The flow of wealth and changing shopping habits have pushed up margins at Castorama’s Polish stores as customers buy a wider range of product and more of Kingfisher’s own-brands.
In the second half of last year, about PLN7 billion (£1.56 billion) was repatriated to Poland.
As the credit crunch, weaker pound and reduced employment prospects bite in the UK and other Western countries, Polish workers are increasingly returning home. The Polish government has been advised that as many as a third of Poles in the UK – about 400,000 people – are likely to return next year.
Poland is expected to ride the global downturn better than many other countries and Castorama is a likely beneficiary. Although the construction market is expected to deliver lower growth than last year’s 30.2 per cent, it is likely to continue to expand.
Speaking to Retail Week on a visit to Warsaw last week, Kingfisher chief executive Ian Cheshire said: “The Polish builder is now back here, building his own house or flat.”
Kingfisher-own brands familiar to Poles from B&Q stores in the UK, such as MacAllister power tools and Colours paints, have been selling well as customers preferences have changed, partly in response to experience abroad.
Once Castorama’s Polish customers would only have bought white paint, but there is now demand for a wide range of colours and a greater willingness to spend more.
Castorama Poland operations director Pawel Walus said: “The attitude of customers has changed. Even in the smallest cities we’ve observed customers are looking for products that are better quality.”
The shift in buying patterns has had a measurable and beneficial impact on margins, Cheshire said.
He described Castorama Poland as a jewel in Kingfisher’s crown and expects to double store numbers in Poland, Russia and Turkey over the next four years, adding about 80 shops.