View From Within: The Glass Magnet

If you walk down Tverskaya in the evening, things are flashing before your eyes from every possible known brand. Along the street the signs of different shops, banks and telecoms shops shimmer from both sides. However it does not stop at the names. Big, transparent, illuminated from within, colorfully decorated show windows attract your attention. They pull you to stop and look at what is inside inside.

The engine of trade

The windows of retail premises were always used to show goods to the potential buyer. It is the same as advertising, but cheaper. You don’t need to pay for expensive time, like on the TV. And the exhibition can be updated every day. Any expert in marketing will explain: to be really interested in the goods, the potential buyer should see them with their own eyes. Even casually passing by. It will be engrained in their memory and at the necessary moment will "shoot" up.

There are three principles influencing the development and success of trade: visibility, availability, and the target audience. Accordingly, the size and decoration of a show window in this process does not play the smallest role in comparison with traffic and other important parameters, says Denis Kolokolnikov, general director of. Window displays in his opinion are a free-of-charge advertising component of [business]."

"A standard extended poster on Tverskaya street costs $10,000 for 10 days. And the window display can be redecorated to write the name of a brand in large letters and to place information about discounts," explains Kolokolnikov.

Potential buyers, passing by, will see what is happening inside the shop, and will visit it. Or when they will need to buy something, they will know where to go. If everyday a person uses the same route to go to work, what it sees on the way will be engrained in its memory, the expert approves. According to some information, 120,000 cars pass Tverskaya every day.

The expert says that many consumer goods sector manufacturers use window displays as a way of promoting a new brand on the market. The main thing is to place the new product on a retail street. For example, on Tverskaya, almost opposite the Kremlin, there is "Gallery Samsung". Sales here hardly ever happen. The place is used by the brand as a show room, for the promotion of its products, says Kolokolnikov. Other market participants act in the same way.

On Tverskaya recently, new branches of regional banks have started to appear. It is unlikely they are aimed at making active turnover in the given point, it is more likely their main purpose is to popularize the brand, the expert argues. For example, a potential buyer remembers a brand, passing by. Even if they go to a different place to shop and see the same brand, they may recollect it, assures Kolokolnikov.

Window displays are the most important element of a premises. They bear information to consumers on what the shop is and what it sells. On the other hand, window displays are a magnet calling people to come inside and get acquainted with the product more closely. Actually a window display is the face of the shop. Because the consumer pays attention to it first of all, says Yulia Dalnova, director of the department for retail real estate at Knight Frank.

The emotions caused by looking at a window display, force the consumer to come inside or to pass by. Therefore for large dealers it is important to have a full dress shop in the city center. Firstly, as a rule, in the city center greater streams of visitors are concentrated. Secondly, a shop in the center often carries out a function within the shop’s image. High street retail premises, located on the shopping streets of the city, are in greatest demand. The main streets, in the opinion of experts, are Tverskaya street, Kuznetsky Most, Kutuzovsky prospekt, part of Leninsky prospect, etc. However in the most expensive streets, which concerns Tverskaya, it is very difficult to rent a premises - supply is too limited, says Dalnova.

Mikhael Gets, vice president of strategic development at Blackwood, says that the main demand for premises with window displays is shown from tenants within the clothes, footwear and public catering segments. For them window displays are often an obligatory requirement for a rented premises, as it is necessary for them to present the goods in the most attractive way, the expert concludes.

Expensive pleasure

On Tverskaya tenants very rarely change, analysts approve. In connection with this rental rates do not increase or fall so much. Many mono-brands that are entering the market are interested in Tverskaya. It is image. They often work with zero profit, simply promoting the brand, says Olga Kondaurova, a research analyst in the retail real estate department at CB Richard Ellis / Noble Gibbons.

The existing supply volume of quality trading premises is not capable of satisfying demand. This is particularly strong in the segment of separately standing or terrace premises with large window displays in the central part of the city, considers Sergey Leontev, general director of Vesco Realty. According to him, there demand exceeds supply by more than three times. "It is now difficult to find such retail real estate premises. The share of free premises with large window displays in the center of Moscow is zero. And if such offers appear on the market a client is found straight away," approves Leontev.

"There is always excitement over good premises and if it has a good window display there will be a fight for it," says Yulia Nikulicheva, director of the department of strategic consulting at Jones Lang LaSalle. Because a market of such premises does not exist, everyone fights for good places – rental rates may differ at times for such premises. For example, on Tverskaya rates reach $11,000-$12,000 per sq.m a year. But this is for small shops with an area of 50 sq.m and less, she says.

Rental rates on Tverskaya for a good premises now vary from $5,000 to $8000 per sq.m a year, says RRG. But such a price is practically impossible to make returns on from sales, and some companies write off the presence of a shop in such a place on the advertising budget.

If a premises on Tverskaya is offered for rent at $4,000 per sq.m a year, there would be a huge queue. There are also enough interested people at $5,000 per sq.m, but not everyone can allow themselves this. Thus, the circle of tenants is limited by the rates, explains Kolokolnikov. However those who want to competently promote themselves understand that it will pay back.

Of course, a window display is not everything necessary for success. Pedestrians, car traffic and also the level of development of retail are important. Premises with an entrance onto Tverskaya will have one rental rate. If this premises has an entrance onto a side street the cost will fall by 40-60 per cent. And if the entrance is onto a lane parallel with Tverskaya, the cost will decrease by several times, the expert says.

The rent for retail premises with a large window onto Tverskaya varies from $6,000-$10,000 per sq.m a year, says CB Richard Ellis / Noble Gibbons. Rental rates start from $2,500 per sq.m, says Ashot Barsegyan, head of commercial real estate at МIAN – Real Estate Agency. In spring and summer 2007 the rental rate reached $5,000 per sq.m. As an example the expert uses former shop on Tverskaya Аrbat Prestige. He adds that renting a retail premise with window displays and a separate entrance, located in such a place, will cost double that of premises without window displays and a separate entrance located approximately in the same place.

The sale price of retail premises in the city center (from $15,000 per sq.m.) can also differ by two and more times. A number of retailers only rent premises which have large open window displays. On Tverskaya or Kutuzovsky prospekt, a premises with a window display meeting all the requirements, is 50 per cent above the average rental rate, says Marina Guryanov, director of the street retail department at Cushman Wakefield / Stiles Riabokobylko. Often choosing a premises, in many respects, often depends not only on the location and size of the premises, but also on the presence and size of window displays. Rental rates can be second place for retail, she emphasizes.

For street retail a window display acts as an additional tool of attracting attention. In addition, there is an opportunity to accommodate free-of-charge advertising in places of high traffic. Therefore in some cases the absence of a window acts as a determining factor in rejecting a retail premises. And at times, it can affect the positioning of a premises, transferring it to the status of an office, which automatically reduces the rent 3-4 times, explains Sergey Lobanov, director of the department for the management of assets at МIEL - Commercial Real Estate.

According to him, some image chains do not consider offers without panoramic windows at all. In general, these are operators such as Alpha Bank, VТB and chain stores, says Lobanov. The rent for a premises in direct view and 30 meters from the metro with panoramic stained-glass windows starts from $2,500 per sq.m a year. With small window - from $1,500-$2,000 per sq.m and without a window - from $1000 to $1500 per sq.m a year. The sale price of premises can reach unlimited limits, starting from $10,000 per sq.m, he concludes.

Although a window display is a powerful factor, it does not greatly influence the total cost of a premises, Leontev argues. On average, rental rates for street retail premises are $500-$1,500 per sq.m a year, however in the Central District of Moscow or in projects with very advantageous locations they can start from $6,000 per sq.m a year. But, agrees Leontev, the average rental rate in the central part of the city is $2,000-$2,500 per sq.m. The sale price for retail premises is in the range of $2,000-$7,500 per sq.m depending on the characteristics of the premises.

This is supported by Anna Shiryaeva, general director of Magazin Magazinov. It does not depend on window displays, she assures. Rates can differ on Tverskaya depending on the size, location, configuration of the premises, date of the conclusion of the lease agreement, etc.

"A window display is important. But if there isn’t one, the premises will be rented by another tenant. And, probably, for even more money," insists Shiryaeva.

More is better

Some companies refuse to rent if they are not satisfied, for example, with the length or height of a window display. Before the revolution, real estate in Russia was not measured by square meters, but by cubic meters, says Kolokolnikov. The height of the ceilings are also important. "Compare premises with ceilings of 3 meters and 6 meters,” he says. “They are absolutely different things.”

The area of a window display has a price, which can be translated into advertising costs. For example: the area of an extended poster is about 10 sq.m. From the afore mentioned price ($10,000 for 10 days) it works out that one sq.m costs $1,000 for 10 days, or $35,000 for a year. It is obvious that the window display costs less than the extended poster if you calculate the cost of its use from the length of time of it functioning. And if you also compare the effect of the presentation, then a beautiful window display wins.

There are minimal requirements to a window display: depending on the area of the shop it should have a certain length, says Nikulicheva. The preferable minimum is 8 meters if the shop is approximately 100 sq.m. Anchor tenants prefer from 12 to 20 meters (not including hypermarkets and supermarkets – they have other requirements). The minimum height for a window display is 2 m. In general, the more, the better, insists the expert. Everything rests on the requirements for the height of the shop. If it is small - 100-200 sq.m then 3-4 meters are quite enough.

Some retailers use methods, such as a false window display. They are premises on the first floors that do not have show window but only usual windows. In this case a remote glass window display is made.

There is another way of increasing the space of a show window. Kolokolnikov suggests buying the apartment above the premises, and transforming it into uninhabited resources. With this it is possible to make a window display how they want, or how is allowed.

Window displays of retail premises especially those located in the center, should not break loose from the general architectural ensemble of the street. During holidays (especially New Year) they should be decorated in advance in the appropriate way, says Leontev. At the same time the window dressing of shops should correspond to this concept. The overwhelming majority of operators in the luxury market have a regular expert who is directly engaged in the dressing of windows and stores.

Many international brands invite eminent designers and artists to create exclusive exhibitions in window displays. The result of their diligence is a lot of impulsive visits to shops by consumers, explains Guryanova.

"It is necessary to note that in western countries operators pay a great deal of attention to window displays, creatively approaching its decoration and involving designers. At the same time in Russia, in my opinion, this direction [works] has not been developed," complains Lobanov.

There is no real difference, assures Shiryaev. According to her, advanced Russian retailers make window displays no worse than in the West. And abroad there are also enough unadvanced retailers too, she concludes.