Allegro Expects eCommerce Market Growth Even as Consumers Trade Down

Much like their American counterparts, consumers in Poland are trading down.

However, that apparently hasn’t stunted the growth of Allegro, that country’s largest eCommerce platform, as Reuters reported Thursday (Sept. 28).

The company said it expects core earnings growth to speed up at home as wages in Poland rise, anticipating gross merchandise value (GMV) to increase by 10% to 11% in Poland during the third quarter, with revenues climbing 19% to 21%.

Chief Financial Officer Jon Eastick said he expected Allegro to continue growing, even as shoppers keep trading down to less expensive goods.

“The economic situation in Poland for the consumer is somewhat better than it was this time last year,” Eastick said, noting faster increases in real wages.

PYMNTS has been monitoring consumers’ tendency to trade down for the last several months, with that trend expected to continue into the holiday season.

“Research from earlier in the year shows that the trade-down/trade-off practices are already firmly entrenched,” that report said.

“As noted here, nearly 60% of consumers have cut spending on clothing and accessories, with 4 in 10 trading to less expensive brands. And within the retail segment, 60% of consumers have switched to cheaper retailers, while 35% have sacrificed product quality by switching to cheaper, lower-quality goods.’

Digging deeper, the research also found that consumers are 21% more likely to report making retail cutbacks than grocery cutbacks, while 69% say they have reduced nonessential spending on retail products specifically because of high inflation.

Forty-one percent of retail shoppers told PYMNTS this has been the most substantial change to their shopping habits.

Earlier this year, Allegro announced plans to launch its third-party marketplace in the Czech Republic, the first step in the company’s plan to expand its marketplace model beyond Poland.

“Having established itself as an economic lifeline for all customers during the pandemic, Allegro now proved its status as the most convenient shopping platform to serve clients in times of inflation,” Allegro CEO Roy Perticucci said in a news release.

According to the Reuters report, the Czech platform — which officially launched July 31 — has already logged 600,000 active buyers. Allegro’s Polish business reached 14.3 million active buyers following five straight quarters of growth.