Guiding Lines: Family Oriented Shopping Standards

Russian regions enthusiastically report on rapid development of shopping centers in their cities with population over 1 million. Retail industry is booming. In Yekaterinburg, in the first five months of this year developers launched two complexes measuring a total of 88,500sqm; four giant stores are to open by the end of the year.

Perm expects 120,000 to 130,000sqm of retail space to be launched in 2006; Niznhy Novgorod plans at least four major mixed-use complexes within the next couple of years. St. Petersburg and Moscow are no exceptions. Multi-screen movie theaters, children’s playgrounds, food courts are everywhere.

In previous years, it never even occurred to the Russians that a shopping center could be something more than merely a shopping venue, that they could also go the movies there, play bowling or have a snack at a fast-food restaurant. If the center had several stories they humbly marched up the stairs instead of using escalators. These days, modern shopping centers are inconceivable without conveniences and amusement facilities.

Some even go to funny extremes. Or example, four out of six shopping and leisure projects to be launched this year in Yekaterinburg will feature multiplex theaters. The city already has a multiplex at the Park House mall. Moreover, consultants have reported that other local developers, too, mull similar projects. “It is not that they fail to understand that such moves will result in stronger competition and glut, but developers now are firmly convinced that each and every large shopping and entertainment center must provide a multiplex,” Vedomosti’s interlocutor says. Local analysts find it difficult to say if the city is able to digest so many movie theaters.

Until recently, Moscow was the trendsetter in terms of mall amenities. But St. Petersburg outstripped the capital after the Planet Neptune retail and leisure center in Russia’s northern Venice launched the country’s first-ever oceanarium. The cost of the project amounted nearly to 50 percent of the total cost of the complex - $16 million out of $36 million. The owners expect a payback in 5 to 6 years, which is possible if at least 800,000 visitors attend the attraction annually. But that amusement is not for those of weak nerves. At the opening ceremony organizers honestly warned their guests that given the specifics of construction and convex glass walls of the oceanarium some visitors might feel dizzy.

The Italian Margheri Group plans an even more exotic project in Leningrad Region near St. Petersburg – an artificial sea and a beach as part of the Novy Kolizei (New Coliseum) shopping center. Construction works are to be launched in early September. Zolotaya Milya (Golden Mile) retail center in Nizhny Novgorod will feature a casino and a nightclub. Obviously, the developer hopes that visitors will leave cash they fail to spend on shopping at gambling tables.

Experts put mall developers’ ingenuity down to acute shortage of retail formats in the province. To regional developers, many of which undertake such projects for the first time ever, modern shopping centers are like beautiful toys and they seek to make them as attractive as possible.

However, seeking to achieve that goal many commit grave mistakes. Yekaterinburg-based analysts refer to such failed projects as “nightmarish hybrids”. Such, in their opinion, are the complexes claiming the role of business, retail and entertainment centers simultaneously, but lacking a clear-cut concept. One of the examples is Antei. Interestingly, in early summer Antei made an attempt to attract a new type of an anchor tenant to the mall. The company said that a local real estate registrar could take up residence at Antei’s business center. Antei’s director told Vedomosti that such a move “could become an attraction for the target audience – well-off customers who buy real properties.”

The projects for re-conception and redevelopment of shopping centers, already launched in Moscow, may soon kick off in the province. In Yekaterinburg, for example, the local government has already initiated a program referred to as “conceptualization”. This summer the local officials launched checks into all retail outlets operating in the city. As a result, owners of certain shopping centers were forced to rethink the concepts of their stores. Owners of the Uspensky center plan to redevelop the project into a department store. Russia is short of such projects and Moscow consultants are actively campaigning in favor of the department store format. Admittedly, such projects are still rare.

Analysts do not doubt that small shopping centers in provincial towns, poorly located and lacking convenient entry driveways and parking facilities, will fail to survive competition. That is what happens now to Moscow’s first-generation stores, such as Gvozd, Novinsky Passazh, Dvoryansky Dom, as well as recently built complexes Arkadiya (Arcadia) and Evropark (Europark).

But failed malls are not likely to undergo re-conception and redevelopment until more successful shopping centers are filled up with tenants in the regions. However, even such measures may prove costly and not always rewarding. What keeps Uspensky’s owners from launching the overhaul, for example, is the high cost of the project, estimated at $50 million. Yekaterinburg’s analysts look forward to the arrival of professional retail chain operators, hoping that they will bring about the demise of failed malls.

Thus, many regions are now at the stage, which Moscow passed several years ago, when the city was full of all sorts of properties, including even covered markets positioning themselves as retail centers. But such wild stages in development inevitably come to an end and the era of professional malls begins. At that stage operators, too, are likely to face difficulties.

“Professional” malls operating in Moscow lack diversity, retail property consultants complain. Such an approach is highly likely to result in loss of shoppers and tenants and in the long run tell on the prosperity of mall owners. Take Leningradka – Moscow’s famous retail corridor stretching along Leningradsky Prospekt from Tverskaya Zastava Square to Leningradskoye Shosse. Many new retail projects are planned in the area.

In addition to Galereya Aeroport and Metromarket already in operation and several smaller stores, in the near future enormous shopping centers Metropolis, Aviapark and the underground mall on Tverskaya Zastava Square are to appear on Leningradka. Some experts fear that some buyers, intercepted near the Belorussky train station, will never make it to Mega in Khimki.

Of course, location remains the key factor in success of any retail project. But increasingly fastidious buyers are beginning to demand diversity. Standards are appropriate where they are necessary, for example, in compatibility of computer hardware. But ask a housewife what her husband’s reaction would be, if she always cooked burgers for him on Mondays, cheesecakes on Tuesdays, sausages on Wednesdays and stuffed cabbage on Thursdays…

Apparently, time has come for developers and consultants to pay more attention to certain smaller formats that are growing increasingly popular, although their returns are not soaring. Take, for example, a bookshop providing a reading room and a caf?. Or, perhaps, it is worth adding a couple of chess tables? Or a bowling alley and a billiards room instead of a multiplex? Or a ping-pong table? Or, would not it be better to provide for all those facilities in one mall?

Let the child watch The Superman while his mother does her shopping and then drinks a cup of coffee at a bookshop, reading a women’s novel, which, being unable to put it down she will buy eventually. And the father will prove to himself that he is still quite a good athlete and his belly is not too large.

Although, unfortunately it is still hard to imagine a situation where a child with a list of products in his hand goes shopping himself, while his mom enjoys the film Three Colors White by Krzysztof Kieslowski, and his father sips green tea at a caf? leafing through the latest edition of Boris Pasternak’s poems. Such a family is likely to spend most of their free time together…