The Russian Fashion Retail Market - CPM Moscow

no.17/September/October 2011 the profashional bi-monthly market monitor
The Russian Fashion Retail Market
macro macro-economics macro macro economics / / consumer consumer behaviour/ behaviour/ retail retail development/ development/ commercial commercial real real estate
estate
November November 222,
2 , 2011 2011
published by ITMM for IGEDO COMPANY
Issues addressed in this September/October Edition 2011
1. Economics
1.1. Key Macro-Economic Indicators, First Eight Months 2011
1.2. Moscow Financial Markets not immune to Debt Crisis
1.3. “Russia is a civilized Market”: Putin in Sochi
1.4. Sberbank receives Trade Finance Loan from JP Morgan
1.5. German Fashion Industry with moderate Expectations on Russian Market
1.6. Majority of CIS-States sign Free Trade Zone Agreement with Russia
1.7. Russia can live without WTO Access: Medvedev
1.8. Russia better prepared for new financial Crisis than 2008
1.9. Russian Ruble remains stable Currency
1.10. Review on Russian Fashion Retail Forum September 2011
2. Consumer Characteristics
2.1. Working Life in the Russian Economy ends at 40
2.2. 10 Percent of Russian dislike Muscovites
2.3. One Third of Russians buys online
2.4. Russia overtakes Germany in Internet Usage
3. Retail Development
3.1. Swedish H&M opens fifth Store in St. Petersburg
3.2. Italian CALZEDONIA launches third TEZENIS-Store in St. Petersburg
3.3. French LOUIS VUITTON increased Russian Revenues by 27 Percent
3.4. Finnish STOCKMANN to terminate Danish BESTSELLER Franchising
3.5. American WALMART engaged Lev Khasis from X5 Retail Group
3.6. Outlet Village BELAYA DACHA attracting German ESCADA and VAN LAACK
3.7. Russian Apparel Discounter FAMILIA to increase Outlet Numbers
3.8. American VICTORIA’S SECRET opened first Store in Moscow
3.9. Footwear Retail analysed in 35 Russian Cities
3.10 German FALKE expanding Shop-Presence in Russia
3.11. German TOM TAILOR Mono-Brand Retail pushed by Franchising
3.12. German ADIDAS Group aiming at 1.200 Stores in Russia until 2015
3.13. European Vertical Apparel Retailers flooding to City of TULA
3.14. American VF to open first own Stores of LEE and WRANGLER
3.15 German LASCANA setting a Multi-Channel Expansion Focus on Russia
3.16. LLC WILD ORCHID and LLC BUSTIER not bankrupt
concepted by: published by: as marketing tool for: all rights reserved by:
Editor-in-Chief: Reinhard E. Döpfer, E-Mail: doepfer@itmm-gmbh.de, Tel.: +49 (0)711-933 29 94 44
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4. Shopping Mall Development
4.1. New RIO Shopping Center opened in the City of Vologda
4.2. MANDARIN MALL to open in Sochi in Summer 2012
4.3. RODNIK Shopping Center in Chelyabinsk started Operations
4.4. New Shopping Center SUNNY to open in Solnechnogorsk
4.5. AFIMALL CITY Shopping Mall in Moscow: Reasons for Failure
1) Economics
1.1. Key Macro-Economic Indicators, First Eight Months 2011
Source: ROSSTAT.RU
Whereas Gross Domestic Product (GDP) in Russia increased by 3,7 % real over
the first semester of 2011 against the same period of last year, data on the
development of GDP for July and August 2011 are not yet available. Instead, key
indicators determinating the overall GDP development have been published by
cisstat for the first two months of the third quarter of this year.
According to this official source Volume of Industry Production in Russia
turned out week over this period at an increase of 1,1 % in August against July.
Capital Investments however rose at a rate of 12,7 % compared to the month
before. Retail Trade Turnover showed a fairly nice upward trend at 3,8 % on a
month – to – month basis. The Consumer Price Index as indicator for inflation
fell by 0,2 % in August against July 2011. The number of Unemployed decreased
by 6,9 % at the end of August compared to the end of June 2011. Finally the
exchange rate of Russian Ruble appreciated in August 2011 to RUR 28,86 for
one US $ (+ 4,6 %) and to RUR 41,84 for one € (+ 5,7 %) against the average
rate valid for July.
1.2. Moscow Financial Markets not immune to Debt Crisis
September 1, 2011; rbth.ru; Vladimir Ruvinsky
Russians are looking at their financial markets more sensitively because they still
carry the fear of stepping into a second wave of crisis which was forecasted
amidst the crisis year 2009 but did not happen at the time. Since August 2011 the
Russian markets have moved into a period of greater instability, with daily MICEX
fluctuations reaching 8 percent. The slump on the Russian Stock Market was
triggered by Standard & Poor’s downgrading of the US credit reating and
continued its volatility due to the European Debt Crisis over September and
October. Andrey Kykk, Chief Trader of UralSib Bank commented the situation in
saying: “what we see is a paradox with investors moving from shares to bonds”,
Alexey Dolgikh, Vice President of Troika Dialogue said: “There is still a lot of
uncertainty, big investors are confused and are sitting on loads of cash. So there
will be a lot of volatility; the market is emotional, but we do not expect a slump”.
1.3. “Russia is a civilized Market”: Putin in Sochi
September 16, 2011; Pravda.ru
Prime Minister Vladimir Putin, who chaired an international investment forum in
mid-September at the Southern City of Sochi, urged foreign investors not to be
afraid of Russia. He claimed Russia to have developed as civilized partner over the
past ten years. He said ”We are not going to steal any technologies, we simply
want full-fledged cooperation with our investors”. He pointed out that Russia’s
state-run companies have launched investment programmes totalling RUR 700
billion (US $ 25 bn.) this year. Putin also gave an outlook on the economic
perspectives of the country. According to the Prime Minister, the speed of Russia’s
economic development will account for around 4 percent. He expects that the
level of the economy will reach the pri-crisis level in 2012. The inflation rate in
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2011 is not likely to surpass 7 percent, Putin said. He also promised that this year
the government will not face a budget deficit.
1.4. Sberbank receives Trade Finance Loan from JP Morgan
September 21, 2011; rt.com/business
JP Morgan will provide a five-year trade finance loan to Sberbank, worth US $ 100
million, to facilitate pre-export finance for the Russian oil and gas sector. Jeremy
Shaw, head of JP Morgan’s trade finance business commented the deal in saying:
“JP Morgan’s loan to Sberbank comes at a time of uncertainty about the
availability of liquidity in Europe and is testimony to our trusted relationship with
Sberbank, the strength and capacity of our trade finance capabilities, and our
ongoing commitment to the Russian market”. On Sberbank’s side, Andrey Ivanov.
global head of trade finance, praised the agreement, which helps Sberbank’s
clients to better manage supply-chain risk and support their ongoing export sales.
1.5 German Fashion Industry with moderate Expectations on Russian Market
October 6, 2011; ITMM GmbH
At the second annual meeting of its Industry Task Force Group monitoring the
Russian Fashion Retail Market, the Chairman of this conference, Reinhard E.
Döpfer observed a rather reluctant sentiment among participants on the
development perspectives of fashion retail in Russia. “Although the majority of our
members returned from CPM in Moscow with good, partly excellent pre-order
results for the season Spring/Summer 2012, their outlook on the present retail
season Autumn/Winter is not euphoric”, Döpfer said. The reason for the modest
expectations is explained by the very slow take-off of fashion retail sales during
the month of September and a rather dull performance at the points of sale over
October 2011. “It looks as if the average Russian consumer keeps delaying
purchases until the first discounts get advertised”, explained Döpfer. He also said
that there seem to be less Russian “fashionista” ready to buy fresh seasonal
clothes at regular prices at the beginning of a season. “We are getting more and
more aware of this phenomenon now spreading across Russia” said Stefan Lange,
Country Sales Manager of BRAX and a permanent member of the task force
group. According to Lange, his company increases efforts to support their Russian
retail customers to get more attractive for their clients through improved visual
merchandising and event-marketing. “We had a good experience with some of our
retail customers by organising Oktoberfest events at stores. In some cases day
revenues tripled, just from doing the events” said Lange. He strongly believes in
the drawing power of better brand promotion, PR, communication and event
marketing to fight the ongoing deterioration of the competitive environment in the
Russian Fashion market, caused by the dramatic expansion of vertical fast fashion
retail chains together with increasing online retail.
1.6. Majority of CIS-States sign Free Trade Zone Agreement with Russia
October 19, 2011; RIA Novosti St. Petersburg
The majority of the Commonwealth of Independent States (CIS) have agreed to
set up a free trade regime after two decades of long, heated, but constructive
negotiations. This was announced by Prime Minister Putin on October 18, 2011.
CIS includes Armenia, Azerbaijan, Belarus, Kazakhstan, Kyrgyzstan, Moldova,
Russia, Tajikistan, Turkmenistan, Uzbekistan and Ukraine. Putin said that the
document was signed by all the CIS states except Azerbaijan, Uzbekistan and
Turkmenistan, which will consider signing the agreement by the end of the year.
“The agreement cancels export and import duties on certain groups of goods.
There are still certain exemptions” but they will gradually become a thing of the
past," Putin said. The CIS prime ministers also signed an agreement on the basic
principles of currency regulation and currency controls in the CIS.
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1.7. Russia can live without WTO-Access: Medvedev
October 19, 2011; RIA Novosti
The conclusion of the Free Trade Zone Agreement between Russia and the
Majority of CIS-countries has obviously encouraged President Medvedev to once
again argue about the pros and cons of Russia’s access to the World Trade
Organization (WTO). “If we are told that we are not fit for WTO Membership for
some reason, Russia can live without it” Medvedev said. This statement was
obviously addressing the permanent objections made by the Republic of Georgia
against Russia’s WTO-access, resulting from the Russia-Georgian conflict on trade
issues related to the Abkhazia and South-Ossetia case. Whereas Georgia made its
access to WTO in the year 2000, Russia, the only major economy not included in
this organization, has been negotiating on membership since 18 years. However
since Switzerland took initiative to act as a mediator between Georgia and Russia
at the end of October 2011, experts in Geneva forecast an agreement on Russia’s
Access to WTO in early November, this year.
Effects of Russia’s WTO-membership on market access conditions of Textiles and
Clothing to the Customs’ Union of Russia, Belarus and Kazakhstan are not yet
known. According to Luisa Santos, Head of International Trade of EURATEX,
Brussels, details are expected from the next WTO Ministerial Meeting in mid-
December of this year.
1.8. Russia better prepared for new Crisis than 2008
October 27, 2011; RINA Novosti
As a speaker at the Russian Money Market Forum 2011, Deputy Finance Minister,
Alexey Savatyugin, made some important statements on the prevention of a new
financial crisis, possibly arising from the Debt Crisis in Europe and the US.
Savatyugin made it clear, that the 2008 crisis and its effects on the real economy
were caused in Russia by tough financial problems of private enterprises,
whereas, to-day, the principal threat results from budget excess of sovereign
states. “Even in a worst-case scenario we are better prepared today than in
2008”, Savatyugin said. At present Russia has the entire portfolio of tools
available to effectively respond to a possible crisis”, he continued. Concerning a
possible slump of oil and gas prices, the Deputy Finance Minister commented on
two scenarios: “If the price of oil depreciated to US $ 90 per barrel, the Central
Bank of Russia has the appropriate instruments at hand to deal with the situation”
Savatyugin explained. “If it falls to a low of in between US $ 75 and US $ 60 per
barrel, additional capitalization of system – critical banks and financial support of
enterprises in the real economy would be required”, he said.
1.9. Russian Ruble remains stable Currency
October 29, 2011; RIA Novosti
“Russians should not worry over currency fluctuations”. This statement was made
by First Deputy Prime Minister, Igor Shuvalov, in an interview with the federal TVchannel
ROSSIYA-1 on October 29, 2011. As Shuvalov further informed the
public, the Ruble has developed into a stable currency, since 2009, having the
same risk level as the Euro. He added that certain fluctuations of the Ruble were
due to changes of prices for oil and gas, Russia’s dominant expert commodities.
Shuvalov declared that if such prices depreciated, the government would use
reserve funds to stabilize the Ruble but will not cut budget expenses in 2012.
1.10. Review on Russian Fashion Retail Forum September 2011
October 31, 2011; IGEDO COMPANY
Embedded in the September-edition of CPM, the 8 th consecutive Russian Fashion
Retail Forum took place on September 6 and 7, 2011 at Expocenter.
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General Theme of the Forum was “Fashion & Internet: New Prospects, New
Challenges” for the Fashion Industry in Russia. The organizers, IGEDO Company
in cooperation with Fashion Consulting Group (FCG), Moscow, and ITMM GmbH,
Stuttgart, have posted a summary on the event in the Internet accessible under
the link of: http://www.cpm-moscow.com/cpm/en/RFRF.html
This Review illustrates all key speakers, sponsors, presented themes and quotes
from participants. The same link also guides interested parties from the global
fashion manufacturing and retailing industries to the Preview of the 9 th Russian
Fashion Retail Forum, coinciding with CPM on February 29 and March 1, 2012
under the general theme of “Multi-Channel Fashion Marketing Opportunities
in Russia”. The link addresses the Preliminary Programme as well as four
different Sponsorship Schemes offered by IGEDO.
2.) Consumer Characteristics
2.1. Working Life in the Russian Economy ends at 40
August 23, 2011; Kommersant, Alexey Boyarsky
Although people around the world suffer from age discrimination, this problem is
especially acute in Russia, where corporate culture does not value longer built
skills or experience:
“Vacancy for general director – under the age of 40 …; head of sales department –
under the age of 35…;office-manager – under the age of 30…”. On the recruitment
website Superjob.ru, 54 percent of the jobs advertised include age as a limitation
for potential candidates. Yevgenia Shatilova, project manager at Rabota.ru says
that age preferences are listed in 75 percent of job advertisements, and even if
age is not specified, in most cases it is implied.
“I have three separate degrees – in teaching, law and management. Starting in
2002, I was head of an HR department, and I was constantly building on my
qualifications,” said Ludmila F. “Now I am looking for a new job and I have sent
my CV off to 34 recruiters. But I didn’t specify my age on my CV. I got replies
from 19 potential employers. But when they found out that I was 55, 14 of them
openly admitted that they had age limits.”
According to Michael Germershausen, Managing Director of Antal Russia
recruitment company, vacancies for qualified specialists and middle and upper
management staff are very limited for job seekers in the 45 to 50 age range.
“Employers still prefer young specialists for most positions,” said Germershausen.
“The main reasons for this are the problems of the older Russian generation, their
inadequate grasp of modern economics, their weak knowledge of foreign
languages, and the fact that it is hard for them to adapt to modern corporate
culture and management style. For example, the unofficial age limit for mid-level
professionals in the finance sector is 35-38 years. Employers think that if the
candidate is already in his or her 40s and was not yet promoted to directorship
then there must be something wrong with applicants, either they are not
professional enough or they lack ambition.”
2.2. 10 Percent of Russians dislike Muscovites
September 7,2011; Pravda.ru/economics
In a poll conducted in August 2011, Romir Research Center conducted an opinion
poll among 1.500 citizens living in towns of a population of more than 100.000
inhabitants all across federal Russian districts. Objective of the survey was to find
out whether the common claim that the majority of citizens in the Russian regions
“hate” Muscovites, is still valid to-day. As the poll turned out, just every tenth
Russian dislikes Muscovites, but not the majority. In certain of the economically
most developed regions of Russia, like Western Siberia the share of people
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disrespecting Muscovites is above average at 15 percent; in Southern Russia the
percentage is 14 and in the North-West and the Urals 12 percent of people detest
Muscovites.
2.3. One Third of Russians buys online
October 31, 2011; WZIOM.RU
According to a survey of the National Center of Opinion Research, WZIOM,
conducted in September 2011, close to one third of Russians have gained
experience in purchasing online. 49 % of Russians are using the Internet
occasionally, 30 % are surfing daily. The most active age group is young people
from 18 to 24, out of which 70 % are Internet users. 29 % of these have
purchased from the Internet. Their favourite product category is clothing and
shoes. 9 % of this age group shopped such items online, followed by Consumer
Electronics; Books; Multimedia such as CD’s and DVD’s and Computer Games (7
% per each category) as well as small household equipment (6 %). The poll was
conducted among 1.600 persons throughout 138 towns in 46 Russian regions.
2.4. Russia overtook Germany in Internet Usage
September 2011M; comScore (published on November 14, 2011)
Com Score as part of British EMEA-group is a global leader in measuring the
digital world and is a preferred source of digital marketing intelligence. According
to the September survey on Internet usage in 18 European countries, Russia
overtook Germany as the market with the highest number of unique visitors
online. Whereas the Russian Federation accounted for 50,810 million unique
visitors in September 2011, Germany is now ranking in second position and
arrived at a total of 50,139 unique visitors, followed by France (42,349 mn.)and
the UK (37,197 mn.). However the UK is the country in which the highest amount
of average visiting hours was reached at 35,6 hours per visitor per month of
September 2011. The second highest hours counted applied to the Netherlands
(33,4 hrs.) and Turkey (32,2 hrs.). Russians spent 22,4 hrs. on internet surfing.
3.) Retail Development
3.1. Swedish H & M opens fifth Store in St. Petersburg
September 6, 2011; fashioner.ru
CITY MALL Shopping & Entertainment Centre in St. Petersburg will host the fifth
store of the Swedish Clothing Retail Chain Hennes & Mauritz on a floor space of
2.600 square meters in November 2011. The total gross lease area of this new
mall composes 100.000 square meters, providing a total of 140 retail stores.
70 % of this capacity was leased in September. The contract with H & M will
increase lease coverage to 90 percent.
At present H & M is operating four stores in St. Petersburg located on 80, Nevsky
Prospekt; at Galleria Shopping Center on 42, Ligovsky Prospect, MEGA Dybenko
on Muranskoe Highway and at the Nevsky Center on 114, Nevsky Prospect,
belonging to Finnish STOCKMANN Department Stores.
H & M’s total Russian market coverage consists of 16 stores, located in Moscow
and Moscow Region (7 Stores), Ekaterinburg (2 Stores), Kazan, Rostov on Don
and Voronezh, allocating one store each. Retail space composes around 35.000
square meters in all.
3.2. Italian CALZEDONIA launching third TEZENIS Store in St. Petersburg
September 6, 2011; shopandmall.ru
Verona based CALZEDONIA, a globally operating retail chain specializing in
hosiery, lingerie and swimwear under the trade marks of CALZEDONIA,
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INTIMISSIMI, TEZENIS and FALCONERI, will open its third store in the TEZENIS
format on 40, Sadovaya Road in St. Petersburg in November 2011. TEZENIS
retails linens and homewear. The store covers a retail space of 160 square meters
and replaces the former ZARINA BE FREE Store whose lease contract expired this
year. To-date CALZEDONIA Group operates 24 further stores under its different
brands in St. Petersburg. Nationwide Calzedonia controls a network of mainly
franchised stores in 50 cities of Russia. In its home market, Italy, the company
counts 1.500 stores and further 1.300 on a global scale.
3.3. French LOUIS VUITTON increased Russian Revenues by 27 Percent
September 8, 2011; russiaretail
Louis Vuitton Vostok, part of the French LVMH group, increased its Russian
revenues by 27% to RUR 2.84bn (US $ 96m) in 2010. The four luxury fashion
stores in the country brought Louis Vuitton sales profits of RUR 454m (US $
15,35m), a growth of 58% year on year, with net profits increasing by 69% to
RUR 339m (US $ 11,5m). However, the share of Louis Vuitton Vostok against the
global turnover of LVMH accounts for just 0,3 percent.
3.4. Finnish STOCKMANN to terminate BESTSELLER Franchising
September 9, 2011; fashioner.ru/inditex
In addition to its department store retail activities in Russia Finnish STOCKMANN
acts as master franchiser on behalf of Danish BESTSELLER Group and on behalf of
other Scandinavian brands. As the relative agreement between STOCKMANN and
BESTSELLER will end on December 31, 2012, BESTSELLER will start developing its
own network of stores independently, in 2013. At present STOCKMANN controls
20 stores for BESTSELLER in Russia under the trade marks Jack & Jones, Vero
Moda & Only. Besides seven department stores in Russia STOCKMANN
implemented 83 single-brand franchise stores across the country. Revenues of
STOCKMANN Russia increased by 45 percent in August 2011 on a year-on-year
basis.
3.5. American WALMART engaged Lev Khasis from X5 Retail Group
September 13, 2011; russiaretail.com
The ex-CEO of the largest Russian grocery retailer, X5 Retail Group, Lev Khasis,
has taken up the position of senior vice president and chief leverage officer for US
international retailer Walmart, on October 1, 2011. Mr. Khasis will be responsible
for the acquisition of potential Russian companies. There is speculation that X5
may become one of the m & a targets. Mr. Khasis will be reporting directly to the
head of Walmart International, Dug Macmillan.WalMart has been researching the
Russian retail market for the last few years and shown a serious interest in
entering it. Among Russian companies which were allegedly potential targets for
the US retailer were grocery chain Lenta, grocery hypermarkets Karusel (owned
by X5 Retail Group) and Ramstore supermarkets (later rebranded to Citystore).
However, the most significant potential acquisition was in late 2010, when
WalMart lost out to X5 for taking over “Kopeyka”, the Russian grocery discounter.
Although WalMart has been allegedly determined to enter the Russian market, this
time, it has made a significant step, hiring one of the most successful business
managers in the country. With Khasis’ in its team, WalMart is in a much better
position to levarage the Russian market than ever before.
3.6. Outlet Village BELAYA DACHA attracting German ESCADA and VAN LAACK
September 13, 2011; malls.ru
According to CUSHMAN & WAKEFIELD, Anglo-American real estate brokers and
consultants, the first outlet village under the name of BELAYA DACHA is planned
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to open near Moscow, in April 2012. Among the tenants announced by CUSHMAN
& WAKEFIELD are luxury brands like FERRAGAMO, TRUSSARDI, BURBERRY,
LOUVRE and German ESCADA, such as VAN LAACK. Lease agreements were also
concluded with WOLFORD, KAREN MILLEN, US POLO and CK Jeans. The footwear
industry will be represented at BELAYA DACHA by NO ONE, FABI, BALDININI,
NINE WEST as well as by ADIDAS ORIGINAL, ROCK PORT, REEBOK and PUMA
offering sports shoes and sports clothing. One of the anchor tenants is TSUM
OUTLET belonging to MERCURY Group. BELAYA DACHA is a joint development
project behind which stands American HINES group on a total rentable area of
38.000 square meters offering retail space to a total of 200 tenants, including
restaurants and coffee-shops.
3.7. Russian Apparel Discounter FAMILIA to increase Outlet Numbers
September 14, 2011; fashioner.ru
According to Vladimir Mosin, Director General of the Russian apparel discounter
FAMILIA, the company will open 8 new stores until the end of 2011, increasing
this retail network to 70 outlets. This information was given at the Retail Business
Russian Forum, held in September this year. As Mosin further announced FAMILIA
intends to further increase market presence in 2012 by opening another 10 to 15
stores.
3.8. American VICTORIA’S SECRET opened first Store in Moscow
September 30, 2011; russiaretail/vedomosti
The famous US lingerie producer and retailer, VICTORIA’s SECRET, belonging to
LIMITED BRANDS group of companies, has launched its first Russian store in
Moscow on September 30, 2011 at MEGA TEPLIY STAN. There are further three
stores planned to open until the end of this year allocated to MEGA KHIMKI,
CAPITOL on Vernandsky avenue and at EVROPEYSKIY in the heart of Moscow. All
stores are under franchise mediated by MONEX TRADING, a master franchiser and
distributor also representing NEXT, THE BODY SHOP, CLAIRE’s, M-A-C,
MOTHERCARE and AMERICAN EAGLE, among other Anglo-American brands.
MONEX TRADING is reported to stand under control of Alshaya Group, a large
trade agglomerate with headquarters in Kuwait City. This company holds the
license for development of retail from LIMITED BRANDS for the trade mark
VICTORIA’S SECRET which was registered in Russia in 2008 with Rospatent
together with its sub-brands ANGELS, THE MIRACLE BRA, SECOND SKIN SATIN
under the trade mark categories of retail, intimate apparel, underwear, perfume,
essential oils and cosmetics.
According to Daria Yadernova, Analyst at ESPER CONSULTING GROUP, the
Russian Lingerie Market accounted for € 3,82 billion in 2010 with a share of 64
percent going on the account of lingerie and underwear and the balance shared by
panty hose, swimwear, homewear and other related categories. Experts forecast a
market growth of 11 percent until the end of 2011, because the Russian lingerie
market is still not saturated with a level of consumption far below the United
States or Western Europe. As Daria Yadernova further explained, the timing of
VICTORIA’S SECRET to enter the Russian market at the end of 2011 was a “good
decision”.
3.9. Footwear Retail analysed in 35 Russian Cities
September 23, 2011; malls.ru
The Russian consumer goods consultancy RRG concluded a study on the footwear
retail market throughout 35 cities. According to Denis Kolokolnikov, CEO of RRG,
main research tasks of the study related to numbers of existing footwear stores
per city, degree of saturation or non-saturation per price segment, household real
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income distribution and share of income spent-on purchases of footwear. The
study also identified the major chained retail players for shoes.
As a result, Moscow and St. Petersburg remain the most important cities for
footwear store allocation despite the fact that saturation of such local markets has
almost been reached, depending on the price category. The report says that good
prospects for footwear retailers exist in Novosibirsk, Samara, Rostov-on-Don,
Tyumen, Orenburg, Ekaterinburg, Krasnodar and Nizhny Novgorod. The least
developed cities of footwear allocation are Khabarovsk, Vladivostok, Tyumen and
Penza. A rather high allocation of footwear stores in the regions can be found in
Kazan, Novokuznetsk, Ufa and Lipetsk. In terms of numbers of footwear stores
per city TSENTR OBUV dominates the local markets, keeping an average share of
32 % of footwear stores, followed by MONROE (16 %), MATTINO (11%) and
UNICHEL (10 %). The balance of 31 % is shared by Russian and foreign monobrand
footwear retail chains and independent multi-brand shops.
3.10. German FALKE expanding Shop-Presence in Russia
September 27, 2011; showrooms.ru
After having launched a first mono-brand store in Ekaterinburg in December 2010,
followed by a FALKE store in Astana, capital of Kazakhstan, this August 2011 a
new venture in Moscow was launched as second FALKE store in Russia. There will
be following a third Russian FALKE Partner Store to open in Irkutsk, by end of
November 2011. FALKE mono-brands display the whole FALKE assortment
including men’s, women’s and children’s hosiery and outdoor sports clothes,
functional underwear and its luxury series of exclusive tights besides men’s
business stockings and socks.
Further FALKE shop-in-shops have been successfully implanted at STOCKMANN
department stores in the GREENWICH Shopping Centre in Moscow, and at a store
of Estelle Adoni allocated to EVROPEYSKIY Shopping Mall. Apart from such monobrands
of FALKE, the company supplies an ever increasing number of multi-brand
fashion retailers all across Russia. TSUM/Mercury will integrate FALKE Men’s and
Women’s as well as its Kid’s assortment in the new department store of the
company launched in Spring/Summer 2011 in St. Petersburg. Travel retail is also
winning more and more interest of FALKE. The company is about to launch a
FALKE Shop-in-Shop in co-operation with AirRest (Italy), its first travel retail
corner in the Moscow International Airport Sheremetjevo, this Winter.
FALKE continues its commitment as exhibitor to CPM for the third time and will
participate in the 19 th edition of CPM with extended exhibition space of three
separate stand allocations for FALKE HOSIERY and FALKE ESS (Ergonomic Sports
System) functional underwear and sport socks, FALKE and BURLINGTON FASHION
with a focus on Men’s premium knitwear in Pavilion FORUM, as well as in the
special CPM KID’S section at Expocentr.
3.11. German Tom Tailor Mono-Brand retail pushed by Franchising
October 5, 2011; russiaretail
TOM TAILOR, the Hamburg/Germany based Young Fashion and Casual Wear
retailer is planning to increase the number of franchise stores in Russia and other
CIS-countries by 50 percent, in 2012. Currently, the number of mono-brand
multiples includes 32 stores and three new ventures are announced to start by the
end of this year. There are 20 openings scheduled for 2012, although the exact
number of stores planned for implementation in Russia was not disclosed. TOM
TAILOR was represented in Russia by the Russian clothing distributor and master
franchiser, FDLab, until September 2010. In January 2011 this contract was
terminated and the company started its own representative office in Moscow. As
part of its expansion strategy in Russia and the CIS, TOM TAILOR also increases
its wholesale activities.
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3.12. German ADIDAS Group aiming at 1.200 stores in Russia until 2015
October 11, 2011; fabeau.de
ADIDAS Group declared Russia to become one of the three future priority
markets, including China and North America. Herbert Hainer, Chairman of the
Board said “with ADIDAS as number one and our sister brand REEBOK as number
two in the Russian market, ADIDAS Group is the market leader achieving two-digit
growth rates every year”. According to the strategy plan “Route 2015”, the
number of own stores in Russia and the CIS will surpass 800 until the end of
2011. The revenue of ADIDAS Group is expected to jump across the Euro one
billion mark in Russia until the end of 2013. The expansion process will continue
and projects an additional number of 400 stores for set-up until 2015.
3.13. Vertical Apparel Retailers signing up Space at GOSTINNIY DVOR in Tula
October 23, 2011; russiaretail
There is a new Shopping and Entertainment centre coming up in the city of Tula,
located 200 km South of Moscow with above 500.000 inhabitants. The new centre
scheduled to open in March 2012 under the name of GOSTINNIY DVOR will be the
largest center of its kind in Tula. The total space of this medium-size venture is
51.000 square meters offering a gross rentable area of 30.700 square meters.
Among the foreign tenants signing up for lease are ADIDAS, REEBOK, NIKE,
BENETTON, MANGO, MOTIVI, CALZEDONIA, INCANTO, FINN FLARE, TERRANOVA,
ECONIKA, PAOLO CONTE, CARLO PAZOLINI, SINEQUANONE. Russian chained
clothing retailers taking space are ZOLLA, SNOW QUEEN, O’STIN besides
SPORTMASTER as anchor tenant.
3.14. American VF to open its first own stores of LEE and WRANGLER
October 25, 2011; russiaretail
Greensboro/North Carolina based VF Corporation, a US leader in branded lifestyle
apparel including jeanswear, outdoor products, image apparel, sportswear and
contemporary apparel brands like LEE and WRANGLER will open its first own
stores in Moscow, later this year. Further 15 own stores are scheduled for
implementation in Moscow and St. Petersburg in 2012. VF plans to build 40 own
stores in Russia until the end of 2015. The investment value for each own store
figures at US $ 330.000. In parallel VF Corporation will increase its franchise
scheme in Russia. At present partners operate 10 franchise stores in Russia. This
number is planned to increase to 120 stores by 2016. VF Corporation entered the
Russian Market in 2003 and opened its first franchise store in Moscow as late as in
2007.
3.15. German LASCANA setting a Multi-Channel Expansion Focus on Russia
October 26, 2011; fabeau.de/ ITMM GmbH
LASCANA was founded as an integrated medium-priced multi-label lingerie and
beachwear brand in 2006 under the roof of OTTO-Group, Hamburg. Besides
LASCANA obtained exclusive multi-channel retail licenses from other brands like
MARIE CLAIRE, S’OLIVER, VENICE BEACH, BRUNO BANANI and JETTE JOOP. Five
years later LASCANA operates close to 260 shop-in-shop points of sale, nine own
stores, an online shop and presents itself in various retail catalogues. The
company which works rather independently from Otto Group has set a focus for its
expansion on Russia such as on China. “We are observing enormous interest for
LASCANA from Russian multi-brand key account lingerie retailers” said Marco
Kebbe, International Business Development Executive of LASCANA at CPM in
Moscow, where LASCANA exhibited for the first time in September 2011. We made
in between 40 to 50 promising contacts at our stand” reported Kebbe, “because
our strengtn lies in the fact that we can supply our wholesale customers in Russia
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within 6 to 8 weeks after receipt of orders from our permanent stocks of up to
450.000 item numbers on a rotation basis. We are also getting a valuable feedback
from our cooperation with our Russian online retail partner, wildberries.ru”
Kebbe added. His main objective for 2012 is to position distributorship and
logistics in Russia and to introduce the LASCANA franchise scheme.
3.16. LLC WILD ORCHID and LLC BUSTIER not bankrupt
October 26, 2011; parvo.ru
The turbulence around the bankruptcy case of the former largest Russian Lingerie
retailer, WILD ORCHID, continues. While the Moscow Arbitration Court declared
the holding of the group CJSC WILD ORCHID bankrupt on July 26, 2011, which
affected the majority share holder, Sberbank, the survival of LLC WILD ORCHID
and LLC BUSTIER remains an open question. Both companies were founded in May
2010 to secure property in store facilities and ownership of merchandise. For this
purpose assets of the holding were transferred to both LLCs in a financial
transaction legality of which was endoubted by minority shareholders of the
holding to which belonged SOYUZ bank, which went bankrupt after this deal.
SOYUZ bank tried to claim bankruptcy for the LLCs but failed several times. On
October 26, 2011, when the Moscow Arbitration Court had to decide on the claim
of SOYUZ bank, the judges decided to wave this application because the
representatives of the bankrupt bank, who had signed the claim, were found of
having no legal authority to do so. The case will be reviewed again in November
2011.
4.) Shopping Mall Development
4.1. New RIO Shopping Center opened in the City of Vologda
September 5, 2011; malls.ru
TASHIR GROUP, a Russian developer of shopping and entertainment centers
(SEC) opened its eleventh SEC under the trade mark of RIO in the city of Vologda,
located 500 km North-East of Moscow. The city has a population of 293.000
inhabitants. Vologda is known in Russia as a distribution centre of agricultural
products like cheese and butter, produced in the Vologda Oblast. The new center
covers a total gross area of 50.000 square meters incorporating a rentable area of
around 35.000 square meters. The investment in this venture accounted for US $
75 million. One of the anchor tenants is hypermarket SEVENTH CONTINENT, a
strategic partner of TASHIR Group in all RIO centers. The developers attracted as
tenants from the clothing and footwear industry mainly Russian retail chains like
INCITY, O’STIN, SELA, SAVAGE, SNOW QUEEN, GLORIA JEANS or ZOLLA. Among
foreign brands having moved in can be found NEW YORKER, ADIDAS, REEBOK
such as the cosmetics retail chain L’ETOILE.
4.2. MANDARIN MALL to open in Sochi in summer 2012
September 9, 2011; shopandmall.ru
Russia’s first open-air shopping and entertainment complex, designed by
American architects, JEDE PARTNERSHIP, is planned to open in the city of SOCHI
on the Black Sea as part of so-called ADLER district, close to the international
airport, the Olymp Park and the SUNBEAM Hilton Hotel. Promotion of tenancies is
in the hands of KNIGHT FRANK, exclusively. MANDARIN MALL composes a total of
33.000 square meters for lease. The objective is to attract 70 popular brands as
tenants. Person in charge at KNIGHT FRANK ROSSIA is Sergey Gipsh, regional
director of the commercial real estate agency.
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4.3. RODNIK Shopping Center in Chelyabinsk started Operations
September 9, 2011; malls.ru
The city of Chelyabinsk saw the opening of its largest shopping and entertainment
center on September 17, 2011 under the name of RODNIK, located in the central
part of the city on a total land area of 135.000 square meters. The space offered
for lease comprises 58.000 square meters for allocation of up to 120 stores
including entertainment areas and restaurants. Anchor tenants are AUCHAN,
SPORTMASTER, DETSKIY MIR, NEW YORKER, INDITEX/ZARA and LACOSTE. The
new mall provides store facilities on four floors. With a population of 1,130 million
inhabitants the City of Chelyabinsk is located 210 km South of Ekaterinburg on the
Eastern side of the Ural Mountains, close to the border of Kazakhstan.
4.4. New Shopping Center SUNNY to open in Solnechnogorsk
September 12, 2011; malls.ru
Located on the highway from Moscow to St. Petersburg and linked to the railway
track connecting Moscow with St. Petersburg, the city of Solnechnogorsk has a
population of 58.000 inhabitants. The city looks at the construction of its first
shopping and entertainment center, which is scheduled to open in February 2012,
providing a total gross lease area of 19.000 square meters. Lease promotion is in
the hands of KNIGHT FRANK. One of the first anchor tenants moving in in
December 2011 is the grocery store ATTACK, belonging to French AUCHAN Group.
4.5. AFIMALL CITY Shopping Mall in Moscow: Reasons for Failure
September 13, 2011; malls.ru
The internet portal malls.ru published a long article on the reasons of failure of
AFIMALL CITY, formerly promoted under the name of MALL OF RUSSIA. Opening
of the mall was delayed several times until May 2011, after around 400 tenants
had moved into the building providing a gross lease area of 114.000 square
meters. Although AFIMALL attracted a strong pool of international mono-andmulti-brand
apparel retail chains like H & M, all major brands of INDITEX as well
as UNIQLO, GAP, AMERICAN EAGLE, BANANA REPUBLIC, MARKS & SPENCER such
as HOLDING CENTER or LADY & GENTLEMAN CITY, visitor attendance remained
under 20.000 people per day. For comparison, the number of visitors at
EVROPEYSKIY MALL accounted for 130.000 people per day over the summer
months in 2011.
As malls.ru concludes its opinion poll, main reason for failure of AFIMALL is that
construction of the large office towers in the new City of Moscow Area on
Krasnopresnenskaya Embankment is still ongoing. Several tall sky scrapers like
the towers of Mercury or Empire will not be finished until the end of 2012.
Therefore the target group of medium-to-better paid office employees, which
AFIMALL projected to address, is just not present around the mall. Further
reasons are lack of parking space blocked by construction, the still missing
connection of AFIMALL to the Metro-rail-system as well as a number of technical
construction failures causing rain water penetration. In August 2011, water
flooded parts of the first floor and affected damages to five anchor tenants among
which was UNIQLO, forced to close the store.
Real estate experts believe that AFIMALL will not operate properly until the
beginning of 2013. As a consequence of the disastrous results on sales, a group of
up to 50 tenants signed a letter to AFI DEVELOPMENT in common, urging the
developer to lower the lease rate for two years and to change it from a fixed rate
per square meter per year to a turnover related percentage which is now a
standard applying to 80 percent of shopping mall tenancies in Moscow, since
2009.
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Düsseldorf, Moscow, Stuttgart
November 22, 2011
Editor-in-Chief : Reinhard E. Döpfer
Tel.: +49-711-933 2994-44; Fax: +49-711-933 2994-50
E-mail: doepfer@itmm-gmbh.de
Publisher: IGEDO Company, Duesseldorf
Contact: Ingrid Kahlfuss
Tel.: +49-(0)-211-4396-302
E-Mail: kahlfuss@igedo.com
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