At the beginning of April, the Spanish retailer Inditex is preparing to return to the Ukrainian market, and with it a number of foreign fashion brands: Zara, Stradivarius, Pull & Bear, Massimo Dutti and Bershka, which closed at the very beginning of the war. Zara stores will be the first to reopen. Novyny.LIVE figured out how the return of global brands will affect Ukrainian retail, what will happen to the prices of new collections, as well as what changes to expect in the market in the near future.<\/p>\n
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Return of brands in April<\/p>\n
The opening dates of the brands became known from the information published on Google maps that the chain\u2019s points will first open in Kyiv – April 3 (SEC Dream, River Mall, Respublika Park) and April 5 (SEC SkyMall, Lavina Mall). There is no information yet about the opening of other retail stores – Pull & Bear, Massimo Dutti, Bershka and others.<\/p>\n
The British business newspaper Financial Times wrote about the Spanish retailer\u2019s plans for a gradual resumption of work in Ukraine back in early March. According to the publication, the retailer plans to reopen 50 stores. And, probably, from Zara chain stores.<\/p>\n
However, even the opening of Zara alone is a good signal for the market, experts are sure. For example, when H&M returned to Ukraine in November 2023, SEC traffic increased by 10-15%. This was reported by the Retailers Association of Ukraine (RAU). In the case of Inditex, traffic growth could be even greater.<\/p>\n
\u201cFirstly, Inditex has many more brands, they focus on different target audiences and try to cover everyone. Secondly, if we are talking only about Zara, then this brand is between Nike and Adidas in terms of Brand value. For us, the return of international brands is very important because these stores drive traffic, make it faster, give impetus to small manufacturers and suppliers,\u201d Dmitry Lashin, CEO of the capital\u2019s Lavina Mall and Blockbuster Mall, quotes in the Association.<\/p>\n
The consulting company UTG is also looking forward to the return of Zara. \u201cZara is one of the world\u2019s leading brands, a traffic-generating operator. Of course, its return will affect both traffic and occupancy of the SEC,\u201d Evgenia Loktionova, general director of the consulting company UTG, told Novyny.LIVE.<\/p>\n
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A fifth of Kyiv\u2019s retail space remains empty<\/p>\n
Meanwhile, things in the commercial real estate market and retail in general can only be called successful with a stretch. The cost of goods is rising, but purchasing power remains low. All this has led to the fact that a fifth of all retail space in the capital remains without tenants.<\/p>\n
According to the consulting company UTG, the average vacancy rate of operating SECs in Kiev at the end of 2023 was 14.2%. \u201cIf we discard closed stores, then in Kyiv the vacancy rate is on average 14%, which is already higher than the normal figure. And if we also take stores of closed tenants, then this is approximately 19.7%. In other words, a fifth of all retail space is actually closed. In In the near future, we predict big problems with the occupancy of regional format facilities, where the actual vacancy is already more than 27%,\u201d UTG said.<\/p>\n
At the same time, as the company notes, on the Ukrainian market today there is not a sufficient number of alternative international department stores in the areas that were vacated after the start of the war.<\/p>\n
At the same time, competition among SECs continues to intensify: the White Lines, New Ray, April Mall, BalticSky, Ocean Mall, Lukiyanivka and other facilities with a total area of more than 250 thousand square meters have been declared for opening in 2024-2025. According to UTG, the launch of the declared projects, given the current level of income and expenses of the population, can increase vacancy to 17% by the end of 2024. This will lead to a gradual redistribution of consumer flows between properties, as well as a further reduction in rental rates.<\/p>\n
There are fewer impulse purchases<\/p>\n
In terms of traffic to SECs, things are not much better. In 2023, average daily attendance has increased by almost 10%, but remains a third lower than before the war. Interestingly, district format SECs, whose structure includes fewer international large-format department stores (Inditex, GAP, IKEA), demonstrate greater stability in terms of attendance.<\/p>\n
Retailers also confirm this. As Igor Zabulonsky, general director of Kar Kat Fashion (develops the Springfield, Women\u2019Secret, Pedro del Hierro brands in Ukraine), told Novyny.LIVE, the traffic situation today is very heterogeneous.<\/p>\n
\u201cIf we are talking about Kyiv, then traffic is growing slightly. We have few stores outside the capital, but there is even a decrease there. But in general, there are no major changes in the market. The situation has stabilized,\u201d Zabulonsky told us.<\/p>\n
As for the return of Zara, he said traffic should increase, but whether this will affect sales is still a question.<\/p>\n
\u201cThe opening of stores will most likely lead to people coming to look. Traffic may increase. But whether it will be productive is difficult to say. People love to walk around SECs, but there are far fewer impulse purchases. People now go to stores more consciously. They can do several approaches to different SECs, look, try on and only then make a purchase,\u201d Zabulonsky told us.<\/p>\n
He also added that the blockade of western borders organized by Polish farmers dealt a serious blow to retailers. \u201cThere are two aspects here. Firstly, the goods take longer. And secondly, the cost has increased. Delivery has skyrocketed. We cannot raise prices for buyers yet, because purchasing power remains low. But they are unlikely to be lower either, because that retailers\u2019 profitability has dropped very significantly,\u201d Zabulonsky noted.<\/p>\n
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Retail is preparing for change<\/p>\n
To stay afloat, businesses have to adapt to new customer needs.<\/p>\n
As UTG notes, many developers have already begun a comprehensive modernization of their SECs (Karavan, TSUM, Metrograd, Metropolis, Lukyanivka Square, Cosmo Multimall, Gorodok Gallery, Magellan, Globus), “Marmalade”, Dream Town, Silver Breeze, InSilver), while others have planned modernization for the near future.<\/p>\n
Retailers are also changing their assortment. According to Zabulonsky, this year Kar Kat Fashion introduced a new women\u2019s sportswear brand, Dash&Starts, to the Ukrainian market. “It is already sold in our Women\u2019Secret stores. We noticed two trends \u2013 a drop in interest in swimsuits and an increase in interest in sportswear. And we were right. The new brand is selling very well. People are not ready to spend money on vacations, but a very large number of women today take care of their body,\u201d said Zabulonsky.<\/p>\n
Also, recently more and more outlets and discounters have appeared on the market. Thus, at the end of last year, a multi-brand outlet store Discounterra opened in the capital\u2019s Karavan Outlet SEC, and the first store of the Polish retailer CCC Half Price in Ukraine was opened in the Respublika Park SEC. And in March of this year, it became known about the opening of two new sports outlet stores, New Balance and Arena, in the capital\u2019s Sofia Mall SEC.<\/p>\n
UTG explains that the rising cost of living is forcing people to pay attention to how much they spend on non-essential goods, particularly clothing. \u201cTherefore, a reconception was made in some properties based on what buyers living in a particular area of the city require,\u201d Loktionova told us.<\/p>\n
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