malls are now bigger Shopping center owner, manager and developer Atrium Group has completed the latest phase of the modernization and extension of its flagship Atrium Promenada mall in Warsaw. Located in the city's Praga Południe district, the center has grown by 13,200 sqm of leasable space with its total GLA now amounting to 51,200 sqm. The added space houses 44 new stores. The main alley of Atrium Promenada – now called Aleja Fontann (The Alley of Fountains) – has been extended and remodeled. It accommodates leading fashion brands. The mall has also got a new dining area called Republika Smaku (The Republic of Taste) that houses ten popular restaurants with complementary menus. Atrium Group has also officially opened a new section of its extended and thoroughly refurbished Atrium Targówek shopping center located in the Targówek district in the eastern part of the Polish capital. The mall has got an additional 8,600 sqm of leasable space with its total GLA now amounting to 60,600 sqm. Atrium Targówek has also got a new façade, while its food court area has been remodeled.

Investor Błysk has secured a building permit for its planned Galeria Wiślanka shopping center project in Żory in Silesia and will soon start the process of selecting a general contractor for the scheme. The development is scheduled to be completed in late 2019 or early 2020. Galeria Wiślanka will comprise almost 20,000 sqm of leasable space and house 80 stores and points of service. Major tenants will include a Helios multi-screen cinema and discount retailer Lidl. The investment is currently 70 percent commercialized with Mallson Polska acting as the leasing agent.

W B J NOVEMBER/DECEMBER 2018

LOKALE IMMOBILIA | NEWS

Logistics

Panattoni building factories Developer Panattoni Europe has held a cornerstone-laying ceremony at the construction site of a 58,500-sqm dishwasher factory in Łódź that it is building for BSH Sprzęt Gospodarstwa Domowego. Construction work on the project, which is located next to the developer's Central European Logistics Hub that already houses a BSH logistics center, is scheduled to finish at the beginning of next year with the factory expected to become operational in mid-2019. The scheme is being developed in the build-to-own (BTO) formula. Panattoni Europe is now also working on an over 10,000-sqm industrial and warehouse project for Voss Fluid, an international provider of hydraulic coupling technology. That scheme, too, is being developed in the BTO formula, with JLL having brokered the transaction between the two companies. The development will sit on a 3.2-hectare plot located within the Legnica Special Economic Zone in south-western Poland. It is scheduled to be completed in March next year.

BRIEFS IIF TO LAUNCH IDEAL IDEA CITY PARK

Investor Ideal Idea Formad (IIF) has finalized the acquisition of 4.5 hectares of land for its fifth SBU (Small Business Units) project in the Warsaw market, which will be located on ul. Słowikowskiego in Raszyn, a town bordering on the south-

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ern Włochy district of the Polish capital. Called Ideal Idea City Park, the planned scheme will offer a total of approximately 19,500 sqm of warehouse and office space in four buildings. Construction work on the development will launch in late 2018 or early 2019 with the first phase of the investment

scheduled to be completed in August next year.

GREEN LIGHT FOR SECOND PHASE OF P3 POZNAŃ PARK

Logistics space developer, owner and manager P3 has obtained a building permit for the second phase of its P3 Poznań logistics park project in western Poland. The new

phase of the scheme will sit on 50 hectares of land lying adjacent to the existing phase and will consist of a number of buildings comprising a total of more than 230,000 sqm of space. Once the second phase of the development has been completed, the combined area of the logistics park will almost double.

Office

Over 200,000

BRIEF sqm

the amount of office space leased in Warsaw in Q3 Source: Colliers International

Skanska enters Tri-City office market Developer Skanska has revealed the details of its planned Wave office project in Gdańsk, which will be the company’s first office scheme in the Tri-City agglomeration. The development will consist of two 14-floor buildings comprising a total of approximately 48,000 sqm of leasable space. The first phase of the investment, which will offer around 24,700 sqm of GLA, is scheduled to be completed in late 2019 or early 2020. Wave was designed by the Silesia-based Medusa Group architectural studio and is being commercialized by CBRE. The project is expected to be certified in the LEED and WELL systems. Builder Skanska is the general contractor of the scheme.

WARIMPEX OPENS OGRODOWA OFFICE IN ŁÓDŹ

Austrian developer and investor Warimpex has officially opened its Ogrodowa Office building in downtown Łódź. The property, which is located close to ul. Piotrkowska and the Manufaktura shopping mall, comprises more than 28,000 sqm of space, including almost 4,000 sqm of retail and service areas, with tenants including MakoLab, PwC Polska, City Handlowy and Harman Connected Services Poland. CBRE is the leasing agent for Ogrodowa Office. The first occupants have already moved into the building.

W B J NOVEMBER/DECEMBER 2018

LOKALE IMMOBILIA | HOSPITALITY

LOOKING FOR ALTERNATIVES

Driven by developers’ pursuit of diversification and by buyers’ quest for more profitable ways of allocating capital, Poland’s apartment hotel/condo hotel sector continues to boom BY ADAM ZDRODOWSKI

ollowing several years of stability, the Polish apartment hotel/condo hotel market has been growing dynamically since 2016, with numerous new projects of this kind springing up in both holiday resorts and big cities. The sector is increasingly attracting large listed developers who have, until recently, been mostly active in the residential market. It is also becoming more and more professionalized, with hotel experts now typically involved in the planning and management processes.

UPWARD TREND

The apartment hotel/condo hotel market in Poland is hardly regulated. Generally speaking, both types

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of projects offer hotel units that can be held by individual owners and that are managed by the developer or an external entity specialized in short-term rentals. Originally, apartment hotels predominantly comprised apartments with their own kitchen, while condo hotels most often offered single hotel rooms. Today, those distinctions are blurred, and the names are, more or less, used interchangeably depending on the developer’s choice. Due to the lack of clear definitions, specific and widely available data regarding the size of the market is hard to come by. However, according to Colliers International, approximately 70 projects of this kind are currently under construction across

InEstate Investments' Wisełka Apartamenty & Spa in Wisła (left) and Solny Investment's Solny Resort in Kołobrzeg (right)

the country. “There is an upward trend – we estimate that the supply grows by over 2,000 units y/y, with many of the units being located in multiphase developments,” said Agnieszka Topczewska, a senior associate in the company’s hotel advisory department.

INVESTMENT ALTERNATIVES

Also, according to Marlena Kosiura, an expert at InwestycjewKurortach.pl, an industry website, the market – which traces its beginnings to the years 2007-2010 – has been growing particularly fast since 2016. From the buyer’s perspective, the purchase of a unit in an apartment hotel or a condo hotel is an interesting investment alternative in a situation when the more “standard” forms of allocating capital – shares, bonds and bank deposits – do not bring satisfactory returns. Developers respond to the demand, especially since this allows them to diversify their business. Some of the projects are built on sites that cannot house a residential scheme – the construction of a hotel with individually owned units may then be the only viable option. Topczewska pointed out that if a developer includes medical services (for example a spa or a rehabilitation facility) in an apartment hotel or a condo hotel investment, such a development can also be built on sites zoned for healthcarerelated functions.

Interestingly, the market is increasingly attracting developers (many of them listed on the Warsaw Stock Exchange) who were, until recently, mainly focused on the residential market, with examples including Arche, Atal, J.W. Construction, Marvipol Development and Robyg. Compared to regular hotel projects, the investor of an apartment hotel/condo hotel scheme is able to launch the commercialization process along with the start of construction, thus securing funds that are an alternative to bank financing. It is big cities where the URBAN GROWTH supply growth The development of apartment hotels and condo dynamics has hotels in cities is a new trend; at the moment, more been the most than ten such projects are under construction or impressive

in the pipeline in such cities as Warsaw, Wrocław, Gdańsk and Lublin, Kosiura said. In fact, it is big cities where the supply growth dynamic has been the most impressive as those locations previously featured no apartment hotels and condo hotels at all. Of course, some of the popular holiday resorts also continue to attract new investments. In general, locations with the biggest number of new projects include Warsaw, Gdańsk, Kołobrzeg, Szklarska Poręba, Zakopane, Międzyzdroje and Świnoujście. In Kosiura’s opinion, in some places within those destinations one can already talk of oversupply. Among promising markets there are

W B J NOVEMBER/DECEMBER 2018

LOKALE IMMOBILIA | HOSPITALITY smaller resorts that have a lower saturation level, but which – due to their poor existing hotel infrastructure and improving transport infrastructure – are becoming more popular. They include Szczyrk, Wisła, Szczawnica, Zieleniec and the Hel Peninsula.

DEMAND GENERATORS

Defining so-called “generators of demand” for hotel services is key when selecting the optimal location for an apartment hotel/condo hotel development, claimed Maria Zielińska, a senior hospitality advisor at Cushman & Wakefield. Meanwhile, location is the crucial factor guaranteeing the operational success of such a project. It determines the ease with which the developer is able to exit the investment, as well as the return on investment for the individual investors, she stressed. According to Zielińska, Warsaw and Kraków are some of the natural choices, with the former being a popular business destination and the latter offering an ideal business mix of weekday demand generated by business travelers and weekend demand generated by leisure travelers. Demand in big cities tends to be more stable in that it is not defined by major seasonal fluctuations. Additionally, business travelers often decide on relatively long stays, lasting from several days to even a few weeks. Securing a well-located plot in large cities, including Warsaw and Kraków, is now difficult. When it comes to holiday resorts, those continue to pre-

Arche's Hotel Poloneza in Warsaw

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dominantly attract local investors, with the activity of international companies there remaining limited. The seasonality of the offer is a challenge in holiday destinations. In such locations, it is worth combining many functions in one complex so that it also remains attractive for guests during the off-season, Zielińska maintained.

MARKET PROFESSIONALIZATION

The boom in the apartment hotel/condo hotel market – with its sizable supply and growing competition – means that the sector is becoming more and more professional. Kosiura argued that just a few years ago hardly anyone saw such projects as types of hotels. Developers were simply focused on the construction and sale of the units. Today, in contrast, they increasingly seek the advice of hotel advisors and contract professional operators to manage their schemes, Kosiura said. Indeed, apartment hotel and condo hotel projects have appeared in the market which will operate under international brands. A Staybridge Suitesbranded (a brand of the InterContinental Hotels Group) scheme, for instance, is now being developed in Warsaw. Another Staybridge Suites-branded development will be built in Gdańsk. It will be developed by Marvipol Development and will be combined with a Holiday Inn Express-branded hotel. A condo hotel belonging to the Best Western chain will soon be completed in Wrocław.

E X P E RT O P I N I O N

Safe savings, robust returns

THE APARTMENT HOTEL and rental apartments sector is becoming increasingly important for us and complements our activity in the residential and warehouse sectors. At the moment, our flagship project in this sector is the Unique Tower complex located on ul. Grzybowska in “Warsaw’s Manhattan” – the business center of the Polish capital which is currently the most sought-after location in the city. The complex includes the Unique Apartments investment, which offers 448 modern rental units. The apartments will be available in a turn-key standard and will be fully furnished with a parking space included in the price. In accordance with a ten-year agreement, the apartments will be available to guests, and owners will have a guaranteed 7 percent yearly return on their investment. Units range in size from 28 sqm to 70 sqm. They are being sold as housing units, rather than as commercial units, which makes them more attractive to investors. The offer is very popular with investors. Some of the units are still available for purchase. The complex will offer complete hotel infrastructure – a reception desk, restaurants, cafes, a bar, stores, a fitness club and a spa facility for owners and guests staying at the apartments. The entire scheme is scheduled to be completed at the beginning of 2021. Demand for real estate investment product is on the rise in Poland. Investing in properties has become one of the most popular and safest forms of saving money. More than half of Poles with surplus funds decide on this kind of capital allocation, ensuring constant returns (which, crucially, are higher than in the case of other safe forms of saving) on the invested capital without the need to be involved in the property management process in any way. An additional advantage is the buyers’ right to so-called “owner stays,” that is using the apartments for their own private purposes, for example during a business trip or a holiday. This is also an important consideration for investors; besides the continued rental revenue flows, they can expect their properties to gain in value in the future.

Unique Apartments is not our only investment in this sector. In Gdańsk, on the border of the Wrzeszcz and Oliwa districts, we are now starting to build a new project targeted at real estate investors. This will be an apartment hotel with a total of 346 units. Thanks to our cooperation with a renowned partner – the InterContinental Hotels Group (IHG) – the scheme will operate under the well-known Holiday Inn Express and Staybridge Suites brands. As a result, we will have access to IHG’s reservation system and will be able to make use of the company’s know-how, both during the construction process and when the building becomes operational. The project is being developed in an excellent location, close to the business center in Oliwa and a major road linking Gdańsk with Sopot and Gdynia. We are now preparing more schemes targeted at investors. We have secured sites in such cities as Gdańsk and Kołobrzeg. By the end of this year, we want to launch sales in a project located on ul. Toruńska in Gdańsk, which will offer rental apartments. While being active in the apartment hotel and rental apartments sector, we constantly pay particular attention to the locations of our projects. Irrespective of whether the schemes are in big cities or in holiday destinations, they have to be unique places suiting the needs of leisure and business travelers. We are convinced that apart from the standard, the location is the key factor ensuring a high occupancy rate at the units and, consequently, a high profitability of the given project.

Mariusz Poławski, vice president of the management board, Marvipol Development

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LOKALE IMMOBILIA | FIT-OUT

WHAT LIES ABOVE

The interiors of today’s public buildings are meant to surprise visually, with the industrial style being a new trend. However, the “wow” effect is not always accompanied by comfort in such interiors. How can mistakes be avoided while designing areas that are to feature a raw industrial style?

he popularity of industrial interiors in new office, hotel and restaurant areas appeared along with the trend towards renovating historic postindustrial buildings. Initially, that popularity was visible in the residential sector – lofts were seen for many years as the epitome of unconventional modern interiors that made the units’ owners stand out from the crowd. Today, that element of surprise and individualism is also sought after in the commercial property market. The interiors of office buildings are expected to help win employees, while the interiors of retail and entertainment facilities are expected ciliation of those needs. Classic to help attract visitors. acoustic ceiling systems can be Leaving structural ceilings replaced with Armstrong’s Canuncovered, and thus making the opy island ceilings (available in technical installations placed Leaving any shape and color) or vertical under them visible, is one of the structural acoustic Baffles. The effect? “Ceilmain ways of achieving the effect ceilings ing panels absorb undesired noise of a raw industrial interior. Until uncovered recently, such areas were hidden, is one of the – which is loud in open-space and co-working offices, as well as but now they have become an elemain ways ment of interior design. Unfortuof achieving in restaurants – but they do not nately, the visual effect does not the effect of a cover the installations, leaving the always correspond with comfort. raw industrial industrial atmosphere of the inteinterior rior untouched,” explained Maciej The ceiling is a very important area Kiepal, sales director at Armwhen it comes to ensuring userstrong Building Products. friendly acoustics in a building. Leaving air ducts and other There are solutions in the martechnical installations uncovket which allow for the recon-

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ered entails yet another challenge – that of air quality. Vertical pipes under the ceiling are a place where dust tends to gather. This contributes to the development of an unfavorable workplace environment that has a negative impact on the health of those who use the building. Even a partial covering of the structural ceiling – with the help of panels, island ceilings or the Mesh Metal openwork ceilings – allows for the improvement of both acoustics and air quality, without detracting from the design and the industrial nature of the space.

(Clockwise from opposite page) Stanley Black & Decker office in Warsaw – area arranged jointly with Tétris. Uncovered ceiling installations are complemented by Optima Baffles The Warsaw office of AXA Assistance – white island ceilings Optima L Canopy complement the industrial space under the structural ceiling Austria Center, Vienna – triangular ceiling panels of the Metal D-H 700 line The AGH University of Science and Technology in Kraków – openwork metal ceiling Metal Q-Clip

MAIN CHALLENGES IN ARRANGING INDUSTRIALSTYLE INTERIORS • the need to provide proper acoustics in large open areas in which work often resembles a meeting in a cafe, rather than the typical set-up of sitting at a desk

• the selection and proper arrange-

ment on the floor plan of the various work areas (quiet space, meeting areas for small and large groups)

• the need to provide additional

lighting when the structural ceiling has a dark color

• air quality – dust tends to settle

on uncovered elements of technical installations, which negatively influences the quality of air in the office and the well-being of the office’s users

W B J NOVEMBER/DECEMBER 2018

LOKALE IMMOBILIA | RESIDENTIAL

DESIGN MATTERS WBJ sat down with Alina Badora, an architect and interior designer, to talk about trends in the luxury residential property market and the No.44-branded rental apartments in Warsaw’s Złota 44 tower that she is currently working on INTERVIEW BY ADAM ZDRODOWSKI

WBJ:

How is the process of designing the interiors of luxury apartments different from the process of designing the interiors of regular housing units? Are clients in the luxury sector much more demanding? Alina Badora: The main difference is that clients in the luxury sector are very conscious, know exactly what they want and how to communicate with the architect. These people have already had a number of apartments or residences in their lives and are experienced in cooperating with designers. What is more, they follow global interior design trends using international websites and magazines, but also by traveling, which gives them a great dose of inspiration and knowledge. Working with such a client is easier in the sense that the decision-mak-

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ing process is shorter. On the other hand, it is definitely more demanding – you always need to be one step ahead and anticipate their needs and expectations. Besides, what they appreciate is good preparation and thorough knowledge, professionalism, experience and self-confidence. Luxury clients also require the relationship to be a partnership,

and they demand punctuality as time means money. Last but not least, they appreciate a rational way of spending their money – the budget has to be reasonable and managed wisely. How has the taste of such clients changed in recent years? In general, luxury clients in Poland no longer feel the need to

show off their wealth. They now prefer a more subtle and sophisticated type of elegance – the furniture and the accessories that they buy, for instance, are obviously very expensive but they do not always feature visible brand labels. Of course, they still need to be of the highest quality. There is also a marked trend towards displaying pieces of art – mostly paintings – in the interiors of luxury apartments. Do Polish clients differ from Western European clients when it comes to their preferences? Based on my experience, I would say that clients from Western Europe usually prefer toneddown colors, including shades of grey and beige. Polish clients, in contrast, tend to add some eye-catching elements to the design and are definitely more eager to express themselves through vivid colors and brave decorating elements in their living space. You have recently been contracted by No.44 Luxury Rental to design the interiors of a package of long-term rental apartments located in the iconic Złota 44 tower in the center of Warsaw. Do you view this as a major challenge? Indeed. I have over 15 years’ experience working for Polish and foreign premium clients, designing their residences, mansions and apartments. No.44 Luxury Rental is the first package project, in which I will do the interior design in 15 No.44 units located on different floors and differing in size, from a single bedroom unit to a VIP apartment totaling over 250 sqm. The number of clients and people who dream of living in the clouds is on the rise and many of them have special requirements, such as furniture and the interior style. My goal is to create a tailor-made product, adapted to their needs – the needs of people from the world of business, peo-

ple who are very busy and spend a lot of time working, people who expect the highest standards of living and services, and who also want to enjoy a homely atmosphere. Obviously, it is an honor for me to work on arranging space in a building that was designed by such a renowned architect as Daniel Libeskind. Will all of the apartments be arranged in the same or similar way? The apartments will be divided into three color groups: Nice, with shades of navy blue and blue; Siena with colors ranging from warm yellow through mustard to bottle green; and Burgundy with shades of dark red and plum. The colors and floral motifs are meant to make the interiors of the No.44 apartments warmer and cosier and allow the residents feel comfortable and at home. Working with a luxury client is easier in the sense that the decision-making process is shorter

Will there be any common features? The apartments will feature Polish furniture, which is of very high quality and is appreciated in foreign markets. Polish producers now employ the best Polish designers as well as foreign ones. Their products can easily compete with global products, for example from Italy, not only in terms of the style and design, but also in terms of the materials and quality. This trend of regionalism is very sought-after and will keep on developing. Much emphasis will be put on the functionality of the apartments. For example, we will provide foldable sofas assuming that the expats living in the units – who are one of the main groups of clients of No.44 – will be visited by their families at weekends. Wooden elements will be made not of exotic wood like palisander or bamboo, but of oak, ash and other species available locally. Last but not least, we will furnish the interior with brand-new collections – we can say that they

will have their premiere in No.44 apartments. What about the accessories? The apartments will feature accessories made of colored glass or patinated gold. They will also feature pieces of popular art produced by Polish artists and associated with Poland and Polish culture; however, for the time being, I cannot reveal any details. It is going to be a surprise. Will the No.44 apartment designs be tailor-made? The lion’s share of the 72 No.44branded rental apartments are already occupied. The new collection of 15 apartments that I am working on will definitely be tailor-made and adapted to the needs of people who want to rent them, in terms of all-inclusive furnishing. The vast majority of luxury clients expect the apartments to be fully furnished and fit with all amenities. Hardly any of them take an interest in arranging them on their own. My job is to make a perfect place to live for the most demanding clients. Does the fact that No.44 apartments are rental units matter during the design process? Definitely, especially in terms of functionality. During the whole process I have to pay particular attention to the materials that will be used – including fabrics. They need to be durable and washable since they are to remain in good shape for a long time. This requires a wise management of the project. The beauty and aesthetics have to correspond with the budget and functionality. For that reason, the whole process is very time-consuming and involves a lot of people. When will the apartments be ready? I started working on them in midSeptember. We are doing our best so that they will be ready for clients to move in by Christmas.

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LOKALE IMMOBILIA | HOSPITALITY

PROACTIVE IN AN INCREASINGLY COMPETITIVE MARKET

WBJ talked to Paweł Lewtak, board member at Syrena Hotels, the owner of three hotels in central Warsaw, and general manager at the Polonia Palace Hotel, about trends in the hospitality market in the city and the company’s ongoing investments INTERVIEW BY ADAM ZDRODOWSKI

WBJ:

A significant number of new hotel projects have been launched and announced in Warsaw in the last two-three years. Does the city need so many new hotel rooms or is there is a risk of oversupply? Paweł Lewtak: Warsaw is gradually growing its reputation as a major business and leisure destination in Europe. In recent years, developers have been very active indeed in looking for new attractive hotel sites in Warsaw, which are scarce and in high demand. Even some office projects in the city that were not successfully commercialized have been re-designed as hotel schemes, which always raises the question of whether such developments are actually well-thought-through

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and not “accidental” in a way. However, these doubts aside, we need to remember that the hotel development boom in Warsaw is relative. Prague and Vienna have approximately 35,000 hotel rooms and in Budapest the number also stands at more than 21,000. Warsaw, by comparison, currently has around 15,600 hotel rooms. Even if we assume that some 2,000 or 3,000 new rooms – the estimates vary – will be added in Warsaw in the near future, this will certainly not mean a risk of oversupply, at most it will cause some periodic growing pains. The increasing number of apartment hotels and private apartments offering short-term rentals shows that there is the

need for more accommodation options in Warsaw. Where is the growing demand for hotel rooms in Warsaw coming from? We have been witnessing an increase in domestic demand – Polish tourists have more and more money at their disposal and they increasingly spend their weekends visiting the biggest cities, especially with their families. Contrary to what one might think, they do not always choose the cheapest offers – in Warsaw, many such travelers look for hotels in the city center with onsite perks and amenities where they can experience the genuine heartbeat of the city while finding a retreat from the hubbub in a cozy room. In our case, depending

on the hotel, domestic demand accounts for 20-35 percent of the total number of stays.

it is also extremely popular with tourists. Admittedly, the growing competition means that you need to be proactive and we have been introducing changes at all of our hotels. This is based on talking to our hotel guests, learning from their feedback and online reviews to meet their changing expectations.

What are the trends when it comes to the prices of hotel rooms in Warsaw? There has been an upward trend with regard to the average price of hotel rooms in Warsaw in the last three years. When you look at the biggest hotel city markets in Europe, Warsaw is close to the bottom of the list when it comes to the RevPAR (revenue per available room) performance indicator, with occupancy above the European average and hotel prices 30 percent lower than those of the leading city destinations. At the same time, many developers and hotel chains want to invest in new hotel projects in the city. This shows that there is a general expectation in the market that the prices in Warsaw will continue to grow. Is the Warsaw hotel market getting more competitive? Yes, it definitely is. However, it is not that all those new hotels in Warsaw automatically start to steal guests from existing hotels with established reputations as soon as they have opened. It does not work that way – in the hospitality sector you need to be very patient, slowly build your brand and develop a faithful client base. Besides, hotels located in the downtown of the city tend to be more resilient to all kinds of changes and fluctuations in the market as they cater to very diverse groups of guests. The Polonia Palace Hotel, for example, which is one of the landmark hotels in Warsaw – it dates back to 1913 and was thoroughly renovated in 2004-2005 with a regular refurbishment program in place to keep the hotel fresh and inviting – accommodates more than 100,000 guests every year. It has one of the highest occupancy rates in Warsaw. The hotel is mainly targeted at business travelers, but due to its historic nature and uniqueness

We have been witnessing an increase in domestic demand

The event business seems to be growing increasingly important for hoteliers… Indeed, hotel meetings and events are a great way to boost revenue in hotels and attract a constant stream of leisure and business travelers. Despite competition from non-hotel conference facilities, the demand for event areas located in hotels has increased significantly in recent years, but only for those who stay tuned to the latest trends and have quality management in place. It is hard to believe, but right after the renovation, Polonia Palace Hotel housed relatively little conference space. We soon realized that the available area was not sufficient – there was more and more interest in organizing both business events and private events such as wedding receptions; especially in the Ludwikowska Ballroom, a bold example of Louis XVI-style. Now we can accommodate events of up to 700 people on two conference floors. Of course, there is also a contrary trend emerging in the market, that of limited-service hotels, which focus on room sales only and keep operating costs low by offering a bed and breakfast experience with no event space available on their premises. Which improvements have you made at the Polonia Palace Hotel of late? After a long planning and construction process, we have added an area called Ludwikowska Lounge, which addresses the needs of our event guests by introducing the latest technologi-

cal meeting solutions together with the crafted design and quality materials. It is pretty uncommon to make extensions or layout changes in listed buildings such as Polonia Palace Hotel. The new space will serve both as a living room and lounge area to complement the Ludwikowska Ballroom, creating a perfect link between enticing history and modern times, ensuring the most effective realization for every kind of gathering and unique event. What about new investments in Metropol Hotel? We are just about to finish the process of renovating all the rooms in the Metropol Hotel and remodeling its lobby, bar and dining areas as per latest design trends. The whole purpose of the project is to take a new approach to lobby spaces, which allows for more flexibility with a fireplace as the focal point. We want to complete the project by the end of this year. Your third hotel – MDM Hotel – has also been under renovation for some time now… Yes, after the renovation of the guest rooms, one of Warsaw’s leading landmarks, MDM Hotel, will be getting a makeover in late 2018. This will bring out the best of the building’s history that depicts the MDM Hotel’s rich heritage and that is in harmony with the surrounding buildings set in Constitution Square, a location that has been revamped and has become much more attractive in recent times. New restaurants have sprung up in the area, including in the highly popular Hala Koszyki project. How much do you invest in your hotels annually? I cannot reveal any concrete figures, but what I can say is that most of the profits that we make on our hotel business – and we are talking about significant sums here – are re-invested in upgrading our hotels.

W B J NOVEMBER/DECEMBER 2018

EVENTS

Warsaw Business Journal relives the most important recent business and industry events

VISION AND RESPONSIBILITY THE 8TH EDITION of the European Forum for New Ideas (EFNI) featured three days of events, almost 1,400 attendees and over 60 debates and panel discussions. “The European Union was created not to subjugate other states or to deprive them of their sovereignty. This is not a new version of the Union of Soviet Socialist Republics, and EU commissioners are not former Soviet party secretaries. The EU does not use tanks against opponents. Its existence is based on the free will of free nations,” said Pat Cox, the former President of the European Parliament, during the closing gala of the European Forum for New Ideas, which was organized by the Polish Confederation Lewiatan. “We don’t need to be woken up, we don’t need to be persuaded to talk and shout. We are aware of the dangers, we do not sit quietly,” responded Henryka Bochniarz, President of the Polish Confederation Lewiatan, in her speech at the closing of EFNI. The 8th edition of the European Forum for New Ideas in Sopot was held under the title “New Global Order or New Global Mess? The World Upgraded: Vision and Responsibility.” Over 60 events, including plenary sessions, panel discussions, counterpoints, night owl discussions or open meetings with the residents of Sopot were attended by almost 1,400 guests, including nearly 200 panelists. Entrepreneurs, economists, politicians and authorities from the world of culture and science discussed the most important challenges for business and societies in a changing world, global trends and the future shape of the European Union. SPECIAL GUEST, PROFESSOR DANI RODRIK An especially important event was the talk given by EFNI special guest professor Dani Rodrik, an economist from Harvard University, who warned that further increase in inequality in the US and Europe is a threat to democratic countries. “In the United States, the less educated men felt frustrated and undervalued, as shown in the recent election results. This is not only about differences in income, but also about a sense of social exclusion. For several years now, Poland has recorded high economic growth, but it has not escaped the deepening division into successful and excluded poor people. This phenomenon is caused by technological change, which primarily serves people with some knowledge rather than those who are less educated, but also by globalization, in which some countries have gained a lot, but many have lost a lot, and by cultural divisions within society,” said Rodrik. PRIME MINISTERS’ DEBATE The Prime Ministers’ debate also received a lot of publicity. It was held during the plenary session “Facing the Great Disruption: Europe in Search of its Place.” The debate was attended by Jerzy Buzek, former Prime Minister of Poland and Chair of the EFNI Programme Council and Committee on Industry, Research and Energy at the European Parliament; Jyrki Katainen, former Prime Minister of Finland and Vice President of the European Commission; Ivanna Klympush-Tsintsadze, Deputy Prime Minister of Ukraine; Enrico Letta, former Prime Minister of Italy; and Herman Van Rompuy, former Prime Minister of Belgium. Jerzy Buzek, who led the discussion, asked about the values in the European Union. He pointed out that in recent years national interest has become more important than the European Community, and international institutions have been weakening. Several decades ago, this caused the outbreak of two world wars. Jyrki Katainen stressed that he is concerned about the rule of law in the EU. “Countries such as Romania, Poland and Hungary have an issue with this. In a liberal democracy, we cannot restrict the rights of minorities or destroy the independent media. There are already voices in many Western countries that there should be no financial support for countries where fundamental values are being called into question,” he stated.

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“I hope that one day Ukraine will become a member of the European Union,” stated Ivanna Klympush-Tsintsadze. “The war in my country is not only a war between Russia and Ukraine, it is a war with Europe. The European Union has no future without standing up for territorial integrity of Ukraine,” she added. Enrico Letta noted that the challenge for our democracies also stems from technological change, which affects the way we communicate and consume. The smartphone has revolutionized the world and accelerated the circulation of information. Everything is happening very quickly nowadays. In the past few years, we have seen an acceleration that has fueled fears and concerns. The generational and geographical gaps are widening. Therefore, we must open up our democracies and old parties to modern technologies. Herman van Rompuy spoke with mixed feelings about the fact that we are living in times when consumption, trade and money are more important in the lives of citizens than values. And this is very harmful to these values. We are witnessing a crisis of authenticity because values are often proclaimed which are contrary to the reality that surrounds us. Our actions do not correspond to everyday practice. Plenary sessions and panel discussions were also attended by Luca Jahier, President of EESC; Jan Dusik, Director of UNEP, Europe Office; Pierre Gattaz, President of BusinessEurope; and Maroš Šefčovič, European Commissioner for Energy Union. SPECIAL GUESTS OF THE CLOSING GALA The special guests of the EFNI Closing Gala, Pat Cox, former President of the European Parliament, and Elżbieta Bieńkowska, European Commissioner for Internal Market, Industry, Entrepreneurship and SMEs, were also received with great interest. Pat Cox called on business representatives in the context of events in Europe and in Poland to wake up, not to sleep in the future, and to get involved in the change process before it is too late. He warned against nationalism, populism and protectionism. “I am afraid of strong leaders and weak institutions. Do not allow xenophobic politicians to teach you patriotism,” he added. Elżbieta Bieńkowska stressed that in recent years Poland has lost its ability to influence the key issues in mainstream European politics. “For some time now, government representatives have been boasting that Poland has finally risen from its knees. Meanwhile, the truth is that Poland has never been as much on its knees as it is these days,” she added. GOVERNMENT REPRESENTATIVES AT EFNI This year’s EFNI guests included several government representatives. Teresa Czerwińska, Minister of Finance, warned in her speech that Poles are one of the fastest aging societies in Europe. This puts a lot of pressure on the pension system as the level of pensions depends not on the form of the system, but on the number of people working in relation to pensioners and on work efficiency. “The number of pensioners will grow dynamically, which must be compensated by a higher workload for the workforce and a lower replacement rate (pension entitlement divided by pre-retirement earnings),” said the Minister of Finance. Minister Teresa Czerwińska suggested the need to introduce changes to the pension system and recommended Employee Capital Plans as a remedy for Poland’s problems. This year, Jerzy Kwieciński, Minister of Investment and Economic Development; Mariusz Haładyj, Undersecretary of State in the Ministry of Entrepreneurship and Technology; Paweł Borys, President of the Polish Development Fund; Karol Okoński, Secretary of State in the Ministry of Digital Affairs; Sławomir Mazurek, Undersecretary of State in the Ministry of Environment; and Grzegorz Brona, President of the Polish Space Agency also visited Sopot.

W B J NOVEMBER/DECEMBER 2018

EVENTS

Warsaw Business Journal relives the most important recent business and industry events

IT FUTURE EXPO On September 19 and 20, the IT world converged on Warsaw. The IT Future Awards were held on the first day of the event, during which a jury selected the IT Leaders of 2018 in 16 categories. For the first time, this year the awards included a category for the best IT solution by internet users. Every year, one of the largest B2B meetings in IT is held at the PGE National Stadium in Warsaw. Featuring specialists and experts from the Polish and global IT industry, this year the fair was attended by a record-breaking 2,900 people. The fair is also a great opportunity to meet Polish and international companies, leaders in knowledge management solutions, security, mobile, Big Data, Data Centers and BPM. Eager to share their knowledge, experts presented noteworthy and compelling cases. The fair’s special guest was Przemysław Pająk of Spider’s Web. Talent Hunters, modern technologies, 3D printers, virtual reality, drones, IT Law Point, EU Grant Point – the various exhibitors drew in a crowd of tech enthusiasts and IT professionals, who could also take a professional resume photo at the IT Career Summit zone. The organizers wish to thank all exhibitors and IT Leaders, sponsors and patrons for supporting the event and they extend their invitation to next year’s edition of IT Future Expo.

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POLISH RETAILERS TRIUMPHANT During the 9th edition of the PRCH Retail Awards, the Polish Council of Shopping Centres selected the best shopping centers and retailers operating in the market. According to the jury, the best retailer was Polish brand Kazar, while eobuwie.pl was recognized as a new brand to enter shopping centers last year. During this year’s final Gala, the PRCH Retail Awards, held on October 11 in the Auditorium of the Faculty of Physics of the Warsaw University of Technology, were attended by 350 representatives from the retail industry. The best projects among shopping centers, retailers and their campaigns were announced during the evening. The highest accolade in the “New shopping center” category went to Wroclavia in Wrocław, while Arkadia in Warsaw was unrivaled among projects that have recently undergone redevelopment or refurbishment. In the category “Retailers” there were two winners chosen: the clothing brand Kazar as the best retailer, and eobuwie.pl as the new retail chain that has recently entered shopping centers. “The Polish retail market is very competitive. Therefore, it is the high level of competence in the project or retail chain management as well as interesting ideas for marketing and building relations with local communities that determine the final success. As an industry organization we want to promote and award the most efficient and interesting actions that can serve as an inspiration for other market participants that have received positive feedback from customers. The aim of the contest is to emphasize the best practices in the area of managing and marketing of shopping centers and retail chains. I am very happy that this year the independent jury appreciated Polish brands, of which there are so many in shopping centers.” said Radosław Knap, Director General and Member of the Board of the Polish Council of Shopping Centres. Winners were also selected in the categories related to marketing of shopping centers and retailers. Having examined marketing projects, the jury decided to award, among others, Bonarka City Center in Kraków for its excellent public relations campaign, as well as Galeria Tomaszów for its image campaign. The event of the year was “Digital origami i rozświetlona Manu” at Manufaktura in Łódź, while “Fedrujemy niskie ceny! Czorny Piontek, Czorny Weekend, czyli Black Friday po naszymu!” by Galeria Katowicka was chosen as the best prosales campaign. The jury also awarded Factory outlet centers for the best internet campaign and appreciated the CSR activities of the manager of 3 Stawy in Katowice. The jurors also recognized the employer branding activities of McDonald’s Poland. In the Special Awards category, Unibail Rodamco’s Galeria Mokotów won recognition for its Polish photography exhibition, winning the Event of the Year trophy, while the company’s Wroclavia took home the New Shopping/Outlet Centre/Retail Park of the Year statuette. Atrium Promenada was lauded for its Shopping Centre Image Campaign of the Year, the “Alley of Wonders” project realized by Valkea Media, while eobuwie.pl was named the New Retailer of the Year. The PRCH Retail Awards are aimed at retailers, developers, managers, investors and professionals involved in retail marketing.

W B J NOVEMBER/DECEMBER 2018

Halloween office parties – a chicken game THOUGH USUALLY CELEBRATED BY KIDS, there is also a time-honored tradition for grown-ups to put on a costume on October 31. Granted, the tradition is a relatively new thing in Poland, but Poles are generally eager to adopt new reasons to celebrate, particularly if it can brighten the long, dark, cold autumn that comes before an even darker and colder winter. For some time now, the Halloween fun has been gaining a foothold even in places of work, particularly those trying to appear hip, young and “Googlesque,” which are supposed to feel like a second home to you. If your company “allows” people to come in costume at Halloween, you’re basically screwed. Because no matter what costume you choose, in the office environment it can send a very mixed message. First, there’s the “weird-but-sexy” camp, which is arguably what adults like the most about putting on a Halloween costume. You can be a sexy witch, a sexy vampire or even a sexy zombie. It may not be work appropriate, though. And it does seem cheap. Others put a lot of effort into their costume which is supposed to be thought-provoking and could serve as a good water-cooler icebreaker. But if you overthink it, it may easily backfire. If you dress up as a relatively obscure celebrity, chances are you will be having exchanges like this one: “So, what are you? Some version of Britney 80

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Spears?” “No, I’m Tiffany Trump. You know – the other Trump daughter.” “Ohhh, right.” If you go for the elaborate “wow, that was difficult to make” option, like the Rubik’s cube, a pot plant or a giant sandwich, it’s generally a pretty safe idea, but it may be difficult to operate a paper-jammed printer or even use the office microwave. The grotesque and sickening option – I’m talking about all the severed heads in jars and realistic-looking mutilations – is a hard “no” for office parties. If people didn’t look at you with suspicion before, they will definitely start now. There are those who put on regular clothes with just a bit of funky looking makeup or a discreet adornment. What you mean to say is: “I’m part of the game but I am also a serious person and I’m not going to parade all day in spandex and mesh.” That’s fine, of course. But it also may come across as: “I’m too lazy to commit to an actual costume, but I also badly want to blend in.” And finally, the hardliners: “I’m not going to dignify the childish and – for Poland at least – recently imported holiday.” They come in regular clothes determined to show they don’t give any credence to the fun people are trying to have. But the message you are sending could be: “I forgot about it entirely” or “I feel too superior to be bothered to dress up and you all look stupid.” Of course, not everyone has to dress up. But it is the very optional nature of office Halloween celebrations that puts people at odds. If you are in the “gotta have the weirdest, coolest costume” camp, you will either think that people who came in plain clothes are killjoys or you may feel insecure that you went all-out while others didn’t. The outcome is that everyone feels some degree of awkwardness at Halloween office parties. And it’s not only about office festivities, it’s parties in general. My friends just organized their birthday party (which they celebrate together, because their birthdays are less than two weeks apart), and since that falls around Halloween, they always make it a fancy dress party. You can come without a costume, of course, but if you do – you will not feel at ease and you’ll probably make a run for it after an hour or so. So, if you have a close-knit group of friends who like to play dress-up, that’s great. But making people choose a side in this chicken game is generally not a good idea. And even more so in the office. - B.K.S.

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