Siberia: the new retail hotspot!
Siberia might be an unlikely place for a retail revolution, but that’s exactly what is happening! When Ikea opened last winter, shoppers loaded up their carts and yellow bags with everything from household goods, to clothes, appliances and furniture. The Ikea store in the Mega Mall opened on the side of the Ob River and expects 12 million visitors in 2008, making it an unlikely center of a retail boom.
With the retail industry seeing a downturn in the United States, Russia is becoming more and more appealing to retailers from across the world. There are big box stores opening every month and the country is likely to have more than twice as much as mall space than any other country in Europe in 2008. Malls have been around in Moscow for several years, and there are another 38 scheduled to be opening in the city and the surrounding areas by 2010.
The Russian retail sector is attracting so much attention that Ernst & Young and KPMG held a investor road show in London highlighting it last month. There are an expected 49 million sq ft of retail space that is to open in 2007 and 2008, which is more than double the expected shopping area in Poland, the country with the second largest mall development plans.
“You have this incredible purchasing power in these cities retailers want to tap into,” said Charles Slater, a partner working in the Russia office of Cushman & Wakefield, which advises mall developers headed to the Russian hinterlands. “There is a race for land.” That is another reason sparsely built Siberia is so popular.
Developers are turning to the 12 provincial cities in Russia with populations over one million, islands of prosperity with population inflows from rural migration and rising purchasing power, ripe for malls. This retail strategy is known here as the “millions,” and is embraced by leading Western retailers including Ikea and Auchan, the French food chain.