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01 april 2014

Ludmila Reva: All brands are presented on Saint Petersburg market

How much money do residents spend in retail entertainment centers? What new retail chains and shopping complexes will be opened in the Northern Capital in the near future? has discussed some of these issues with Ludmila Reva, Director of ASTERA an alliance member of BNP Paribas Real Estate.

BSN: Will there be any specialization allocated to the street-retail segment in Saint Petersburg?

L.R.: Public catering operators (restaurants, fast food restaurants, canteens, pubs (in a less degree)), convenient stores, supermarkets, and also banks with area of about 80-150 sq.m remain the most active clients in street-retail segment. In 90% of cases it is the question of expanding the chain, but these are not new players who try to enter the market.

However, there is still a question of what is meant by ’specialization’ in street-retail segment. If we speak about territorial specialization, then I can say that in Saint Petersburg there are historically developed zones where the operators of one specialty are settled. For example, on Rubenshtein Street there are restaurants located; on Bolshoy prospect of Petrogradskaya side and on Bolshaya Konnushennaya Street boutiques operate; near Leninsky prospect metro station there are plenty of banks. But for right now there are no prerequisites for appearance of an increasing number of highly specialized shopping streets in the city.

Also we can define specialization by ‘format’. For instance, some retail chains, such as Melon Fashion Group and, are developed only in shopping complexes, when others (Alfa-Bank, First Aid Pharmacy, Nespresso, etc.) are situated preferably in premises of street-retail format. On the contrary, there are chains that can be developed comfortably in shopping complexes, as well as in built-in premises, for example, banks, and SberBank in particular.

BSN: Will there be any ranging of shopping centers into furniture stores, building material stores, sports hypermarkets, etc.? Does the format where all of them are concentrated in one place still exist?

L.R: It is no doubt that specialized furniture retail centers will stay on the market. Furniture is a special group of goods which badly combines with anything else. The majority of customers when furnishing the apartment prefer to purchase everything needed at once and in one place, that’s why in the recent years there is a tendency to enlargement of furniture centers. Most often new furniture hypermarkets are built in active city districts, for example, in the north of Primorsky District.

Construction materials are also referred to the products which are usually sold separately. For such goods as furniture and building materials, the synergy is very rare. A great example of their synergy with clothing goods and food products is ‘Mega’ shopping center, and other regional retail centers with area of about 100 thousand sq.m where the main anchor tenants are grocery hypermarkets, supermarket of construction materials, and hypermarket of household appliances in combination with the range of clothing stores.

In general, as before shopping complexes are reaching out for universality offering its customers a wide range of goods and services.

BSN: Are there any sites for construction of new large-scale retail entertainment centers in the Northern Capital? What retail chains and investors consider the possibility of entry to St. Petersburg market? Which one does the city need?

L.R.: There are almost no interesting places left for construction of new large-scale retail entertainment centers in St. Petersburg. The city is ranked third for saturation level of retail premises in Russia. By the end of 2013 residents’ provision with premises in shopping centers in St. Petersburg has reached 612 sq.m per 1,000 people.

In near future new retail complexes will be opened over the Ring Road near the projects of integrated urban development, and also in bedroom communities of the city where low concentration of quality retail premises is observed.

At the same time, Saint Petersburg remains attractive for large retail chains and new brands. In 2013 about 30 new retail brands of international and federal chains entered the market. This number is twice higher than in 2011-2012.

In particular, at the end of last year a designer, Michael Kors, opened his own store; in February the first multibrand boutique ‘Prada’ was launched on Bolshaya Konnushinnaya in Saint Petersburg; a brand store ‘Armani Jeans’ started operating in Shopping Center ‘Galeria’. Russian Federal Chains, such as ‘Posuda Center’, ‘Dochki & Sinochki’, ‘Takko Fashion’, Early Learning Center, and other operators have also recently entered Saint Petersburg market.

Panasonic Company has announced its plans for opening a multibrand store in our city in 2014. Children’s entertainment center ‘Bubblegum’, and supermarket chain of digital and household appliances ‘DNS’ consider the possibility of entering the Northern Capital Market. In general, all Russian and international brands, and retail chains are already well represented in the city.

BSN: When and in what suburbs of St. Petersburg will large-scale retail entertainment centers be opened? Or do the residents of Leningrad region prefer to go shopping in the city?

L.R.: Large local retail complexes are already functioning in Kolpino, Gatchina, and Vsevolozhsk. Moreover, they are very close to St. Petersburg projects by their format and by a number of brands. In regional centers the development of quality retail entertainment centers are on fast-forward. For example, in Vsevolozhsk cinema is an entertainment part of Yubileyny shopping complex. In Kolpino the opening of a new cinema in Mercury retail center is being prepared.

As for the objects under construction, modern retail complexes are now being built in Pushkino and Krasnoe Selo. The residents won’t have the necessity to go and buy brands in the city, when new quality shopping complexes are opened in St. Petersburg suburbs. We can say that retail entertainment format enters Leningrad region, and for now it is very successful. Regional shopping complexes certainly cannot be compared with that of St. Petersburg by scale, but it is not expected of them. The demand in the regional cities with population of 100-200 thousand inhabitants is very limited.

In the near future the developers continue exploring regional localities which have entered active development phase.

BSN: Will e-commerce have an advantage over retail? Is it true that there has been a decrease of attendance in retail entertainment complexes?

L.R.: Certainly, e-commerce takes a great market share. As of 2013 the volume of internet trading accounted to $17 billion. Last year the amount of online customers increased by 13% and reached 30 million people.

But here we cannot talk about total dominance of such business format. It is not the first year when we observe the increase of purchases through internet, that’s why chain retailers were not surprised by its expansion and reacted adequately. Now the balance between online and offline trading has been reached, although in some segments an advantage of e-commerce is especially noticeable (first of all in the segment of electronics and household appliances). There was no decrease in retail centers’ attendance. Shopping malls continue to be attractive for customers because of their good combination of fashion-stores, retail operators, entertainment and other services in demand, such as beauty-centers.

BSN: How much money do the residents spend in shopping malls?

L.R.: This depends on tenants of retail complexes, their marketing and lease strategies, and also their project concept. For example, in Saint Petersburg there are some large regional retail entertainment complexes which don’t pay attention to their marketing strategy and, thus, are not popular among visitors. But on the other hand there are some successful projects, such as REC ‘Grand Canyon’, which are constantly improved by changing tenants, using new formats, and organizing different events for their customers.

There are a lot of examples of successful neighborhood shopping complexes, such as the French boulevard shopping mall, which invest into renovation and as a result don’t have any shortage in visitors.

Thus, each retail entertainment complex has its own level of yield and average check which depend on a number of factors.


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