On the Lookout for Luxury
January 31, 2013
Despite an economic slowdown and turmoil in the eurozone, the luxury goods market in Poland is growing steadily as Polish consumers become more affluent.
In 2012, over 750,000 people in Poland had a gross monthly income of more than zl.7,100, the level regarded as affluent, according to a report called the Luxury Goods Market in Poland by professional services company KPMG. The number of people classed as wealthy was 23,000 up on 2011 and 90,000 higher than in 2010. The combined disposable income of these consumers last year is estimated at up to zl.130 billion.
KPMG analysts say that the upward trend seen in recent years will probably continue and that in 2015 there may be as many as 839,000 affluent and rich people in Poland, with a combined annual income of up to zl.160 billion. Poland also has a large group of people, who aspire to affluence, with gross incomes higher than average—from zl.3,700 to zl.7,100. In 2012, there were almost 2 million such people and their combined annual income was close to zl.97 billion.
The KPMG report shows that the amount of money Polish people said they spent last year on luxury goods could have reached up to zl.36.8 billion, or zl.4.7 billion more than in 2011. This includes spending on products people regard as luxuries and their spending outside Poland. Consequently, the real value of the Polish luxury goods market may in fact be several times lower.
“With wages are on the rise and the number of prospective consumers of luxury goods going up, we can see a systematic growth in spending on these kind of goods every year,” says Andrzej Marczak, tax partner at KPMG and one of the report’s authors. “We estimate that Poles’ real spending on luxury goods came to zl.10.2 billion in 2012 and that by 2015 it may rise to almost zl.13 billion.”
The luxury goods Polish people with higher than average incomes bought most frequently last year were perfumes, which were bought by 58 percent of those surveyed, clothes (43 percent), footwear (42 percent) and alcohol (39 percent). Twenty-three percent bought a luxury car and 9 percent bought a house or a luxury apartment. Quality, prestige, tradition and the values it represents are the most important features of a luxury brand for Polish consumers.
The KPMG report shows that men buy luxury products as frequently as women, most often from single-brand stores. Most consumers—82 percent—buy luxury goods in Poland, but at the same time nearly 40 percent of them go abroad to buy such goods. Online shopping is also gaining in popularity, with 37 percent of consumers of luxury goods buying luxury products on the internet.
Polish consumers are a special target group for global firms, one differing significantly from Western consumers. The KPMG report shows that Poles with higher than average incomes have specific views on what constitutes luxury. “Many brands perceived by Polish people as luxurious—that is expensive and prestigious—are regarded in Western countries as belonging to a premium rather than strictly luxury segment,” says Tomasz Wi¶niewski, financial advisory partner at KPMG, one of the report authors. “On the other hand, many legendary brands which are recognizable throughout the world remain unrecognized in Poland.”
Polish people with higher than average incomes put the price threshold for a product to be regarded as a luxury item relatively high. Those surveyed said that the price of a luxury car starts at zl.180,000 while a men’s and women’s watch needs to cost over zl.9,000 and zl.7,000 respectively to be called a luxury product. The price of a luxury necklace is no less than zl.8,800, of a man’s suit almost zl.4,500, of men’s shoes zl.1,400 and women’s shoes zl.1,500.
Apart from Polish people becoming more affluent, a factor that additionally contributes to the growth of the luxury goods market is the increasing availability of luxury brands in Poland. As a result, consumers do not need to travel abroad as often as they did several years ago to buy such goods. Global producers have noticed the potential of the Polish market. KPMG estimates that two-thirds of key global luxury brands are already present in Poland. The largest percentage of luxury brands in Poland—88 percent—is in the segment comprising luxury alcohol, coffee, tea and tobacco products, followed by the hi-tech sector (86 percent), accessories and extras (75 percent) and the automotive sector (75 percent).
Jaguar, Armani, Rolex
The KPMG report shows that BMW, Jaguar, Porsche, Ferrari and Mercedes are the best known luxury and premium car brands in Poland. Those surveyed regard the Rolls-Royce, Maybach, Lamborghini and Ferrari as the most prestigious brands, while Porsche, Lamborghini, Ferrari and Jaguar were identified as the most desirable brands because they are seen as sports cars.
Armani, Gucci and Chanel followed by Dior, Prada and Versace are the best-recognized fashion brands in Poland. Versace, Prada, Armani, Louis Vuitton and Gucci are the most desirable brands.
The recognition of jewelry and watchmaker’s brands is much lower among Polish people with higher than average incomes than that of automotive and fashion brands. Rolex, Omega and Zenith are the best recognized—91 percent, nearly 75 percent and 55 percent respectively. Cartier and Tiffany&Co are the best-recognized jewelry brands. More than 40 percent of those surveyed buy luxury goods as an investment. They invest the most in jewelry and real estate.