Money to burn
By : Charles Ward
Karolina Kowalczyk, 19, hits the Klif shopping mall in downtown Warsaw on Saturdays to look for new clothes, make-up and shoes, and to spend her zl. 100 or more in monthly pocket money.
"I came here to buy some trousers, but also to kill a bit of time," she said, sitting on a bench beside a fountain while chatting with her pals, Agnieszka Pawlowska, 17, and Beata Marak, 23. "I think teenagers who don't work come here to hang out, look around and get their parents to buy them something."
The concept of "mallrats," stereotypical American teenagers who spend their spare time loafing about the local shopping center with their friends, may not have ensconced itself in Polish retail culture just yet, but the foundation is already there.
As more hip goods find their way into shops, teenagers are gradually becoming one of the more important consumer groups. Unlike their parents who are often stretching their average disposable income of zl. 500 to cover basic bills, food and any entertainment for the whole family, teenagers are estimated to have zl. 100-zl. 200 a month that can be spent on more frivolous items than groceries.
The increasing importance of teen purchasing power occurs against the backdrop of overall rising incomes in Poland. In the first half of 1997, disposable income per capita stood at zl. 412.69, according to ING Barings. In the first six months of this year, that figure has risen to zl. 528.48. Much of that newfound purchasing power is finding its way to malls and retail outlets that are springing up in towns and cities across the nation.
In a country where children are traditionally more financially dependent on their parents than their peers in Western Europe and the United States, Mom and Dad's perkier cashflow situation means more pocket money. At the same time, more teens are working part-time jobs. The end result is that many sectors including clothing, food and beverage, soft drinks, music and cosmetics are seeing their sales rise.
Cruising the mall
On a recent Saturday afternoon, teenagers swarmed into the Klif shopping center as the afternoon hours dragged on, in pairs and foursomes, drifting in and out of the clothing stores and supermarkets.
"Everything's here in one place, instead of going around to the bazaars. It's a nice atmosphere, I like it here," said Karol Dzik, a 13-year-old on his way to buy a nameday present for his aunt in between checking out the shops. "My favorite (clothing brands) are Lee, Big Star. My favorite shops? RTV Euro and the sports shop you can find here."
Manuela and Marta, two 15-year-olds who did not want to give their last names, also said that Klif, or similar malls, is the place to be. "Why here? Because there are a lot of shops here, the best shops." The pair said that on average they spent zl. 100 or more alone on the latest clothing items, such as hooded sweaters, quilted jackets and pants, and, of course, any piece of clothing with a shiny nylon look.
"How much do I spend on clothes? More than zl. 100 last month," Marta said.
At the same time, advertising agencies are busy making sure that every brand and shop is seen as being "with it" to attract this new, young group.
"As consumers, teenagers are very important," said Piotr Lukasiewicz, director of strategic planning at advertising agency McCann Erickson Polska. McCann Erickson this year alone has worked on several campaigns geared toward teens, such as one for ice cream maker Algida, Warner Home Video, and the teen-aimed Graffiti bank account by Powszechna Kasa Oszczednosci Bank Panstwowy (PKO BP).
As a rough estimate, total disposable income stands at zl. 19 billion ($4.75 billion) per month, or zl. 500 per capita, while teenagers aged 15-19 account for some zl. 332 million-zl. 664 million ($83 million-$166 million) of this figure, Lukasiewicz said.
Teenagers' consumer value has been rising for some time now, Lukasiewicz said. "Definitely their disposable income is increasing and at a higher rate than inflation and the real income of the average Polish family," he said. "It's definitely been growing for five years this trend is gaining momentum."
For many companies, teenagers have always been integral to their sales. More than 50% of Adidas Poland's business comes from teens, with the sports-clothing retailer enjoying annual sales growth of 40-50%, said Maria Ceran, marketing manager of the firm. "It's the only important market," she said. "We are a sports company, our natural customers are young customers."
Michal Ozimek, marketing and trade director of Diverse Wear System, a chain of 200 clothing shops around the country, one of which is located in the Klif shopping mall, said it was difficult to give a breakdown on how many of his shop's clients were teenagers. But at least 70% of customers are younger people and business has been doing especially well over the last two years, he said.
Other firms, though, are specifically targeting the niche group with new products and promotions. Cosmetics companies are among those firms, and as a result, firms such as Oriflame have introduced new make-up lines with lighter colors and unusually scented perfumes such as vanilla or chocolate.
Oriflame first noticed that teenagers were becoming a key consumer group two years ago, said Edward Zieba, managing director of the company. "It was an eruption. We'd never experienced it before," Zieba said.
He said that teenagers aged 15 to 19 make up 20-25% of Oriflame's annual sales, and that sales in this niche market are growing 25% annually.
Instead of concentrating only on advertising campaigns to court the teen market, which "could do serious harm to sales to older customers," Zieba said, cosmetics firms are relying on other ways of attracting these consumers, such as promotional stalls in shopping malls. On average, the company does a few hundred of these campaigns a year, he said. However, Oriflame spends around 35% of its turnover on promotion and advertising each year, which amounts to a few million zlotys, he said.
Targeting teenagers is also easier than older consumers, Lukasiewicz said. One reason for that, he said, is that teens "very easily find themselves in the new market reality" and are far more open to new products and enjoy experimenting with them. Furthermore, they are valuable in helping the firms attract other consumer age groups, such as teens' parents.
Others in the cosmetics industry, however, pointed out how fickle young shoppers are. "Teenagers are less brand loyal, they go for what's trendy," said Stuart Mactavish, general director at direct selling company Avon Cosmetics Polska. "We are very open to them and are doing our best to attract them, but they are not our primary target group."
Avon's primary group are consumers aged 25-49. While the company has a range of cosmetics for the 18 to 25 group, which now accounts for 30% of its business, younger teens are not the primary concern just yet, he said.
Out to work
But the kids with real spending power are going to work. According to surveys conducted by research groups IQS and Quant Group, 16 to 19-year-olds who didn't work received zl. 95 per month on average from their parents. Those employed had four times that, zl. 400, to spend.
"The older teenagers are, the more disposable income they have, but what's changing now is that more and more teenagers work," Lukasiewicz said. He said that while 60-70% of their cashflow still comes from their parents, the rest stems from other sources, such as a part-time job.
That is true for Kowalczyk, who said that her parents supply much of the zl. 100-zl. 500 she has to spend each month. Some of that money, though, comes from her part-time sales job.
Handing out promotional leaflets on Warsaw's streets is one of the most popular part-time jobs among teenagers interviewed. McDonald's, a traditional employer of teenagers, does not hire anyone under 18 years of age in Poland, said Krzysztof Klapa, a spokesman for McDonald's.
But gauging the number of teens who do promotional work, or even the amount that they make, is difficult because the pay is largely undeclared, said Tomasz Karon, a consultant at market research company SMG/KRC.
As well as promotional jobs, other teens have more steady employment such as working in gas stations or their family's firm, Lukasiewicz said. Other sources said that farms and fruit picking were popular jobs.
Whatever the source of cash is, it is helping to bring free-spending teens into the malls, record stores and clothing outlets, thus making their presence known in Poland. "They are very modern consumers and valuable in terms of their purchasing power," Lukasiewicz said.
