Searching for the ideal

It was a cloudy afternoon in Moscow. The crème de la crème of the Russian retail market was gathered at the Ararat Park Hyatt Moscow hotel. Over 200 people were assembled at the invitation of ColliersInternational Russia, the organiser of the event, their fourth conference on the retail market in Russia. “How can we create the ideal shopping centre, and what features should it have?” – this was the provocative question posed by Nikolay Kazanskiy, the managing partner of Colliers International Russia, at the beginning of the conference. “We wanted to start a discussion because looking for an answer to the question asked in this way could prove to be most inspiring,”he explained afterwards. So what was the response? The majority of the participants agreed that consumers’ approach to shopping has changed dramatically in Russia. “Our society has been going through a transformation. The current trends show that we’re getting closer and closer to European and American standards. Most people no longer want to spend their free time with a bottle of vodka. This has changed: people want to leave their houses, they are looking for an interesting offer,” ventured Evgeny Butman, the co-owner and partner of the Ideas4retail Group. This change in behaviour has contributed to the development of formats related to entertainment and to the offer for children in Russia. According to those at the conference, these segments will undergo dynamic development over the next few years.
Interestingly, the developers present found themselves on the receiving end of a scolding. “Russia is a paradise for shopping centre developers,“ said Natela Klimova, the real estate director of Moneks Trading (the company has a number of fashion brands in its franchising portfolio, such as Next, as well as cafés such as Starbucks). In her opinion developers should take better care of the strategy for a centre and its concept. She was accompanied by Nikolay Yuskiv, the director of the real estate department of the Sportmaster Group of Companies: “We like developers and shopping centres, but sometimes developers ask us what concept their shopping centre should have. And after that they want to charge us higher rents. But thinking up an appropriate concept, after all, is a task for the shopping centre owner, not the tenant,” pointed out Mr Yuskiv. The modern shopping centre market in Russia is still relatively young and far from saturated. In Moscow alone an area of 370,000 sqm will be opened in shopping centres this year – twice the figure for 2012. Colliers International estimates that over the next two years the Moscow market should gain over 1.1 mln of retail space. Investment funds, which are now viewing the Russian market with some optimism, still only want to invest in the two largest cities – Moscow and St Petersburg. “The Russian market is very young and it is still speculative – we do not know what will happen with yields, nor do we know what the cash flows will look like in a few years’ time. In this respect the Russian market is far behind more developed, western markets,” remarked Andrey Kolokolnikov, the vice-president of Morgan Stanley.
And what about the search for the Platonic ideal of a mall? Nikolay Kazanskiy’s opinion is that the search for an ideal resembles shooting moving targets on a shooting range: “The fact that you hit one of them once does not guarantee victory. You need to look for a new ideal every month and try to get closer to it,” concluded the managing partner of Colliers International Russia.