Interview by Jerry Kamecki

WBJ: Can you tell us about BIG's expansion into the Polish market and the reasons behind choosing Poland as a strategic location for your operations in Eastern Europe and the Balkans? What factors make it an attractive market for BIG's operations and investments?

Eran Levy: In 2019, we made a strategic investment with a long-term perspective when we became one of the parties in the acquisition of AFI Properties. Two years later, we became the main shareholder of AFI Properties, with already established strong operations in Poland, Romania, Czech Republic. AFI’s expertise in the development of offices and residential projects in the region not only brings a significant added value to BIG but also drives our closer attention to Central Europe.

Expansion is our main focus and a core BIG strategy for the future. We are constantly examining and pursuing business opportunities in various market areas - offices, logistics, residential developments, and new energy. Nevertheless, our dominant category and the company’s DNA remain and will remain in retail. We strongly believe in brick-and-mortar retail’s great potential today and in the future.

The analysis that we conducted regarding Poland and its prospects for further retail development showed potential here for us. The decision to enter Poland was supported by macroeconomic data and by observed changes in lifestyle trends.

Poland has a significant customer base with rising disposable incomes and higher consumer purchasing power. Relatively stable economic growth translates into increased consumer spending. The developing infrastructure enhances the accessibility of retail locations and supports supply chain efficiency. Favorable demographics ensure consistent demand for goods and services. It also contributes to changing behavior - we observe that after the pandemic, people are becoming more outgoing, seeking social interactions, and spending active time in places providing enjoyable experiences. We see our opportunity in the fact that the concept of BIG retail parks is virtually nonexistent here.

With the recent acquisition of two commercial centers in Poland, what are your plans and goals for these properties? How do you envision leveraging the existing anchor tenants and brands to enhance the shopping experience for customers?

First and foremost, it is crucial for us to build brand awareness among tenants and customers alike while also nurturing long-lasting relationships with them. BIG is known for its strong relationships with tenants. We continuously emphasize our commitment to building strong and sustainable bonds to our partners and tenants. They can be confident that we are always here available for them. In Poland, we dedicate all of our time and effort to establishing strong ties with our tenants as we are only beginning to operate in this market.

Second, BIG, as a group, invests heavily in marketing, paying great attention to strong marketing communication and accurately targeted activities. We also actively collaborate with our tenants in advertising and marketing initiatives.

Third, we are investing in a qualitative and diverse customer experience. Our focus is on providing the most enjoyable shopping experience, which will result in a substantial group of loyal customers choosing each BIG retail park as their first choice destination for shopping and socializing in their spare time.

We are hopeful that most of our tenants will join us in our new projects and markets.

What will BIG bring to these properties that may set them apart from competitors?

In BIG, our priorities and a unique selling proposition (USP) are clearly defined.

An obvious BIG standout is our approach towards our tenants. We cooperate as partners, and our everyday connection is very strong. We make every effort to be regarded as a reliable, realistic, and fair partner, showing support and offering quick responses in any situation. BIG’s focus is generally on sales, especially OCR (occupancy cost ratio). If needed, we are always ready to make adjustments or provide rent reductions, according to actual sales. This focus on OCR is the key difference between us and other shopping center owners or funds. We are long-time investors and long-time partners. We grow together with our tenants, and so we also make a profit with them.

BIG retail parks offer an extensive tenant mix, quite incomparable to traditional retail parks. Most of our venues have 30-40 retail shops or more, almost like a roofless shopping mall, whereas classic retail parks or convenience centers usually consist of 7-12 units offering an assortment of basic necessities. So, from the customer perspective, BIG retail parks offer a very different customer experience.

Our core competence lies in the top-level maintenance of our centers. We keep a constant watch on refreshments of interior and exterior design, conducting works and renovations of all systems and areas on a monthly basis.

Constant investment in marketing is also one of our strengths. Our centers aim to be regional parks, double the size of a regular retail park. They will provide customers within a 20 minute drive with everything they need: supermarket, electronics, furniture, drug store and pharmacy, playgrounds for kids, leisure and entertainment, fashion, cafes, restaurants, and, quite often, multiplex cinemas, fitness, or even a medical center. As owners and managers, we actively support solid sales with a carefully arranged calendar of marketing activities. For these four reasons, we are optimistic that tenants and customers will remain satisfied and loyal.

How do you plan to leverage your experience in managing BIG Centers in Israel, Serbia, and the USA to ensure the success of BIG's operations in Poland?

Over the years, BIG has consistently demonstrated the effectiveness of its philosophy. By actively partnering with our tenants, we have successfully fostered their business growth, resulting in robust and healthy business relationships. And providing customers with a superior and enjoyable shopping experience helps cultivate their loyalty. From my experience, the skillful combination of the efficiency of shopping provided in our retail parks, their pleasant environment, and targeted marketing activities create the right formula to ensure customer satisfaction and position ourselves among industry leaders. In a thriving retail market like the USA, staying creative and delivering outstanding performance and experiences is essential to stay competitive. Physical stores are and will remain a strong retail sales channel, despite the significant share of online transactions in the total retail market transactions, which in the USA surpassed 21% in 2022.

Are there any lessons learned or best practices that you intend to apply in the Polish market?

Absolutely. There are many recognizable brands that are absent from the Polish market.

Specifically, in the restaurant and cafeteria sector, there is still a noticeable gap in the market. We are already working on expanding BIG Lubin to include a restaurant building and a patio for restaurants with a good, relaxed atmosphere. Our know-how and long-term approach based on our philosophy help us a lot with tenants, giving us a huge advantage.

The current market is not seeing many transactions, but everyone seems to be in love with retail parks in Poland right now. Aren’t you going to pay a premium for them at the current time? Why did you choose this time to go on a shopping spree?

Regrettably, there have been significant changes in the overall global market situation over the past 12 months. Initially, when we commenced working on deals in early 2022, the interest rates were still at a reasonable level, which prompted us to proceed with two transactions in Lubin and Andrychów. As we closely monitored the market's direction, we decided to pause further acquisitions, including those nearing completion. This period is challenging for everyone, particularly as we were just entering the market. We maintain an optimistic outlook and believe that once market conditions improve, we will swiftly resume our shopping activities. Currently, our primary focus lies in development; however, should an appealing opportunity arise, we will certainly evaluate it.

How do you anticipate the expansion into the Polish market will contribute to BIG's overall growth and development as a prominent player in the real estate industry? Do you plan to implement any specific strategies or initiatives to achieve this goal?

How do you achieve your goals?

First, we choose our locations very selectively. Our projects are positioned at the entrance to cities and within the immediate vicinity of road infrastructure for maximum accessibility from the outskirts. Then, we continually learn about our customers and communicate with them via various channels. We treat our loyal customers with the utmost respect, while also striving for a constant flow of new ones. Our approach is working well. Part of our growing into the Polish market is also developing partnerships with the most professional investors, enabling us to utilize our joint expertise and resources to achieve mutual success.

How do you plan to ensure a smooth transition and successful integration of these newly acquired properties into BIG's existing portfolio? Are there any challenges or opportunities you foresee in managing these centers in Poland? Have you set up a large team in Poland, or are you working through contractors?

We are the only retail park owners with open-air facilities managed as traditional closed shopping centers. We specialize in shopping center management for projects developed according to our own concept. The way we carry out high-level maintenance, strong marketing, and all other operations sets us apart.

BIG applies the principle of “everything from a single source.” We have our own on-site management teams, fully dedicated and with in-depth knowledge of all technical and operational details. Where necessary, we also benefit from the support of outsourced suppliers. The key component that builds recognition and market value for BIG is noticeable, consistent visual communication. The rebranding of a facility is a significant moment in the life of our brand. We carefully prepare for this, ensuring proper visibility of logos, clarity of messages, and the quality of advertising materials.

As the Country Manager for Poland, what are your key responsibilities and priorities in overseeing the operations and growth of BIG in the country? Are there any specific objectives or targets you aim to achieve in the short and long term?

My priorities are set in three areas: tenants, marketing, expansion. First and foremost, my responsibility is to build a lasting relationship with our tenants. As we enter the Polish market, we are not only changing the branding of retail parks but also implementing a win-win approach to business - fostering long-term relationships and collaborating closely with our tenants and local municipalities.

As to marketing, the primary task is to build a strong brand, making it strongly recognizable throughout the region. The way we do our BIG marketing makes an impact.

In the future perspective, we aim to become a dominant company in Poland in the open-air shopping center category, with our main focus on creating BIG retail parks. I am actively seeking new, appealing locations that meet BIG's standards and show a potential for future growth. We came to expand and grow BIG in Poland in the long run.

Eran Levy, CEO of BIG Poland and Romania, oversees all aspects of the business and the expansion of BIG retail parks in Poland and Romania. Previously, as COO of BIG USA, he led all real estate operations, including portfolio, asset and property management, leasing and marketing, for BIG shopping centers and retail parks in the US market.