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The Warsaw Voice » Business » December 30, 2014
Business & Economy
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Luxury in Demand: Report
December 30, 2014   
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The number of affluent and wealthy consumers in Poland, meaning those with a gross monthly income of over zl.7,100, is steadily growing, according to the fifth Luxury Goods Market in Poland report by professional services company KPMG.

In 2013, there were 832,000 such individuals in Poland, with a combined net income of zl.134 billion. KPMG’s forecasts suggested that by the end of 2014 the number of affluent and wealthy Poles was expected to increase to 878,000, marking a 6-percent increase in year-on-year terms, while their combined income was expected to increase to zl.141 billion (a rise of 5 percent in year-on-year terms). Of this number, 47,000 are people with liquid assets of at least $1 million, defined as High Net Worth Individuals (HNWI).

“Poland is chasing the West,” says Andrzej Marczak, a partner at KPMG in Poland. “Each year there is a higher number of affluent and wealthy people in Poland, and their combined net income has also been growing for years. It is expected that the upward trend will continue in the future. We estimate that in 2016 the number of affluent and wealthy taxpayers may for the first time exceeded 1 million, and a year later their combined income could reach about zl.200 billion.”

Nevertheless, Poland occupies a distant 23rd position in the European Union in terms of the average assets of citizens. In 2014, the value of assets per capita in Poland was $22,200, while the EU average was $153,600, almost seven times as much. “Although the affluence of Poles is growing at a relatively fast rate—4.6 percent a year from 2008 to 2014—catching up with the richest European economies will be a long process. If this rate of growth in assets per capita is maintained, it will take as long as 43 years to catch up with the current EU average in terms of the value of assets per citizen,” Marczak says.

The KPMG report shows that the Polish luxury goods market was worth around zl.12.6 billion in 2014. This marked an increase of 15 percent in year-on-year terms, which was primarily due to increased demand for luxury and premium cars (zl.5.6 billion), followed by luxury clothing and accessories (zl.2.1 billion), hotel services (zl.1.3 billion), real estate (zl.1.1 billion) and furniture (zl.600 million).

KPMG’s forecasts suggest that in the coming years the Polish luxury goods market will expand at a slightly slower pace. By 2017 its value may rise to zl.14 billion, marking an increase of 11 percent over 2014. The greatest increases in percentage terms can be expected in the jewelry and watch segment, along with hospitality and spa services.

The vast majority of affluent and wealthy Poles (65 percent) approach luxury in a pragmatic way: they choose high-quality products because such products are durable and reliable. For almost 70 percent of Poles with above-average incomes, luxury goods purchases result from “intrinsic motivation.” This means that Poles buy luxury goods to feel better and please themselves. Far less often is the motivation external, which means people surrounding themselves with luxury because this is what people around them expect them to do.

The study shows that Poles are increasingly eager to make purchases via the internet, and this also applies to the purchase of luxury goods. Today nearly one in five Poles with above-average incomes says they have purchased luxury goods online. Besides convenience, which is the main motive for online shopping, a relatively large proportion of affluent and wealthy individuals buy online because this form of doing shopping offers a wider choice and lower prices than traditional stores.

Poles with above-average incomes tend to invest their assets to increase their wealth. Depending on the level of gross income, from 57 percent (those earning zl.7,100-10,000 a month) to 83 percent (those earning more than zl.20,000 a month) of respondents say they invest their assets on their own. Those with above-average incomes most often invest on their own in real estate and stock as well as companies and start-up businesses.

The KPMG report confirms that as incomes rise, the percentage of those taking advantage of specific luxury services is increasing. A large proportion of people with above-average incomes declare they regularly visit exclusive restaurants. Most often such establishments are regularly visited by wealthy people. The same goes for having a personal coach (14 percent of affluent and 27 percent of wealthy individuals regularly use the services of a personal coach), and house help (21 percent of affluent individuals and 53 percent of wealthy individuals say they hire house help on a regular basis).

“There is no single definition of luxury,” says Tomasz Wi¶niewski, a partner at KPMG in Poland. “The KPMG study shows that the perception of goods and services in terms of luxury depends on a person’s affluence. The higher the income, the more expensive the goods that tend to be viewed as luxury items. For example, the price level from which affluent people start to consider a car to be a luxury vehicle is around zl.200,000, while for wealthy individuals this is close to zl.300,000.”
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