Tell us a little bit about your background.
I’m among the pioneers of the Russian retail market, which is quite new in comparison to the rest of the European markets, as it only goes back to the mid-90s. I joined this market as soon as the first retail deals took place, coming straight from the office sector. I took my first step into retail while I was a Retail Director with Colliers and had the opportunity to try the waters before forming my own team during the crisis of 1999.
How big is the retail market in Russia today and where do you see it going?
There is about 12 million m² of shopping centers in Russia today. The market is growing quite fast with more than 1 million m² being added each year. Moscow is still in high demand and though the total supply of modern shopping centers in Moscow had reached almost 4 million m², there is still a shortage of retail space in city as retailers are usually keen on taking the best spaces. So if someone comes to the market with a poor product, it won’t be consumed .
Who is Magazin Magazinov?
Magazin Magazinov is the largest specialized retail property-focused consulting company in Russia; we do brokerage services, shopping center leasing, market analysis, research, shopping center development consultancy, geo-information services, geo-marketing, shopping center design support/ everything is done in-house. We also do a lot of shopping street deals and in respect of high-street leasing we would be the largest service provider in Moscow.
Are you active outside Moscow?
Russian regions are being actively developed right now and retailers who are already presented in Russia focus their expansion outside the country’s capital. We have much work in regional markets, for instance we support international retailers with their expansion plans, we work on many regional retail schemes including consultancy and leasing. All this work is impossible without relevant market research and analysis, so we also do it. We are present everywhere throughout the country; in the Urals for instance we are the largest broker in respect to products leased and for lease.
Is it hard for foreign players such as developers, investors or in retail?
We are currently servicing an international developer who is opening its first outlet center in Russia (Moscow). It seems that they haven’t run into any specific problems in entering the market. Most developers prefer easier ways, but I believe that coming to Russia as a retail developer is a rewarding decision. Foreign retailers on the other hand keep demonstrating more and more interest for Russia at each MAPIC, but they are not moving to Russia at high volumes so far, although there is a strong trend of buying back franchises from Russian partners after they have demonstrated good and stable sales and fast expansion options.
So, retailers don’t want to do it themselves?
I would put it this way: in the past years, most retailers would go for the franchise scheme, but a few years ago the trend of doing it on their own started, and now it’s growing. New retailers are coming on their own. The ones who have already tried the market are much braver and much more reassured about the future, they grow wider and they switch from franchise to their own stores.