The Russian Fashion Retail Market - Igedo Company
The Russian Fashion Retail Market - Igedo Company
The Russian Fashion Retail Market - Igedo Company
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no.10/ July/August 2010<br />
the profashional monthly newsletter<br />
monatsnachrichten<br />
<strong>The</strong> <strong>Russian</strong> <strong>Fashion</strong> <strong>Retail</strong> <strong>Market</strong><br />
macro-economics / consumer behaviour/ retail development/ commercial real estate<br />
September 29 st , 2010<br />
published by ITMM for IGEDO COMPANY<br />
Issues addressed in this July/August edition 2010<br />
1. Politics and Economics<br />
1.1. Gross Domestic Product might rise by 6,2 percent in 2010<br />
1.2. Industrial production up by 10,2 per cent over second quarter 2010<br />
1.3. Unemployment down by 20 per cent<br />
1.4. Imports back on the growth path<br />
1.5. Capital investments keep increasing: higher yields<br />
1.6. Inflation likely to rise<br />
1.7. Fire devastation may cost Russia US $ 15 bn.<br />
1.8. European clothing suppliers to Russia cut losses by half<br />
2. Consumer Characteristics<br />
2.1. Consumer Demand up by 3,4 per cent over first semester 2010<br />
2.2. Real Income rose by 13,4 per cent until May 2010<br />
2.3. Strong recovery in demand for new automobiles<br />
2.4. Share of private clothing expenditures abroad on the rise<br />
3. <strong>Retail</strong> Development<br />
3.1. Rents for retail premises to move up in autumn<br />
3.2. ARMANI COLLEZIONI opened mono-brand store in Ekaterinburg<br />
3.3. Growing GINGER teen-wear chain in the regions<br />
3.4. METRO CASH & CARRY taken to court by clothing supplier<br />
3.5. ADIDAS breaks customer relationship with SPORTMASTER and SPORTLAND<br />
3.6. <strong>Russian</strong> DETI childrenswear chain planning large scale expansion<br />
3.7. STOCKMANN closing down old retail premises in St. Petersburg<br />
3.8. NEW LOOK to sign partnership with DELTA SPORT in Ukraine<br />
3.9. Did heat wave and smog affect retail sales in Moscow?<br />
3.10. PODIUM opening first department store in Moscow<br />
3.11. MANOUKIAN to launch first mono-brand store at GALLERY mall<br />
3.12. TOM TAILOR getting independent from FDLab<br />
3.13. MANGO strengthens market presence in Russia<br />
3.14. Voronezh delaying construction of IKEA's new MEGA Mall<br />
3.15. BOSCO DI CILIEGI likely to sell 45 per cent of stake to GUM<br />
3.16. MARKS & SPENCER anchors at new GAGARINSKY MALL in Moscow<br />
concepted by: published by: as marketing tool for: all rights reserved by:<br />
responsible: Reinhard E. Döpfer, E-Mail: doepfer@itmm-gmbh.de, Tel.: +49 (0)711-933 29 94 44
4. Shopping Mall Development<br />
4.1. Shopping Center JUNE opened in Cherepovets, North-West Region<br />
4.2. OZ-MALL under construction in Krasnodar on 46 hectares<br />
4.3. Owners of EVROPEYSKIY Mall in Moscow investing in PAVELETSKAYA MALL<br />
4.4. Second GOLDEN PARK MALL to open in Novosibirsk<br />
4-5. KOMSOMOL MALL inaugurated in Ekaterinburg<br />
4.6. St. Petersburg in second place of shopping mall implementation in Europe<br />
1) Politics and Economics<br />
1.1. Gross Domestic Product might rise by 6,2 per cent in 2010<br />
September 2010, Bloomberg Corporate Executive Board (CEB) and cisstat<br />
After subsequent higher one digit growth of the <strong>Russian</strong> Gross Domestic Product<br />
(GDP) over the past ten years, this indicator dipped by 7,9 per cent in 2009. Over<br />
the first quarter of 2010 GDP increased by 2,9 per cent against the same period of<br />
2009. <strong>The</strong> first semester of this year saw a rise of 4,0 per cent. According to the<br />
chart below, CEB projects a GDP growth for 2010 ranging between 2,9 % (low<br />
estimate), 4,0 (medium estimate) and 6,2% (high estimate) at real terms:<br />
1.2. Industrial production up by 10,2 per cent over 2 nd Quarter 2010<br />
September 2010, www.cisstat.com, main macroeconomic indicators<br />
Industrial production increased in Russia at an average rate of 5,3 per cent from<br />
2000 till 2008. In 2009 this indicator declined by 10,8 per cent against 2008.<br />
During the first quarter of this year industrial production attained a growth of 5,8<br />
per cent. From January till June output of the <strong>Russian</strong> industry recorded an<br />
increase of 10,2 per cent against the first semester of 2009. Agricultural<br />
production faced different results. Whereas turnover rose by 3,6 per cent during<br />
the first quarter of this year, the first six months saw a reduced growth at 2,9 per<br />
cent.<br />
1.3. Unemployment down by 20 per cent<br />
September 2010, cisstat.com<br />
According to ROSSTAT records, unemployment in Russia, which kept rising over<br />
the crisis year 2009 and the first quarter of 2010 to a peak of 2,3 mn people (in<br />
February 2010) started to decline in April 2010. Over the second quarter including<br />
July 2010, the rate of reduction accounted for 20 %. In July there were 1,79 mn<br />
people registered as unemployed against a total of 2,234 mn in March 2010.<br />
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1.4. Imports back on the growth path<br />
September 2010, cisstat.com, first semester key macro indicators<br />
As it is commonly known due to the lack of diversified industry basis, Russia is<br />
highly dependant on imports of both, industrial products and consumer goods.<br />
From 2000 till 2008, imports from third countries, excluding CIS-nations rose at<br />
an average annual rate of 29 per cent . <strong>The</strong> peak was reached in 2007, when<br />
imports surged by 47 per cent against 2006. In 2008 growth slowed down by 23<br />
per cent against the year before an it plummeted at a rate of 37 per cent in 2009.<br />
<strong>The</strong> turnaround has been reached over the first quarter of this year, when imports<br />
from third countries rose by 17,2 per cent compared to the first three months of<br />
2009. At the end of the first semester of this year imports picked up at a<br />
cumulated rise of 28, 6 per cent.<br />
1.5. Capital investments keep increasing: higher yields<br />
August 30, 2010, Handelsblatt/Investment Strategies<br />
According to Matthias Siller, manager of Barings Russia Fund, the country is the<br />
cheapest market for investors at a time right now when fundamental economic<br />
data for Russia are commonly considered as very convincing. As Siller says, global<br />
portfolio investors find no way around Russia for getting higher yields than here.<br />
Shocked by the Euro-crisis in May, this year, global institutional investors jumped<br />
on <strong>Russian</strong> government bonds issued in Roubles and US Dollars, bringing the<br />
investor an annual yield of 5,4 per cent. According to Segei Arsenyev, analyst at<br />
Goldman Sachs, he expects high profit margins from investments in stock of<br />
<strong>Russian</strong> trading and retail companies selling consumer products as well as raw<br />
materials for industrial use.<br />
1.6. Inflation likely to rise<br />
3 rd Quarter 2010, <strong>The</strong> Global Blue Respective/ Handelsblatt<br />
Although monthly inflation came down from 8 per cent at the beginning of this<br />
year to 3,6 per cent in May, forecasts of the <strong>Russian</strong> Ministry of Finance aiming at<br />
an average inflation rate of 5 to 6 per cent for 2010, may not come true.<br />
According to the US economist Nourid Roubini, there are a number of indicators<br />
pointing at an overall inflation rate possibly reaching 8 per cent this year. Higher<br />
inflation than originally forecasted by the government may result from strong<br />
rising prices for wheat, other foodstuffs and basic commodities, raw materials,<br />
increase of salaries and wages such as from a declining US $ in combination with<br />
a stronger € and a weaker <strong>Russian</strong> Rouble.<br />
1.7. Fire devastation may cost Russia US $ 15 bn<br />
August 11, 2010, Stuttgarter Zeitung<br />
It is still premature to assess the economic and social damage caused by the<br />
heat-wave and forest fire devastation which have hit Russia in July and August<br />
2010. Experts speak of a cost burden of around US $ 15 bn resulting from this<br />
catastrophy. Almost any economy sector has been directly or indirectly affected.<br />
Mobile telephone providers were hit extremely hard because their networks<br />
collapsed under destroyed transmission posts, telephone cable and networks.<br />
Water supply was partially interrupted from the breakdown of power pumps.<br />
Consumption of electricity surged because air conditioners operated at their<br />
maximum capacity. In 27 <strong>Russian</strong> federal regions agriculture faces losses in crops<br />
of wheat and other foodstuffs accounting for 20 percent below average summer<br />
crops results. <strong>The</strong> government stopped wheat exports on August 5. This decree is<br />
valid until December 31, 2010. Russia is the fourth largest wheat exporter world<br />
wide and expects a negative effect on its balance of trade. According to Vladimir<br />
Milov, former federal energy minister and leader of the liberal opposition party<br />
3
claims that the environmental disaster will Russia push back by several months in<br />
its attempt to overcome the global economic and financial crisis. His opinion is<br />
shared by experts saying that the economic recovery will be delayed because<br />
higher cost for anything related to food, energy supplies and telecommunication<br />
will be put on the shoulders of the public, beginning in autumn of this year.<br />
1.8. European clothing suppliers to Russia cut losses by half<br />
September 2010, European <strong>Fashion</strong> and Textile Export Council (EFTEC)<br />
Exports of textile apparel and accessories from the 27 member states of the<br />
European Union to Russia kept declining by 15 per cent over the first six months<br />
of this year reaching an ex factory value of € 0,958 mn. Last year shipments had<br />
to face a decline of 29 per cent representing a total of € 2.1985,5 mn. This means<br />
that European clothing suppliers to Russia were in a position to cut their losses<br />
almost by half. Over the delivery period of the first quarter of 2010, clothing<br />
exports from the EU to Russia saw a decrease of 20 per cent. <strong>The</strong> European<br />
<strong>Fashion</strong> and Textile Export Council (EFTEC), monitoring export development of<br />
European clothing to Russia on a quarterly basis for each member state and for 33<br />
main product categories since 2002, expects a return from "red" to "black" export<br />
figures after the first semester of 2011.<br />
2) Consumer Characteristics<br />
2.1. Consumer Demand up by 3,4 per cent over first semester 2010<br />
September 2010, cisstat<br />
Measured against officially registered retail trade turnover, consumer spending in<br />
Russia at the points of sale rose by 1,3 per cent over the first quarter of 2010 and<br />
by 3,4 per cent during the first semester of this year. From 2002 till 2007,over the<br />
boom phase in Russia retail turnover rose at an average annual rate of 12 percent<br />
<strong>The</strong> peak was reached in 2007 when retail turnover increased by 16 per cent<br />
against the previous year. In 2008 growth declined to 13 per cent and in 2009<br />
retail turnover plunged by an overall rate of 5,5 per cent. According to Anna<br />
Lebsak-Kleimans, CEO of <strong>Fashion</strong> Consulting Group (FCG), retail turnover for<br />
textile clothing and accessories reached a value of US $ 27,4 bn in 2008. In 2009<br />
the retail market value declined by 8 per cent to US $ 25,4 bn less a balance of<br />
US $ 2,7 bn for inventories of unsold merchandise. This reduction has brought the<br />
clothing retail turnover to a suggested US $ 22,7 bn in 2009. FCG reckons with a<br />
new growth emerging in 2010 of up to 4 per cent bringing the total to US $ 23,6<br />
bn.<br />
2.2. Real income rose by 13,4 per cent until May 2010<br />
3 rd Quarter 2010, <strong>The</strong> Global Blue Perspectives<br />
According to the World Bank, Russia is experiencing a "bumpy" recovery.<br />
Domestic demand is on the rise and budget execution is better than anticipated<br />
due to higher oil prices at around US $ 78 per barrel. This is much more than the<br />
US $ 57 per barrel, planned by the <strong>Russian</strong> Ministry of Finance for this year's<br />
budget. In May 2010 inflation was at 3,6 per cent and the real income of the<br />
population increased by 6,2 per cent against the month before. During the first<br />
five months of this year the average salary was up by 13,4 per cent in comparison<br />
with the same period of last year. Employers in Moscow are getting more aware of<br />
the necessity to increase wages and salaries to keep their workforce staying in<br />
their companies.<br />
4
2.3. Strong recovery of demand for new automobiles<br />
September 2010, Bloomberg Corporate Executive Board Research<br />
Car sales, an important indicator for consumer sentiment, reached their peak in<br />
Russia in April 2008, when around 300.000 cars were sold. Since then, there was<br />
a constant decline in sales of cars. <strong>The</strong> bottom line was reached in January 2010,<br />
when just 75.000 cars found customers. At the end of April 2010 car sales<br />
increased by 20 per cent against the same month of last year. In June 2010 car<br />
dealers reported a surge of 57 per cent compared to June 2009.<br />
2.4. Share of private clothing expenditures abroad on the rise<br />
August 2010, Global Blue Perspectives<br />
According to Tatiana Komissarova, Head of Higher School of Economics (HSE),<br />
Moscow, the numbers of <strong>Russian</strong>s who prefer to buy clothes abroad are<br />
"vigorously" growing from a suggested 20 per cent of consumers in 2009 to 30<br />
per cent in 2010. Preferred places for <strong>Russian</strong>s for shopping outside of Russia are<br />
single retail stores, shopping malls and outlet centres. <strong>The</strong> most popular shopping<br />
destinations for fashion abroad are Italy with an increase of 27 % against last<br />
year, Germany (+22%), Finland (+18%), France (+9%), Austria (+18%) and the<br />
United Kingdom (+11%). As it was stated by CitiBank from a study, 70 per cent of<br />
the payments for fashion abroad are paid by credit cards, owned by a male. Men<br />
more actively buy watches and jewellery costing more than € 1,000 per unit and<br />
often pay for women in luxury fashion stores. <strong>Fashion</strong> products are the most<br />
popular products to buy. <strong>The</strong> average <strong>Russian</strong> consumer has returned to spend<br />
15-17 per cent of monthly income on fashion, compared to 7-9 per cent spent by<br />
average Europeans.<br />
<strong>The</strong> <strong>Russian</strong> Federal Tourism Agency confirmed that more than 6,64 mn <strong>Russian</strong>s<br />
headed abroad during the first quarter of 2010, an 11 per cent increase compared<br />
to the first quarter of 2009. According to the Federal Agency of Air Transport, the<br />
highest number of passengers to outside Russia destinations are recorded at<br />
Moscow airports in June 2010 totalling 2,462 mn people, a 23 per cent increase<br />
against June 2009. <strong>The</strong>re are several reasons for the surge of <strong>Russian</strong>s travelling<br />
abroad: the perceived end of the crisis, pent-up demands, the increased value of<br />
the Rouble and easier travel rules. Spain for example now issues six month<br />
multiple visas and Italy and Greece announced similar steps. Turkey for any<br />
<strong>Russian</strong> and Eastern traveller, is a visa free destination likewise Egypt and the<br />
United Arab Emirates.<br />
3) <strong>Retail</strong> Development<br />
3.1. Rents for retail premises to move up in autumn<br />
July 6, 2010, shopandmall.ru<br />
According to Elena Afanayeva, head of the commercial real estate agency Prime<br />
Time Reality, she observes an upward trend in lease rates for retail stores which<br />
are estimated to increase by 10 to 15 per cent in autumn 2010. Landlords already<br />
signalled since July to revise rents in shopping centres and malls, in particular, for<br />
which demand at this time of market awakening is feasibly rising. Prospective<br />
tenants are said to be very active in catching the last competitively priced store<br />
facilities. <strong>The</strong> most attractive objects are still those of the middle market segment<br />
at leases going from € 500 to a maximum of € 2,000 per sq. meter per year.<br />
5
3.2. ARMANI COLLEZIONI opened mono-brand store in Ekaterinburg<br />
July 7, 2010, malls.ru<br />
As it was announced by Michail Kuznirovich, majority share holder of BOSCO DI<br />
CILIEGI, the company opened its fifth store for ARMANI COLLEZIONI at the<br />
shopping mall EVROPEYSKIY in the city of Ekaterinburg. <strong>The</strong> shop composing a<br />
retail space of 170 square meters, offers men's wear together with women's wear<br />
and accessories under this Armani second line brand. It is located in the<br />
neighbourhood of mono-brand stores for ETRO and HUGO BOSS, which also<br />
belongs to the network of luxury brand boutiques owned and managed by Bosco.<br />
A further store under ARMANI COLLEZIONI is operated by BOSCO at Koltzovo,<br />
the airport of Ekaterinburg.<br />
3.3. Growing GINGER teen-wear chain in the regions<br />
July 8, 2010, shopandmall.ru<br />
GINGER is a <strong>Russian</strong> retail chain selling trendy clothes for children and teenagers<br />
from 7 to 17 years. Up till present the company operates above 20 stores in<br />
regional cities like Ekaterinburg, Vladivostok, Kirov, Murmansk, Nizhnevartovsk,<br />
Zheleznagorsk; Irkurtsk and others as well as in Astana, Kazakhstan. GINGER<br />
announced plans to expand the network by 13 new stores across Russia. <strong>The</strong><br />
company further stated that it is in course of trading up its brand to become more<br />
attractive.<br />
3.4. METRO CASH & CARRY taken to court by clothing supplier<br />
July 9, 2010, advertology.ru/RBC Daily<br />
As it was reported by the head of corporate communication of the <strong>Russian</strong><br />
subsidiary of German Metro Cash & Carry Group, Oksana Tokareva, the company<br />
was taken to court by one of its largest clothing suppliers, LLC LAMIS, claiming to<br />
recover an amount of RUR 300 mn (€ 77 mn, US 100 mn) for not provided<br />
marketing services. According to the law firm Partnership, representing LLC Lamis<br />
at the Moscow Arbitration Court, the clothing supplier has delivered merchandise<br />
invoiced to Metro for the amount of RUR 1,2 bn. Metro paid RUR 900 mn and<br />
declared the balance of RUR 300 mn as a bonus due by the supplier for marketing<br />
services provided by Metro for Lamis. <strong>The</strong> company denied that such an<br />
agreement had been concluded with Metro. In this first stage of appeal, the court<br />
decided in favour of Metro. According to Maxim Puras, a partner in the law firm<br />
representing Lamis, a second appeal will be brought forward because there is no<br />
written agreement apart from the order placement ruling the right for bonus<br />
claims in favour of Metro.<br />
3.5. ADIDAS breaks customer relationship with SPORTMASTER and<br />
SPORTLAND<br />
August 2, 2008, malls.ru/Kommersant<br />
A dispute between ADIDAS and its largest <strong>Russian</strong> wholesale clients,<br />
SPORTMASTER and SPORTLAND on a decrease of discounts on turnover, new<br />
terms for invoice payments such as on adjustments of price reductions for<br />
inventories in favour of ADIDAS has lead to a break in the business relationship<br />
between the supplier and the two large <strong>Russian</strong> retail chains of sports goods and<br />
apparel. SPORTMASTER declared that the new terms proposed by ADIDAS would<br />
have lead to unprofitable working conditions for the company if they had been<br />
accepted. <strong>The</strong> break of cooperation does not extend to Russia alone but also to<br />
Ukraine. In turn ADIDAS is said to develop both markets independently, cutting<br />
the wholesale business down and to concentrate expansion on own stores. For this<br />
purpose ADIDAS will open its own <strong>Russian</strong> distribution subsidiary which will also<br />
6
take responsibility for the Belo-<strong>Russian</strong> market. According to Kommersant ADIDAS<br />
announced to open approximately 15-20 stores in the territory in 2011, all<br />
countries which are part of the new Customs Union which Ukraine is expected to<br />
join in 2011.<br />
3.6. <strong>Russian</strong> DETI childrenswear chain planning large scale expansion<br />
August 5, 2010, shopandmall.ru/ <strong>Retail</strong>er.ru/PMR<br />
This St. Petersburg based retail chain of childrenswear and accessories,<br />
specialising in super-and hyper-market formats of stores from 350 to 2,500<br />
square meters has recently opened its largest store of 3,000 square meter retail<br />
space under its brand DETI at Mega –Belaya Datcha in Moscow. In August 2010,<br />
the company has launched a further store of 1.500 square meters at the<br />
Muscovite shopping center KLUCHEVOY. According to <strong>Retail</strong>er.ru DETI looks at<br />
developing similar such formats in large cities of the regions. <strong>The</strong> DETI chain<br />
consists of 28 stores in St. Petersburg and 15 in Moscow. <strong>The</strong>re are rumours that<br />
ZDOROVIY MALYSCH another children's goods retail chain also based in St.<br />
Petersburg may go for a merger with DETI. This company operates 55 stores in<br />
St. Petersburg and two in Moscow. Both companies entered the Moscow market<br />
through the opening of stores launched under the name of DETI. Unable to solve<br />
the dispute over who has a stronger claim to the name, Zdoroviy Malysch is<br />
expected to acquire its competitor. Should the merger come to pass, the retailer<br />
will become a serious rival of DETSKIY MIR, the current leader on the <strong>Russian</strong><br />
children's goods market. DETI is estimated to be worth US $ 355 mn.<br />
3.7. STOCKMANN closing down old retail premises in St. Petersburg<br />
August 7, 2010, shopandmall.ru/ August 16, 2010, malls.ru<br />
After the opening of the shopping mall STOCKMANN NEVSKY CENTER on Nevsky<br />
Prospect at the end of 2010, the company will most probably shut its traditional<br />
STOCKMANN DEPARTMENT STORE which is also located on Nevsky Prospect. <strong>The</strong><br />
old premises were under negotiation between STOCKMANN and H&M as a second<br />
store facility for H&M on Nevsky Prospect, but the parties could not agree in lease<br />
terms, although H&M will move as anchor tenant into the new STOCKMANN<br />
NEVSKY CENTER. At the moment the average rent on Nevsky Prospect is in<br />
between RUR 3.500 and 5.000 (€ 90,-/US $ 117,-) per square meter per month.<br />
According to RIA Novosti, the <strong>Russian</strong> news agency, Finnish retailer STOCKMANN<br />
recorded sales in 2009, which fell by 16,3 per cent against 2008 to € 212,7 mn.<br />
Over the first six months of 2010 STOCKMANN registered earnings accounting for<br />
€ 97,5 mn compared to € 81,1 mn in the fist semester of last year. <strong>The</strong> operating<br />
loss declined from € 17,5 mn to € 10,2 mn. As of July 2010 STOCKMANN runs 5<br />
department stores in Moscow and one in St. Petersburg. Besides the department<br />
store business the company operates mono-brand clothing stores under the<br />
brands of Seppala, Lindex and Bestseller which are also controlled by STOCKMANN<br />
in the Ukraine.<br />
3.8. NEW LOOK to sign partnership with DELTA SPORT in Ukraine<br />
August 10, 2010, liveretail.ru<br />
British young fashion retailer NEW LOOK prepares its further expansion in Russia<br />
in co-operation with its master-franchiser DELTA SPORT since the beginning of<br />
2009. At present NEW LOOK covers Russia by a number of 14 stores. According to<br />
the terms of contract DELTA SPORT committed to open a total of 96 NEW LOOK<br />
stores in Russia over a period of 5 years. In July the British extended the cooperation<br />
with DELTA SPORT on the territory of Ukraine. DELTA sold its original<br />
distributionships for SPRINGFIELD, WOMEN'S SECRET (Cortefiel) and COLOURS &<br />
7
BEAUTY to <strong>Russian</strong> MFG Group, which DELTA owned before. According to<br />
Alexander Tomasevic, head of marketing of DELTA, the company will now fully<br />
concentrate on the expansion of NEW LOOK in Russia and Ukraine. Pricewise NEW<br />
LOOK positions itself on a comparative level with PEACOCKS and Inditex's<br />
BERSHKA and STRADIVARIUS. For example, a pair of jeans under the brand of<br />
NEW LOOK retails from RUR 799 to RUR 1.600 (US $ 26,80 to US $ 53, 60), and a<br />
jacket from RUR 999 to RUR 2.500 (US $ 33,50 to US $ 83,80). Experts say that<br />
entering the Ukrainian market at a competitive price level together with a vast<br />
range of collection being speedily updated appears to be very prospective venture<br />
at this time because there is a lot of abandoned retail space now available at<br />
shopping malls in Kiev and in other Ukrainian large cities offering low rent<br />
opportunities. <strong>The</strong> Ukrainian clothing retail market is expected to recover in the<br />
medium price segment from the crisis in 2011.<br />
3.9. Did heat wave and smog affect retail sales in Moscow?<br />
August 11 2010, malls.ru / ITMM<br />
<strong>Retail</strong> experts are undecisive whether or not the environmental catastrophy over<br />
July and August affected retail sales in the capital. Some argue that both heat<br />
wave and smog attacks came along during the key <strong>Russian</strong> holiday season, when<br />
Moscow is usually empty anyway. Others, like the management of EVROPEYSKY<br />
shopping mall in Moscow reported frequency of visitors increased from 4,28 mn<br />
people in June 2010 to 4, 35 mn in July, which is around 1 mn more visitors than<br />
in July 2009. Whereas retailers selling electric home appliances like air<br />
conditioners and fans made a life time fortune in selling such products out, dealers<br />
of consumer goods including fashion recorded a "slight drop" of sales. This was<br />
reported by RBC, a <strong>Russian</strong> market research news provider.<br />
3.10. Podium opening first department store in Moscow<br />
August 17, 2010, malls.ru/RBC Daily<br />
PODIUM FASHION GROUP, one of the leading <strong>Russian</strong> retailers selling premium<br />
and avantgarde clothing and footwear in Moscow and the regions, will open its<br />
first large format fashion department store at the renovated historical building of<br />
Hotel Moscow, located at the Manege Square in the centre of the capital. <strong>The</strong><br />
store is positioned on the second and the third floor of the building. It comprises a<br />
retail area of 6.600 square meters. "Our new store will present a number of<br />
unique and ambitious brands which have not been sold in Russia before"<br />
announced PODIUM through RBC Daily. PODIUM is the first anchor tenant in the<br />
building providing a total of 12.000 square meters retail space. PODIUM operates<br />
in the <strong>Russian</strong> fashion market since 1994 and runs 24 multi-brand concept stores<br />
on a total area of 14.000 square meters in Moscow and other selected <strong>Russian</strong><br />
large cities. <strong>The</strong> portfolio of PODIUM comprises more than 350 brands. In addition<br />
to clothing and footwear PODIUM also sells luxury jewellery, watches, home<br />
furnishings, perfumes and cosmetics. <strong>The</strong> company goes international as well.<br />
Two boutiques selling jewellery were opened in Paris and Courchevel in France.<br />
3.11. MANOUKIAN to launch first mono-brand store at GALLERY MALL<br />
August 17, 2010, liveretail.ru<br />
As it was reported by the real estate broker Jones Lang LaSalle on August 16,<br />
2010, the Californian BCBG <strong>Fashion</strong> Group, owned by MAX AZRIA, will open a<br />
store on 170 square meters under the brand of MANOUKIAN at the new shopping<br />
mall GALLERY in St. Petersburg, located at the Moscow Railway Station. <strong>The</strong> new<br />
mall is planned to start operations at the end of 2011. According to Nadejda<br />
8
Shpagina, Director General of DIALMA, the franchise partner of MANOUKIAN, the<br />
store will extend on two floors. Jones Lang LaSalle also announced, that three<br />
British fashion brands, WAREHOUSE, FRENCH CONNECTION and RIVER ISLAND<br />
have chosen GALLERY as location for the opening of mono-brand stores. Lease<br />
contracts have been signed by the master franchiser for WAREHOUSE and<br />
FRENCH CONNECTION named CENTERPOINT and SK BREEZE, the developer of<br />
GALLERY. As it was stated by Alexander Golobov, regional development manager<br />
of CENTERPOINT, the two stores will cover a retail space each of around 180<br />
square meters. Maratex, franchise partner for Russia and Ukraine for RIVER<br />
ISLAND, will join the other three brands at GALLERY and will open a store under<br />
this brand on a floor space of 800 square meters. In addition to such brands the<br />
following have concluded lease contracts for GALLERY shopping mall: ESPRIT;<br />
LADY & GENTLEMAN (multi-brand); NEW LOOK; BENETTON; SNOW QUEEN (multibrand);<br />
MANGO; TATUUM; MOTIVI; TERRANOVA; CALLIOPE; LACOSTE among<br />
others. <strong>The</strong> price level environment at GALLERY follows the trend in Russia<br />
focusing on "democratic" to upper medium positioned clothing.<br />
3.12. TOM TAILOR getting independent from FDLab<br />
August 18, 2010, malls.ru/Kommersant<br />
As Kommersant writes, "<strong>Fashion</strong> Distribution Lab (FDLab), one of the largest<br />
apparel distributors in the <strong>Russian</strong> market is once again reviewing its portfolio of<br />
brands and stops working in building store networks for German TOM TAILOR and<br />
British WAREHOUSE". <strong>The</strong> separation was concluded in July 2010. TOM TAILOR<br />
will continue to work in the <strong>Russian</strong> market independently. WAREHOUSE owned by<br />
Aurora <strong>Fashion</strong>s, went under the roof of CENTERPOINT, as new <strong>Russian</strong> franchise<br />
partner. FDLab confirmed continuation of its partnerships with MARC O'POLO,<br />
COAST, MOA and other foreign brands. <strong>The</strong> separation from WAREHOUSE for<br />
whom FDLab had opened four stores was reasoned by lacking profitability. In the<br />
case of TOM TAILOR, FDLab claimed that the wholesale business was profitable<br />
but not the feasibility of shop development.<br />
3.13. MANGO strengthens market presence in Russia<br />
August 12, 2010, malls.ru/retailer.ru/shopandmall.ru<br />
Spanish clothing retailer MANGO who operates independently on the <strong>Russian</strong><br />
fashion market, is reported by shopandmall to continue concentrating on its own<br />
retail store development but the company will not give up development of<br />
franchising. Until the end of 2010 MANGO will open seven new stores, three of<br />
which to be located in St. Petersburg, two in Moscow and one of each in Voronezh,<br />
Saratov and Ekaterinburg. At the end of July 2010 MANGO counted a network of<br />
64 mono-brand stores all across Russia with a concentration on Moscow and St.<br />
Petersburg. Next year the company implements an expansion plan to open<br />
smaller scale stores of 100 to 150 square metes in mid-sized cities of a population<br />
of 300.000 to 500.000.<br />
3.14. Voronezh delaying construction of IKEA's new MEGA MALL<br />
August 26, shopandmall.ru<br />
According to RBC Daily, over the past 8 months IKEA did not open any new<br />
commercial and entertainment centers under its brand MEGA MALL, due to<br />
bureaucratic interference imposed on IKEA by regional administrations. At this<br />
moment IKEA keeps struggling with the local bureaucracy of Voronezh to obtain<br />
approval for the start of construction of its MEGA MALL project in Voronezh. A<br />
spokesman of IKEA said that the company does not expect the permit until the<br />
end of 2011 due to problem of "internal nature". IKEA faces similar problems for<br />
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the opening of its MEGA MALLS in Samara and Ufa, where constructions are<br />
almost finished but approvals for specific security and technical installations get<br />
delayed since months by the competent authorities of both cities. As it also<br />
became known, IKEA faces problems to agree with building contractors on the<br />
terms of construction for the fourth MEGA MALL in Moscow, close to the Mytishi<br />
subway station.<br />
3.15. BOSCO DI CILIEGI likely to sell 45 per cent of stake to GUM<br />
August 26, 2010, malls.ru<br />
Mikhail Kuznirovich, owner of a controlling stake in BOSCO DI CILIEGI, the<br />
<strong>Russian</strong> luxury retailer, may sell 45 per cent of his shares in Bosco to JSC GUM<br />
TRADING HOUSE, a company operating GUM SHOPPING MALL, in which<br />
Kuznirovich also holds a majority stake. <strong>The</strong> deal involves 392.000 shares valued<br />
at RUR 5,5 bn (€ 141 mn /US $ 184 mn). Bosco DI CILIEGI operates around 100<br />
luxury fashion stores in Russia for top brands like ETRO; KENZO; MAX MARA;<br />
MOSCHINO; HUGO BOSS; LA PERLA; ICEBERG; PAUL SMITH; BARBARA BUI and<br />
others including shopping malls like GUM; PETROVSKY PASSAGE; VESNA<br />
SHOPPING CENTER; NOVINSKY PASSAGE in Moscow and mono-brand stores in St.<br />
Petersburg, Samara, Ekaterinburg,, Novosibirsk and Milan (Italy). Other retail<br />
assets of Bosco include ARTICOLI, a perfumery and cosmetics chain, beauty<br />
salons under ARTICOLI SALON SPA; DIOR BEAUTY INSTITUTE, cafes and<br />
restaurants, a dental clinic and a pharmacy. <strong>The</strong> reason behind this financial<br />
transaction is seen by experts as an attempt to provide cash for Bosco to finance<br />
the chain of OLYMPIC stores together with sourcing and production of OLYMPIC<br />
clothing for which the company took responsibility two years ago in its role to act<br />
as a main sponsor for the Olympic Winter Games in Sochi 2014. Behind<br />
Kuznirovich stands Alpha-Bank, the largest privately held <strong>Russian</strong> commercial<br />
bank in which he is a minority shareholder.<br />
3.16. MARKS & SPENCER anchors at GAGARINSKY MALL in Moscow<br />
August 30, 2010, malls.ru<br />
British clothing retailer MARKS & SPENCER signed a lease contract with Jones<br />
Lang LaSalle, exclusive brokers for the new upcoming shopping and entertainment<br />
center GAGARINSKY, being under construction on Vavilova Street in Moscow. <strong>The</strong><br />
store will comprise 1.310 square meters of a total retail reserved area of 70.000<br />
square meters. According to Jones Lang LaSalle anchor tenants of the new<br />
complex are AUCHAN on 24.000 square meters, SPORTMASTER on 5.300 square<br />
meters, DETSKIY MIR; LADY & GENTELMAN; MANGO; ETAM; ACCESSORIZE;<br />
INTIMISSIMI; CALZEDONIA; ADIDAS; REEBOK; LEVI'S; LEE; WRANGLER;<br />
CROCUS FASHION; NICE CONNECTION; GLORIA JEANS and many other medium<br />
priced brands. Investor in GAGARINSKY is a joint venture between French Auchan<br />
and a Moscow based Machine Tool Plant named Ordzhomikidze, which is quite an<br />
unusal alliance for Russia.<br />
4) Shopping Mall Development<br />
4.1. Shopping Center JUNE opened in Cherepovets, North-West-Region<br />
July 6, 2010, mallhouse.ru<br />
JSC REGION DEVELOPMENT opened its third shopping and entertainment complex<br />
under the name of JUNE in Cherepovets, one of the largest towns in the North-<br />
West region of Russia. This city has a population of 311,869. <strong>The</strong> center is the<br />
first venue of its kind in Cherepovets. <strong>The</strong> grand total of the centre comprises<br />
46.000 square meters providing a retail area of 30.000 square meters. Anchor<br />
tenants are LENTA, the <strong>Russian</strong> grocery hypermarket chain (5.800 m²), seven<br />
cinemas on 2.800 square meters and M.VIDEO, a large <strong>Russian</strong> retail chain of<br />
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electronics and household appliances on 2.700 square meters. <strong>The</strong> balance of the<br />
retail space is held by clothing, footwear and sports gear multiples of <strong>Russian</strong> and<br />
international brands together with cafes and fast food restaurants. JUNE brings<br />
more than 1.000 new jobs to the city of Cherepovets. According to Amiran Z.<br />
Muftozoev, Director General of the developer JSC REGION, this company operates<br />
two more shopping and entertainment centres under the name of JUNE in St.<br />
Petersburg on a gross lease area of 62.000 square meters as well as in<br />
Krasnoyarsk, Siberia, on 75.000 square meters.<br />
4.2. OZ-MALL under construction in Krasnodar on 46 hectares<br />
July 7, 2010, mallhouse.ru<br />
According to Jones Lang LaSalle this real estate broker has taken exclusive lease<br />
promotion rights for a new shopping and entertainment center coming up in<br />
Krasnodar in the South-West of Russia under the name of OZ-MALL. <strong>The</strong> first part<br />
of the venue is opening in autumn of 2010, the second is to open in March 2011.<br />
OZ-MALL belongs to the largest projects of its kind all across Europe. <strong>The</strong> total<br />
land area comprises 46 hectares with a gross lease space of 165.000 square<br />
meters. Anchor tenants moving in autumn of this year are German OBI, the DIYchain,<br />
KIKA, O'Key, the <strong>Russian</strong> grocery chain and French DECATHLON, the<br />
sports' retailer. Developer of the center is AIM PROPERTY DEVELOPMENT which<br />
plans to continue investing in large scale shopping and entertainment centers in<br />
Russia.<br />
4.3. Owners of EVROPEYSKY MALL in Moscow investing in PAVELETSKAYA<br />
July 8, 2010, malls.ru/RBC daily<br />
As it was reported by RBC Daily, God Nisan and Zarah Iliev, owners of the most<br />
frequented shopping mall EVROPEYSKY in Moscow, have taken a majority control<br />
stake of the <strong>Russian</strong> investment and industrial group EURASIA. <strong>The</strong> largest<br />
development project of this group is construction of a multifunctional shopping<br />
and entertainment complex under Paveletskaya Square in Moscow. <strong>The</strong> total area<br />
of the complex comprises an approximate 120.000 square meters incorporating a<br />
retail area of 35.000 square meters. Begin of construction of the project was<br />
delayed several times but with the new investors the City Government of Moscow<br />
expects construction to take off shortly.<br />
4.4. Second GOLDEN PARK MALL to open in Novosibirsk<br />
August 3, 2010, malls.ru<br />
As it was announced by the developer USPEH in Novosibirsk, the second shopping<br />
and entertainment centre under the name GOLDEN PARK will open on Ocotber 15,<br />
2010, in the West-Siberian capital of Novosibirsk. <strong>The</strong> gross lease area of the<br />
center covers 30.000 square meters. Anchor tenants are French AUCHAN,<br />
L'ETOILE cosmetics, O'STIN, the young fashion brand belonging to SPORTMASTER<br />
Group and others. O'STIN was created by SPORTMASTER to substitute s'OLIVER<br />
from which SPORTMASTER separated as master franchiser and distributor in 2008.<br />
4.5. KOMSOMOL MALL inaugurated in Ekaterinburg<br />
August 6, 2010, malls.ru<br />
A new shopping and entertainment center has come up in Ekaterinburg, the<br />
capital of the Urals, under the name KOMSOMOL. According to the developer DVI<br />
Group, the center covers 67.000 square meters. 30 retail stores moved in over<br />
the summer months to participate in the official inauguration set on September<br />
11/12 of this year. Anchor tenants are the <strong>Russian</strong> grocery hypermarket<br />
ROUNDABOUT, M.VIDEO, the consumer electronics and household equipment<br />
chain, SPORTMASTER, L'ETOILE, a large fitness center among other tenants. At<br />
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the end of August 2010 the developer reported a lease contract overage of 80 per<br />
cent of the disposable retail area.<br />
4.6. St. Petersburg in second place of shopping mall implementation in Europe<br />
August 18, 2010, malls.ru<br />
At the end of this year St. Petersburg will reach the second highest level of square<br />
meters provided by shopping centers in the whole of Europe. This was reported by<br />
the <strong>Russian</strong> news agency Infoline. Whereas at present the total area of shopping<br />
centers in St. Petersburg comprised 1,302 mn. square meters, the openings of the<br />
new shopping and entertainment centers GALLERY, SUMMER and STOCKMANN<br />
NEVSKY CENTER will add some 500.000 square meters providing a total of 1,8 mn<br />
square meters. Moscow holds 2,648 mn square meters and the capital will soon<br />
reach 3 mn square meters, the largest accumulation in Europe. St. Petersburg is<br />
to surpass cities like Stockholm (1,344 mn square meters) or Berlin (1,466 mn<br />
square meters). <strong>The</strong> top ten in Europe further includes Milan, Barcelona, Warsaw,<br />
London, Rome and Prague.<br />
Stuttgart/ Düsseldorf/Moscow<br />
September 29, 2010<br />
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