Modern Food Retail
Inflation and high interest rates continued to impact the retail sector in Poland, with the resilience of the labour market and rising wages mitigating this adverse effect.
Retail sales performance was inconsistent in the year, dropping, at constant prices, more in the first six months than in the second half of the year. This is explained by the decline in inflation, but also by the effects of the increase in the minimum wage and improved consumer confidence.
In January 2023, the minimum wage in Poland increased 15.9% to 3,490 zloty, further increasing 3.2% in July to 3,600 zloty. This led to higher costs for businesses, but increased purchasing power and confidence among families.
Although rising prices have been a challenge for businesses and families alike, some experts1 admit that inflation enabled companies to maintain turnover, despite significant drops in volume. At the same time, the high price sensitivity of consumers saw retailers step up promotional and loyalty activities.
POLAND - Food retail sales index & food inflation
Current prices
Despite the growth of the food retail market in 2023 at current prices, growth at constant prices shrank 3.1% as a result of the decrease in volumes.
In 2024, operators in the retail sector2 are expected to continue seeing strong price competition. Retailers will continue promotional activity to remain competitive, while placing greater emphasis on customer loyalty.
Consumption3 in 2024 will likely be driven by the combination of stronger economic growth, a sound labour market and lower inflation, translating into the increased purchasing power of families over the course of the year. All consumer confidence indicators point to an improvement in consumption in 2024.
The minimum wage increased 17.8% to 4,242 zloty in January 2024 and will increase again by 1.4% in July 2024 to 4,300 zloty. Given the forecasts, real wages are expected to increase by over 5%. The increase in the minimum wage will affect a large portion of the population and could have a significant impact on consumption growth if families do not take the necessary precautions in the face of uncertainty.
Health and Beauty Retail
In 2023, in Poland, the health and beauty market proved to be more resilient than the retail sector as a whole. The prices of personal care products and cosmetics increased less than expected, with companies in the sector absorbing part of the effect of price increases on their margins, which are structurally higher than those in food retail.
POLAND - Health and beauty retail index & inflation on personal care and wellness items and beauty products
Current prices
1 Future Minds retail barometer
2 Future Minds
3 Fitch
Sources: Banco de Portugal Economic Bulletins; Portuguese Ministry of Finance; Portuguese Statistics Office (INE); National Bank of Poland Economic Bulletins; Central Statistical Office (GUS); Banco de la República (Colombian Central Bank); Colombia National Administrative Department of Statistics (DANE); Fedesarrollo; Nielsen and BMI; Future Minds, Fitch BMI, Mordor Intelligience, iAlimentar, America Retail, Valora Analitik.
Note: All macroeconomic data presented in this subchapter are based on the latest available information at the closing date of this report.