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03 october 2014

Ludmila Reva: ‘Participants of retail market express contrary opinions’

Ludmila Reva, director of ASTERA an alliance member of BNP Paribas Real Estate, held a discussion titled ‘Retail: change management’ within business program VIII International investment forum PROESTATE which was held 8-10 September in Moscow.

Participants discussed the influence of new economic and political conditions on expansion of international retail chains and development of federal chains. ‘Starting from 2011, 22 international brands left Russian market, at the same time 31 brands entered the market’, - noted Andrey Vasutkin, head of Research and Consulting Department of MAGAZIN MAGAZINOV. According to Andrey Vasutkin, Russian market still remains attractive for international chains in terms of development. Svetlana Kuzmina, director of Asset Management Department at AVICA Property Investors (RD Group), shares his opinion: ‘Now it is still too early to speak about any consequences of economic and political situation. Chains enter Russian market and open their retail outlets. All agreements reached earlier are implemented’. Eduard Tishko, commercial director of ‘Maxi Development’, noted that multinational companies will firstly pursue economic interests even despite the statement of government bodies. Maxim Schegolev, director of integration and development of LENTA formats also thinks that interest of international chains will not grow weak: ‘All chains understand that if they stop their development, then in future they will lose their market shares and their turnovers. Therefore, chains continue to develop, and federal chains enter regions. This tendency will remain unchanged. The plans will be possibly corrected - for example, there will be less than 100 openings, but it will not affect the overall picture’.

The moderator, Ludmila Reva, director of ASTERA an alliance member of BNP Paribas Real Estate, indicated that during the discussion participants mostly expressed absolutely opposite opinions. Thus, experts had different opinions on where chains should be developed. Andrey Vasutkin said that the development would be concentrated in Moscow and in largest cities of Russia where a great number of new retail centers entered the market. On the opposite, Anna Nikandrova, regional director of Retail Real Estate Department at Colliers International in Russia, thinks that million-plus cities are now in the state of frustration due to high expectations of many tenants and developers which were not met. “Today, retailers of international as well as federal chains are focused on cities with population of 300-500 thousand people where quality retail is represented, but developers are concentrated on places where there are no quality retail”, - says Anna Nikandrova.

Nikolay Yuskov, director of Real Estate Department at Sportmaster Group notes that it is easy to observe that customers are tired of big shopping complex: ‘In Moscow not many retail centers are being built but they are built in very large formats. We have a feeling that customer is tired of big complexes. This year, ‘Back to School’ Program failed decreasing by 25%. A question rises – is it profitable to develop multifunctional complexes? As retailers we are not able to grow separately from development, and now, unfortunately, there are some circumstances that do not satisfy retailers – shopping centers are built in wrong places and in very big formats’.

During the discussion participants made a conclusion that retail chains of middle and mass-market segments will be developed more actively in current economic environment. ‘In this case customer will benefit as chains will hold in price increase in industrial or wholesale sectors in order to produce quality supply, - notes Maxim Schegolev. – In the development of large retailers there are no major transformations today, but the situation changes constantly and we are not able to forecast it for years or even months to come’.

Source: PROESTATE press services

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