‘The replacement of international tenants in regional shopping centres happened faster’

How Western brands are being replaced in Russian shopping centres

‘The replacement of international tenants in regional shopping centres happened faster’
Photo: realnoevremya.ru

After the withdrawal of Western brands, Russian retailers, which are actively expanding their presence in the regions, as well as manufacturers from Turkey, China, Belarus, and other friendly countries, joined the fight for buyers in shopping centres. In particular, as Realnoe Vremya found out, an updated format of Sportmaster hypermarket is going to be launched in Kazan soon — the retailer had to increase the area, and the stores of Russian clothing and footwear brands Ralf Ringer, Lime, Savage, Henderson and others are also going to open. According to experts, the attendance in Tatarstan shopping centres in April — May turned out to be by 21% higher than last year, and district shopping centres are showing a stable growth. Read the details in the material of Realnoe Vremya.

“Attendance figures show growth in district shopping centres”

The withdrawn international brands in the Russian market are now being actively replaced by manufacturers from Turkey, the UAE, and other countries. Russian brands are also strengthening their positions. Nevertheless, there are still enough empty areas in large shopping centres.

“In the large shopping centres of Kazan, according to the results of the second quarter of this year, the share of stores that suspended commercial activity decreased by four percentage points and is almost zero. Despite that the vacancy rate has remained unchanged for the third quarter in a row and is 18%, we see that quite a lot of new stores are opening. But the vacancy rate is not decreasing, as some stores continue to close in large shopping centres," said Elena Stryukova, the director for development and operation of commercial real estate department at Essen Production AG JSC.

According to the expert, the attendance in Tatarstan shopping centres is gradually increasing: “Attendance in April — May 2023 is on average by 21% higher than in the same period last year and by 4% higher than the average of the first year. Probably June will not please us with the indicators, but we can say for sure that in district shopping centres the attendance indicators are steadily strengthening and showing a steady growth.”

Earlier, the Union of Shopping Centres of Russia, Belarus, and Kazakhstan reported that the replacement of Russian brands in large shopping centres is slow, since the volumes of tenants who have left and released square metres are estimated in millions of square metres across the country. At the same time, the shopping centres of district scale has practically not been affected by this problem.

“The situation in the district shopping centres is more stable. Initially, there were fewer international tenants in the regions and district shopping centres, their replacement occurred faster. In the Zakamsky region, the vacancy rate in shopping centres is 10-12%," Elena Stryukova added.

Earlier, the Union of Shopping Centres of Russia, Belarus, and Kazakhstan reported that the replacement of Russian brands in large shopping centres is being slow. Photo: Maxim Platonov/realnoevremya.ru

How shopping centres are growing with new brands

The Russian mass market is actively expanding the regions of its presence in the absence of major Western competitors. For example, LIME women's clothing brand, created in 2008 in Samara and having an extensive network of almost 100 stores, including in the Kazan shopping centres Koltso and KazanMall, intends to open another outlet in our city — in Mega. The press service of the shopping centre confirmed this information to our publication and told how the replacement of brands is going, as well as which new stores are going to appear here soon:

“Recently, English home stores have already opened — the first in Russia, Maag, Dub, Vilet, and Ecru. This year, several stores are planned to open in the centre, for example, Ralf Ringer, Lime, Savage, Henderson, Sportmaster PRO, and others. Ramennaya cafe is going to open on the food court.

The Russian shoe monobrand Ralf Ringer has four own factories and more than 1,5 thousand stores across the country, and not so long ago they introduced clothing into the assortment. There have been three stores of this retailer in Kazan so far, and a fourth is going to appear in the coming months. The Russian manufacturer of women's clothing Savage has been on the market since 2000, it is going to increase the number of stores in the Tatarstan capital to five soon.

Last year, another domestic brand of men's clothing Henderson was replenished with new sites in Volgograd, Kemerovo, and Nizhny Novgorod, and the flagship salon of the brand has recently been opened in the centre of Moscow. It is present in 62 cities of the country, the company has more than 160 stores, and a fourth one is going to open in Kazan this year.

Last year, another domestic brand of men's clothing Henderson obtained new sites. Photo: Maxim Platonov/realnoevremya.ru

Besides, Sportmaster company is launching an updated hypermarket format in the capital of Tatarstan, combining PRO-service, a wider selection of goods, and consultations of famous athletes.

“Currently, Sportmaster Pro store is increasing its area by almost 20%, preparations are underway for this expansion — these works will not affect the comfort of visitors in any way," the press service of Mega assured.

The Russian chain of sports equipment stores has been operating for almost a quarter of a century. Today, the company has more than 450 stores, which account for 25% of the domestic sports goods market. Among the experts of the network in the PRO format, there are professional athletes, participants of competitions of various levels, instructors. In 2021, three stores of the chain switched to the updated format — in Moscow, St. Petersburg, and Mytishchi. Each has an area of 5 thousand square metres and an assortment of products for fifty sports.

It is noteworthy that in the near future, Stockmann department stores of the Finnish brand are starting to work in Russia again — the first one opened in Moscow a few days ago, and St. Petersburg, it is planned for the end of the year. In addition to the traditional assortment, the chain stores will present their own brand of household goods. In this segment, as Realnoe Vremya has already reported, the Belarusian analogue of IKEA is going to open in Kazan soon.

By the end of last year, the share of brands that announced the termination of their activities in Russia had been 37%. Photo: Maxim Platonov/realnoevremya.ru

Turkey, Dubai and China are showing interest in the Russian market

By the end of last year, the share of brands that announced the termination of operations in Russia had amounted to 37%, 41% of companies announced restructuring, and another 21,3% of retailers suspended their business. According to analysts, about 200 foreign companies selling their products in the segments of food, household goods, clothing and footwear, perfumes and cosmetics, children's goods announced the suspension of investments, commercial activities, as well as supplies to the territory of our country. With the beginning of the special operation, almost 20 key retailers announced that they were going to leave the Russian market.

Brands are being replaced in the shopping centre now. According to experts, if during 2022 only 10 new foreign brands entered the Russian market — from Armenia, Kazakhstan, Turkey, China and, unsurprisingly, from the USA (perfume monobutik), then in the first quarter of this year, eight new foreign retailers operating in the average price range already opened their stores. These are the clothing seller from Poland PitBull West Coast, French JACADI with clothes for children, five Turkish brands — AC&Co, Madame Coco, Loft Jeans, NetWork and Club. It is also reported that about 10 more Turkish brands have declared their desire to work in Russia.

According to CORE.XP analysts, the process of filling vacancies that have become vacant after the withdrawal of foreign brands from Russia will take 1,5-2 years. It is expected that the drivers of demand for empty areas in shopping centres may be the areas of service, entertainment, and catering.

Angelina Panchenko

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