Eighty-two new brands came to Central Europe last year, including 31 arriving in the Czech Republic – the most in the entire region

Eighty-two new international brands came to the Central European region last year*, including 31 in the Czech Republic (22 in Poland, 17 in Hungary and 12 in Slovakia). This confirms the Czech Republic’s reputation as the international retailers’ gateway to Central and Eastern Europe. Not even Russia can claim a higher number of new arrivals with 20 new global brands coming last year. Compared with 2016 when 67 new brands arrived in Central Europe (29 in the Czech Republic, 17 in Slovakia, 13 in Poland and eight in Hungary), this is a 22% increase. Such are the findings of the latest study by Cushman & Wakefield, monitoring newly arriving brands in CE countries and Russia in the long-term perspective. 

Brand structure by segment 

Generally speaking, there are no major differences between the individual Central European countries in terms of the individual segment shares. 

Brand structure by segment

The highest rate of expansion is attributable to fashion shops, the traditional driver among all segments. In 2017 they were involved in an average of 46% of all new arrivals in CE countries. They accounted for as much as 55% in the Czech Republic and Russia (the highest percentage in the reviewed countries), and for 50% in Poland. The most attractive brands included Palmers (Prague, Budapest), Karl Lagerfeld (Prague), Superdry (Slovakia), L.K.Bennett (Russia) and the Czech-based Alpine Pro’s arrival in Poland. From the viewpoint of target groups of customers in fashion, mass market brands prevailed with 58%, followed by premium brands accounting for 39%. 

The CE region also attracts luxury brands across all segments. The great majority are headed for Prague, with Celine, Tory Burch, Patek Philippe, Rolls-Royce and Breiling arriving over the last two years. All of them opened their shops in Prague’s Pařížská Street. The street has been profiling itself as the pre-eminent luxury location. This is also confirmed by the fact that Louis Vuitton has expanded its premises at the prestigious address three times to date. Thanks to the high purchasing power of its elite, Russia has seen the arrival of five new luxury brands in the last two years, as has Prague. Rolex came to Hungary during the same period. 

The Food & Beverage sector (“F&B”) has seen the greatest leap in terms of the percentage of all segments. It grew by 71% year-on-year in the Central European region. Seven new brands arrived in 2016, and 12 came in 2017. The growth was the strongest in the Czech Republic, Poland and Slovakia, with popular brands that opened their establishments including the likes of Vapiano (Prague), Pizza Hut (Prague), Blue Frog (Wroclaw), Papa John’s (Warsaw) and Nespresso (Bratislava). 

“We have seen a large growth in F&B both in high street and, even more so, in shopping centres that often undergo costly remodelling in order to increase the percentage of F&B zones and cater to the changing preferences of their customers. They no longer come just for shopping – instead, they arrive to spend leisure time there with good food and fun activities. This is why we increasingly see fitness centres, IMAX multiplex cinemas and other leisure concepts in shopping centres,” says Jan Kotrbáček, International Partner and Head of Retail CEE at Cushman & Wakefield. 

“One steady trend in recent years has been where big international brands use retail units in premier locations as their reference shops. Examples include the unique Rolls-Royce shop in Pařížská Street, Central and Eastern Europe’s biggest Foot Locker shop at Wenceslas Square, and the Preciosa shop in Rytířská Street. This trend will continue, as major brands prefer operating fewer shops with the flagship one being more prominent and dominant in order to demonstrate how broad and magnificent their range and concept is. The sales of traditional retailers will also be boosted by the online platform, which has already become an indispensable sales channel. Conversely, even typical online shops are beginning to use brick-and-mortar shops as their pick-up centres and showrooms,” adds Jan Kotrbáček

Shopping centres or high street – where are the brands headed? 

More than 80% of new brands coming to Central Europe and Russia opened their first shop in a shopping centre. Hungary is an exception, with high street locations being more attractive. The situation in the Czech Republic was influenced primarily by the extension of the Chodov Shopping Centre, which drew in 18 out of the 31 new brands. High street locations dominated in 2016, however. The Czech and Hungarian high streets are the most attractive in the region, which is why they have been chosen for the entry to the market by more brands than in other countries in the long-term perspective. 

“The period around the opening of a new or extended project always involves the entry of many new brands at once. We saw this with the Chodov Centre in the Czech Republic, the Galeria Północna in Warsaw and the Wroclavia shopping centre in Wroclaw. For the future, we expect the same developments, for example, in connection with the Savarin project in Prague,” explains Jan Kotrbáček

Where the brands come from 

The highest number of brands, 17 to be specific, came to Central Europe from the United States last year. Italy was a close second with 15 brands. The biggest year-on-year increase is attributable to German brands with 11 German retailers opening their first shop in the region. In terms of continental structure, European brands prevail with 66% followed by America with 19%, and Asian brands account for just 6%. 

Also important is the expansion of Czech brands into the neighbouring countries of the region, including Alpine Pro, Notino, Poe-Poe and KOBE Steak Grill Sushi. Two Czech brands, Présence and Sportissimo expanded in 2016, so the increase is substantial. 

Prime headline rents in Central Europe grew by 11% year-on-year: Prague reports a 23% increase in shopping centres and 7% in high streets 

Rents grew the fastest in Prague’s shopping centres – by as much as 23% to EUR 160 per sq m per month. They are catching up with rents in Russia where retailers in shopping centres have to pay up to EUR 180 per sq m per month. However, rents are by far the highest in Prague’s high streets which, due to their attractiveness, have seen a 7% growth to EUR 220 per sq m per month for the ideal unit of 100 sq m. Prague’s high street locations, in particular Na Příkopě, Wenceslas Square and Pařížská, attract the most prospects who wish to set up prestigious and presentational retail units. 

Prime rents in CE

Outlook 

The Central European market has been growing with multiple tens of new brands added ever year, and the trend will continue. The purchasing power in the region is growing faster than in the West, as are the rapidly growing Central European economies. On average, retailers achieve solid turnovers that increase steadily. In addition, the Central European Region is an increasingly popular tourist destination, also because it is safe. It is not surprising, therefore, that the arrival of many brands and new concepts is being discussed now, and Cushman & Wakefield does not expect any of the existing ones to depart. 


* We include the Czech Republic, Poland, Slovakia and Hungary in the Central European region.