[INTERVIEW] M. Zawadzki, Apcoa: In Poland, we have almost 800 car parks. This is both a commitment and an opportunity to set trends.
Katarzyna Łabuz, 23 August 2021, 12:39 pm
Apcoa Group manages 14,000 car park locations across Europe and before the pandemic it generated nearly one billion euros in income annually. For all practical purposes, we are the largest parking operator in each of the 13 European countries we do business in. In Poland, we have almost 800 car parks. This is both a commitment and an opportunity to set trends, says Maciej Zawadzki, Apcoa Parking Managing Director, in an interview with SCF Magazine.
Apcoa Parking will be exhibiting at the Shopping Center Forum 2021 CEE. Its representatives will be available for contact at stand 120.
How has the pandemic affected your operations?
Similar to shopping mall operators and tenants, who have seen their revenues disappear practically overnight, we, too, have suffered losses because of the pandemic. We were hit hardest in those of our projects where we leased car parks as tenants. We lost all revenues while continuing to pay high rents because we were not caught by the regulatory rent exemptions available to some tenants. It turned out we could not count on any support because we were not a standard commercial tenant.
How, then, did you manage to survive and operate in this difficult time?
We started talking with mall owners about possible rent reductions or suspensions. These talks were not always easy for us, and they mostly concerned the locations were we leased space as tenants. At the same time, in those projects where we acted as car park managers – meaning that we did not pay rent and received regular income – we reduced our fees to accommodate the needs of our clients, the shopping mall owners. We decided we would partially reduce our services and operating costs and drop our margins to help those clients survive and maintain sound partnerships with them, knowing that business would return once the pandemic is over.
In other words, while expecting support, you were also offering it?
We wanted the relationships with our clients to continue going forward after the pandemic was over, and we wanted those relationships to become stronger based on our partnership attitude. Sadly, a significant part of our income suffered in the process; we just lost it. We operate car parks at dozens of shopping malls across Poland and a significant drop in revenues meant that, for a time, our liquidity was in a precarious position. And what helped us survive were the relationships we had with our partners.
What did this support and relationships involve?
Most clients helped us by reducing or deferring rent payments. These were shopping mall operators but also public entities which agreed to defer our rents to later in the year, until everything went back to normal. That saved our liquidity. The largest retail networks, such as Lidl, Netto, Kaufland, Aldi or Polo Market, were very accommodating as well, paying our fees on time despite the pandemic and lockdowns. Fortunately, their businesses were stable during the pandemic. With such friendly partners on our side, we managed to come out of the lockdown unscathed.
Shopping centres and their car parks operated on a limited basis, but retail networks, including especially discount and convenience shops which you also serve, were doing rather well at the time.
Netto, Lidl, Kaufland, Polo Market and Aldi – all of these retailers engaged us for new projects on the back of their dynamic expansion. Kaufland and Aldi even terminated their contracts with other operators and gave us exclusivity for all of their car parks, handing over several dozen new locations to us. This was because they were very satisfied with our services and our partnership approach to business.
What makes your services stand out?
That would be, for instance, the quality of our parking equipment or additional charge notices issued at those car parks in commercial locations where there are parking metres. Unfortunately, a lot of operators in Poland which have contracts with retailers offer their services for token amounts and then compensate their low fees by issuing penalty charge notices to shop patrons, or provide old or used parking equipment. This “hunting” for clients to charge them penalties ruins the image of our sector as a whole and draws interests from watchdogs, such as the Polish Office of Competition and Consumer Protection or the Consumer Ombudsman. We do things differently. Our car parks feature the latest-generation pay-and-display machines which accept card payments. Payments there can also be made using our mobile application, APCOA Flow. We are also aware that a penalty charge notice issued to a shop client will scare them away from the establishment. For this reason, our Complaints Units will try to cancel penalty notices issued to customers who have shopped at a store but for some reason did not take their parking ticket. If a client who went shopping to, say, a Lidl or Biedronka store, is issued a penalty notice because they did not take their ticket or did not pay, their notice will always be cancelled if they report this to us afterwards.
In terms of car park arrangements, what’s the biggest challenge to shopping malls and retail networks?
I believe it’s the parking charges. Usually, a client can park for free while shopping at a given mall or store. The problem occurs when parkers contravene that rule. Increasingly, a client at a shopping mall is unable to park because the car park is full, occupied by staff from nearby business offices, people coming to local government offices, hospital patients or residents of nearby housing estates. What will a client who comes to a store for shopping do when they cannot park? They will drive half a kilometre further to a competitor’s store. The retailers have noticed that this is bad for their business and started to adopt their own parking rules. For example, a Lidl store will allow a 90-minute free parking, which is more than enough to do the shopping, but will charge for each additional hour parked. Once adopted, such rules will usually resolve parking problems at large establishments.
You said you offer two business models, one lease-based and the other as a parking manager. What is the difference?
In a management contract, we act as a facility manager and are paid a fee for it by our client. Naturally, some of that fee will go towards paying for labour costs, equipment depreciation, equipment repairs that we usually make ourselves, parking tickets or technical maintenance. Under a lease arrangement, we pay a rent to our client, collecting and recording all income from the car park. Shopping mall car parks generally use the management contract model.
Why do the malls choose the management model?
Generally, shopping mall car parks offer long free-parking times. The mall owners do not want their customers to cut the time spent on premises and want them to stay there as long as possible. As such, a shopping mall will not generate enough income from the car park for us to operate it under lease, paying our own costs in addition to rent. The management model is more practical here.
And what does it involve, specifically?
To put it simply, we install and set up a parking management system – barriers, licence plate recognition cameras and automated pay-and-display machines. Our staff operates the system; we provide consumables, such as parking tickets; we analyse market trends across the car park area and optimise parking tariffs; we handle cash management processes, including cash transports; we provide in-house equipment maintenance; and we sell season tickets.
Which model is more profitable for Apcoa?
There is no rule here. During the pandemic, management contracts were surely a much better choice for us. With those contracts, our margins are lower than in leases, but this is compensated by the fact that we are not exposed to market risk – the client pays us a regular monthly fee.
Apcoa is a multinational firm. What are the current management trends, in Poland and worldwide?
Apcoa Group manages 14,000 car park locations across Europe and before the pandemic it generated nearly one billion euros in income annually. For all practical purposes, we are the largest parking operator in each of the 13 European countries we do business in. In Poland, we have almost 800 car parks. This is both a commitment and an opportunity to set trends. In 2019, the Group launched its own mobile application, called Apcoa Flow. It is available at all our car parks across Europe and at many car parks we are in partnerships with. Indeed, more often than not, car park owners who have not contracted us as managers only want our application. It also works in paid parking zones.
Can you characterise it?
With our mobile application, you can pay at car parks with barriers or pay-and-display machines. In the latter case, a parker inputs their expected parking time within the app (e.g. a free hour at a shopping mall) and does not have to go to the parking machine for a ticket. The solution worked extremely well during the pandemic. Monthly, we would register thousands of new Apcoa Flow users every month.
With a barrier system, once a vehicle is at a barrier arm, the camera there reads its licence plate and automatically raises the bar, starting a parking session. The application notifies the client that their parking has just begun. On exit, the system will again read the licence plate, raise the barrier and terminate the parking session, transferring whatever amount is due from the driver’s credit card and sending the session receipt to the client’s e-mail address. We also use our mobile application to sell season tickets. Moreover, our application can be integrated with our clients’ external IT systems.
How does your application work for shopping malls?
Sadly, the system is not yet as popular in Poland as in other countries. Some shopping malls express an interest, others plan to roll out their own solutions. What can be said, though, is that the pandemic accelerated the rollout decisions for such arrangements.
Each year, Apcoa is present at SCF. What is your offer to shopping malls this year and what partners will you be looking for at SFC?
For us, the Shopping Center Forum is a very important platform to meet our current and prospective clients. Nowadays, seeing as we all never have enough time for meetings, talks or reviews, the events of this kind facilitate business contacts. SCF provides an attractive, interesting format, one in which our existing business relationships can be maintained and in which we can present our new solutions and technologies to a wide audience. Let me recall that a lot of shopping centres that even recently have had no parking problems now see the need for changes in that area. We are seeing a surge in development projects, a lot of new properties are being built, and there are changes in land development following which commercial premises suddenly find themselves surrounded by office buildings or housing estates. Many shopping malls are looking for solutions to their parking problems, and such solutions can be found here. Our stand this year will exhibit new and interesting parking systems, the best global brands, and mobile solutions to support car park management.
By Katarzyna Łabuz
