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SLOVAK CAPITAL BECOMES SHOPPING DESTINATION

By Susan Thorne

Polus City Center is the first regional mall in Bratislava, the Slovak Republic’s capital city.

Bratislava, a historic city on the Danube overlooked by a picturesque castle, used to be a border checkpoint for traffic into southeast Czechosolvakia during the Communist era. Since the Velvet Divorce in 1993 when 5 million Slovaks split from the Czech Republic to form their own nation, it has been the capital of the new Slovak Republic. More recently, this city of 500,000 has been evolving as a local and international shopping destination, as signalled by the opening of its first regional mall.

In November, the Budapest-based TriGranit Development Corp. officially opened Polus City Center Bratislava, a 624,000-square-foot glass-fronted mixed-use project on the outer downtown perimeter that combines a 413,000-square-foot enclosed shopping mall and a 211,000-square-foot office component, among whose tenants is IBM.

The project is one of few shopping center investments retained by the Toronto-based TrizecHahn Corp., a major partner in TriGranit. TrizecHahn currently is in the process of divesting itself of retail properties and becoming an office property specialist.

So far, so good for Polus
Polus City Center appears to be a very successful venture: The two-level, triple-atrium mall, anchored by a 155,300-square-foot Carrefour hypermarket, a Kingfisher electronics store, a movieplex and family entertainment center, has exceeded the developer’s and retailers’ expectations, reported Todd Cowan, chief development officer for TriGranit. “We’re shocked at the customer traffic,” he said. “We’ve been coming close to 300,000 visitors per week.”

The center’s 151 tenants would not share sales figures with management, but they have indicated better-than-anticipated results to date, he added.

The Bratislava area contributes around 66% of the visitor complement, but shoppers are also being drawn from smaller towns in a 50 to 150 kilometer radius. This includes day-trippers from four different countries, because Bratislava is located at the point where the borders of Austria, Hungary, the Czech Republic and Slovakia converge.

Visitors from outside Slovakia, who account for 7% of the total, find Polus Center’s merchandise very favorably priced given the relatively weak position of Slovakia’s currency, the koruna, Cowan indicated. As the first regional mall in the area, Polus City Center also benefits from its access to an untapped market, with only two smaller competing shopping centers at present.

The market in Slovakia is particularly retail-friendly, Cowan pointed out, because people there tend not to be heavily indebted (home and commodity mortgages are a relatively new phenomenon) and thus enjoy a high level of disposable income. Car ownership and use are not up to U.S. levels, however; 70% of Polus City Center’s visitors arrive by public transportation or on foot.

Eastern European shopping habits have gone upscale since the early days of free-market economies in that region, and this is reflected in the merchandise mix at Polus City Center. In place of the heavy demand for TVs, washing machines and other white goods and electronics that prevailed in the early 1990s, today’s shoppers are more sophisticated and have shifted more of their spending to apparel and fashion items, Cowan said.

“Compared with the average North American mall, there is more spending on fashion and less on travel,” he commented.

“People are very image-conscious and fashion-conscious, especially the young generation, which has money to spend.” Fashion and shoes account for more than half (150,335 square feet) of the total gross leasable area at the center; retail banners in these categories include Terranova, Makyta, U2, Zoe, Mixer, Sensa Max, Enrico Fashion and Delray.

A hot new retailer can excite a lot of interest with this shopping public: When Spanish fashion purveyor Mango opened earlier this year at Polus City Center, for example, an extra 10,000 shoppers came to the mall over the first two days.

A majority of Polus City Center tenants are non-Slovak, including international leaders like Datart (Fisher PLC’s French subsidiary), Bata shoes, McDonald’s, Nike, Adidas and Kodak. A number of the mall’s stores represent the first Slovakian or Eastern European outlet for their retail chains.

While the merchandise selection is a priority, Polus City Center is also attracting visitors because of its entertainment retailers: an eight-screen Ster Century cineplex (Bratislava’s largest), a Strike Bowling facility and 20 restaurants, cafes and food court eateries. These offerings go beyond those available in the small towns where many of its visitors live. The Time Out children’s entertainment center with supervised games and other activities encourages family outings.

Vojto Kabath, manager of the Ster Century cineplex, said his South Africa-based company is very pleased with the results at Polus City Center. The cinema facility, the first multiplex in Slovakia, has already captured more than half the Bratislava movie market despite setting its admission prices 38% higher than those of other local cinemas, Kabath said, citing the shopping center’s 2 a.m. closing time as a key contributing factor. North American culture is very much in evidence at Ster Century, which features mostly Hollywood and some British films, plus children’s movies dubbed into Slovak. The refreshments are also similar to those in the States: Soft drinks and popcorn head the list although moviegoers can also buy beer to quench their thirst during the show.

Joining forces with a hypermarket
Hypermarket giant Carrefour, which frequently locates in its own midsized shopping complexes in Eastern Europe, has chosen to join forces with a regional mall in the case of Polus City Center. While Carrefour could not be reached for comment, Cowan said the French company had altered its expansion strategy recently to include more locations within shopping centers. The reason? The company is discovering that profits are higher in the mall than out. “Carrefour has a stand-alone location in Bratislava, too, for example, but they are trading better at our mall,” Cowan said.

Other new shopping centers are on the way which will enhance Bratislava’s position as a retail focus. A 1.1 million-square-foot center called AUPARK will open in the fall in Bratislava, followed by Shopping Park Bratislava in 2002. The cities of Kosice in eastern Slovakia and Zilina to the northwest are also set to acquire new malls next year, according to Andrea Hinkova, editor in chief of OBCHOD (“Business”), a monthly Slovak magazine. These new arrivals will challenge Polus City Center’s current privileged position as the primary modern shopping center for the region. They could also put downward pressure on pricing. Hinkova feels that merchandise at Polus City Center’s shops is overpriced for the Slovak customer market, a situation that can only be continued while there is no competition.

Whatever the particular outcome, this expansion of new retail centers seems likely to further benefit retail customers in Slovakia and neighboring countries.

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