Zara and H&M stores have been closed in Ukraine since the start of the full-scale war and it looks like they won’t reopen after all. Meanwhile, manufacturers from Poland, Turkey and Ukraine began to occupy the niche of these popular brands.

Western companies are in no hurry to resume their business in Ukraine due to unabated missile attacks. These include the Swedish brand H&M and the Spanish retailer Inditex. The vacated niche was filled by Polish and Turkish brands.

Who continues to supply clothes to Ukraine and when fashion brands Zara, Bershka and others will return – read in the article.

Zara and H&M are not ready to return to Ukraine

Since the end of April, there has been information on the Internet that the Spanish retailer Inditex, which owns the brands Zara, Bershka, Pull&Bear, Stradivarius and Massimo Dutti, may return to Ukraine. Preparations for the opening could allegedly begin in July and be completed within a month.

However, given the significant increase in the intensity of missile attacks by the Russian Federation, this is not the case now. Since the beginning of the full-scale war, nothing has changed and is not changing at the moment, Evgenia Loktionova, director of the UTG consulting company, told UBR.ua.

“While martial law continues, the stores of these brands will be closed. There were no official announcements from these brands. If there are any changes – and the landlords are waiting for them – there will be an official announcement,” Loktionova said in a conversation with us.

According to her, retailers are keeping their space in Ukraine and are waiting for the end of the war.

“They have not closed completely, shops with equipment are standing,” says Loktionova.

The main obstacle for brands is that it is dangerous for their staff to work during military operations, since there were precedents of shelling at the SEC itself, explains commercial director of Dragon Capital Property Management Nataliya Kravets, who in particular manages Piramida and Aladdin shopping centers in Kyiv and Victoria Gardens in Lviv.

“There are their stores in our malls, but they are not working. We periodically contact the companies, but at the moment they do not announce specific plans for opening,” Kravets told UBR.ua.

Vacancy in Kyiv shopping malls is breaking records

As Evgenia Loktionova notes, according to statistics for 2022, the average vacancy rate of shopping malls in Kyiv was 21%.

“If you look at individual modern shopping centers – they have a small vacancy. These are Respublika, Lavina – there are about 10 of them in Kyiv. In two or three, it is almost zero – like, for example, in Smart Plaza at KPI,” Loktionova clarifies.

In general, across the country, the vacancy rate decreases as the distance from the front line increases.

“At the beginning of the war, there were three shopping centers in Kharkiv – now two are fully operational, one was bombed. The situation there is difficult. There is almost no vacancy in Western Ukraine – in Lviv, for example, it is practically zero,” adds the director of UTG.

At the same time, the vacancy rate this year is even higher than last year, says Natalia Kravets. She explains the reasons in detail.

“In Kyiv, in the last two years before the war, a very large supply entered the market, so the vacancy rate was unusually high. Large malls did not have time to fill all leased space. Usually, regional and super-regional malls are leased approximately two years before opening and within a year after opening”, Kravets explains.

Thus, even before the war, the market simply did not have time to absorb such an offer. However, demand in Kyiv is currently at a low level. The main reasons are standard for any business: the economic situation and the danger of missile attacks.

“At the same time, the situation in Vinnytsia and Lviv, where we also have a shopping center, is radically different – there we even have a queue of potential tenants,” adds Kravets.

How the price for renting premises in the shopping center has changed

Currently, rental rates have decreased compared to pre-war rates in Kyiv and in the east of the country, says the commercial director of Dragon Capital Property Management. On the other hand, in the western part, in particular in Lviv, according to her, prices have already returned to the pre-war level.

According to Evgenia Loktionova, even in the capital, prices have already returned to the level before the full-scale invasion.

“As of today, prices have returned almost to pre-war levels, even increased a little. There is always a link to the dollar exchange rate, and the dollar has increased by 30%,” says Loktionova.

As Loktionova explains, in general, the turnover of shopping malls in Ukraine has increased over the past three months. First of all, this applies to Kyiv – here the indicators have increased by 30%.

Who occupied the niche after the departure of Inditex and H&M

Spain gave way to Poland when it comes to large retailers with a wide range of brands. Gdańsk LPP came to replace La Coruña Inditex.

“The brands of the companies that left Ukraine work in the fast fashion category, so their niche was occupied by Polish Reserved, Cropp, House, Mohito, Sinsay (all from LPP retailer – ed.), Turkish LC Waikiki and De Facto, German New Yorker and Ukrainian brands that continue to be at the peak of popularity,” Kravets lists.

The general director of KarKat Fashion, the official representative of women’secret, Springfield and Pedro del Hierro brands in Ukraine, Ihor Zabulonskyi confirms that in the absence of Inditex with its powerful line of brands and the Swedish H&M, Ukrainians prefer Polish brands. Ukrainian manufacturers also took advantage of the vacant niche, many of which opened new ones.

“Traffic is down compared to the pre-war period but is increasing compared to last year. The more sun, the more active people are. They want to be beautiful and attractive. Many people use a trip to the mall as a means of relaxation, while people buy something seasonal, with short sleeves,” Zabulonskyi shares with UBR.ua.

Suppliers continue to work with Ukraine and are ready to send products to the country. But it became more difficult to deliver during wartime.

“Supply is now more difficult and more expensive. Now transshipment takes place in Poland, we pay extra for it. Someone does it in Romania. Transshipment is entirely at our expense,” Zabulonskyi says.

Additional costs affect the final price of the product, but not particularly dramatically – within a few percent, according to the director of the network. Goods cross the border without incident.

Source: ubr.ua