Retail Market Developing at Fast Pace
Published: March 6, 2007 (Issue # 1251)
St. Petersburg’s retail market today is one of Russia’s most dynamic. Growing personal incomes coupled with a lack of quality shopping space in the city mean that developers and retail chain operators, both Russian and international, are actively trying to establish their presence on the country’s second biggest market.
However, for a city of 4.6 million inhabitants, St. Petersburg’s quality market remains very small and is currently at a very early stage of its development. In mid-2006 the total area of the city’s international-standard shopping centers (i.e. at least 5,000 square meters in size, with a quality selection of tenants and managed as a single project) was only 370,000 square meters, while vacancies there were very low. In addition to that, street retail along the city’s main shopping corridors (Nevsky Prospekt, Bolshoi Prospekt, Ligovsky Prospekt and Sadovaya Ulitsa) is currently at 21,000 square meters.
This means that in today’s St. Petersburg there is only 80 square meters of quality retail space per 1,000 inhabitants — this is one of the lowest figures in Europe. For comparison, Warsaw has 600 square meters, Madrid — 300 square meters and Berlin — 350 square meters. By the amount of quality retail space per 1,000 inhabitants St. Petersburg is not only behind Moscow with 120 square meters, but Samara and Kazan as well and is now on the same level as the majority of other cities with a population of 1 million or more, such as Yekaterinburg, Nizhny Novgorod or Volgograd. Taking the city’s size and importance into account, it becomes obvious that St. Petersburg has a huge, yet unrealized, retail market development potential.
Like in any other city, the retail space on offer in St. Petersburg is not limited to shopping malls and boutiques on main shopping streets. The entire market, which also includes open-air marketplaces, kiosks, neighborhood grocery stores and pavilions, is estimated at 4 million square meters. As the city develops and local consumers become more discerning, demanding better service and a better choice of quality retail, the share of sub-standard properties will decrease. In terms of the sophistication of its shopping centers and the overall development of the market, St. Petersburg is now three to five years behind Moscow, but is quickly closing the gap and the situation is likely to change dramatically in the next 1 1/2 to 2 years.
A number of large-scale Western-standard shopping center projects currently under development — some of these concepts are not present in Moscow yet — will make St. Petersburg one of the retail capitals of Russia. According to our estimates, by late 2008 the amount of quality shopping center space in the city may reach about 1.4 million square meters (compared with 2.7 million square meters that Moscow is scheduled to have in two years).Pages:  [2 ]