In 2016, a total of 39 major international brands launched in Moscow’s market, among which were Swiss watchmaker Rolex, French luxury bakery chain Ladurée, and American lingerie classic Victoria’s Secret.
According to CBRE, around 70% of the new brands were fashion, cosmetics, and catering companies. A majority entered Moscow’s market with the help of local partners.
Moscow is an attractive market for retailers because of its large population that totals over 12 million people, a huge amount of retail turnover, and favourable business conditions, said Mohammed Akhkuyev, an analyst at CBRE’s research division.
“With the ruble devaluation, dollar rental rates also fell, and owners are now more flexible with rental agreements, including transitions to a percentage of product turnover and a willingness to compensate capital expenditures with finishing the premises for major fashion retailers,” Akhkuyev said, adding that 2014-2016 saw the end of a development cycle, and that during this period many new retail centres opened in Moscow, totalling about 1.6 million square metres.
The decrease in vacant retail space also demonstrates the increase in retailer activity. According to data from the real estate consulting company JLL, the share of vacant retail space in Moscow decreased 0.8% and totaled 7.5% in 2016, despite the overall increase in total retail property and commercial centres. In 2017, analysts from JLL expect vacancy to further decrease to 6.5% – the lowest since early 2015.
This is an important turnaround in the Russian retail landscape. In 2014-2015, international brands, primarily fashion retailers, began to leave the Russian market en masse or drastically scale back their activity. The German company Garry Weber, the British companies River Island and New Look, and the American companies Esprit and American Eagle Outfitters all departed in 2014. The sports retailer Adidas closed 167 stores across Russia in 2015.