House 19-21 and 23 on Nikolskaya street in Moscow, 2015
One of the largest suppliers of luxury perfumes, Vladimir David intends to open a premium Department store in the buildings he bought in 500 m from the Kremlin. But to develop such a format is more difficult than traditional shopping malls
GUM, TSUM, VUM
Entrepreneur Vladimir Davidi, group product Manager at Esterk Lux Parfum — one of Russia’s largest suppliers of expensive perfume — plans to create a new Department store in Central Moscow. About this businessman told RBC.
Your Mall he would call VUM, wanting to cause Association with shopping malls GUM and TSUM. Thus, in contrast to the latter the name is an abbreviation. For these purposes, at the end of July, David has registered OOO “VUM”, which will be not only the owner but the management company of a new shopping center, but also bought (the transaction closed in early September) two historic buildings at the address: Nikolskaya, 19-21 and 23, between the Tretyakov passage, shopping centre “Nautilus” and the Deluxe hotel St. Regis.
Given the greater wear, the Chairman of the Board of Directors of Kalinka Group Ekaterina Rumyantseva estimates the value of the buildings on Nikolskaya about 640 million rubles. They are not connected to utilities and has hardwood floors, says the head of Department strit-retail at JLL in Moscow, Yulia Nazarova. It is estimated that the cost of reconstruction of such facilities will cost about 100-200 thousand RUB for 1 sq. m., Davidi He hopes to make repairs within $500 for 1 sq m (about 32.5 thousand rubles).
“We are not planning to make a premium repair — explains the businessman. Exclusive will be the fulfillment of the new store. There are things that aren’t there, not only in Russia but throughout the world.” According to David, we are talking about exclusive clothing collections from brands. The premises on the ground floor facing the street, will be allotted under the trade things available “to a wider audience of buyers. Also inside the Department store will open a restaurant, pastry shop, book salon and a wine cellar.
What is business David
The company Esterk Lux Parfum family Davidi exists since 2001. According to system SPARK, one of the main legal entities of the company “Esterc Luxury Perfume” on 100% belongs to Vladimir David. Esterk Lux Parfum is one of the largest distributor of selective perfumery in the perfumery-cosmetic network in Russia, in particular, is a partner of the Moscow and St. Petersburg DLT TSUM, Articoli networks, “Rive Gauche” and “Ile de Beaute”. Exclusive distributor represents more than 30 brands of perfume and develop their own retail projects: a network of boutiques of niche perfumery Molecule and mono-brand boutiques Kilian and Serge Lutens. According to the source RBC, close to the family, David, most of the real estate used by the company, including the Moscow office and warehouse complex, located in its property. The company does not disclose data on revenues and profits. Believed to be the primary Manager of the business Vladimir David.
Chamber Department store
Respondents RBC experts agree that to attract a good traffic of customers the store needs to be large enough. Project Davidi (with a total area of just over 2.4 thousand sq. m) seems too intimate. To call it a competitor of TSUM, which belongs to the group of Mercury, or Gum, which is owned by the Bosco group, Mikhail Kusnirovich, one can only conditionally. The area of these shops 57.3 thousand and 75 thousand square meters, respectively. To Mercury and Bosco queries on the RBK not answered.
Latest shopping complex within the Boulevard ring was opened in 2012 is “Fashion season” (until 2013 called “Gallery Moscow”). Its area is also much larger and amounts to 30 thousand square meters.
However, the main challenge for the new project will be the formation of the range.
During the crisis, the premium segment is feeling much better than mainstream. According to the company CBRE, specializing in commercial real estate since the beginning of the year, the average turnover of luxury brands, the first line (Chanel, Dior, Louis Vuitton, etc.) amounted to about €30 thousand for 1 sq. m of retail space per annum. Brands second line shows more modest gains of €15 thousand for 1 sq. m a year.
“Theoretically, the idea [David] could work brilliantly, but he needed to get to your level because Nicholas is already a lot of luxury operators,” — says Director of retail Department, CBRE in the Moscow region Marina Malakhatko.
“In my opinion, the creation of a luxury Department store in Central Moscow is now virtually impossible, as most brands are distributed between the key players of the market, who develop them in their areas,” — said the commercial Director of AVICA Petr Isaev. However, he stipulates that there is a whole layer of brands that do not belong to the Suite, but interesting fashion to the public. However, to obtain from them permission to be represented in the new project still seems to be a long and difficult process.
“Execution” of the house
Building on Nikolskaya, 23, is the object of cultural heritage of regional significance, follows from the information published on the website of the Moscow cultural heritage Department. At the heart of the building lie stone chamber of the XVII century. It was subsequently enlarged and rebuilt in the XIX century here lived the writer Nikolai Stankevich, and in 1935 moved the Military Collegium of the USSR Supreme court. In the history of this house came as a “firing”: it is here handed down the death penalty on many high-profile cases during Stalin’s repressions. It decided the fate of Babel, Meyerhold, Tukhachevsky, Bukharin, Zinoviev, Kamenev, Rykov and many others.
To find needs
It trouble attracting brands and, as a consequence, the range, caused the failures of other Department stores such as Debenhams and Stockmann in Russia, reminiscent of the interlocutors RBC.
In November 2015, Stockmann announced the sale of the Russian business. Then CEO Per Thelin said that the company’s business in Russia has been unprofitable for the last several years, and a significant devaluation of the rouble aggravated the losses.” According to the company, in 2014, the revenue of Russian Department stores amounted to €240 million, operating loss of — €26 million
For four years, from 2012, Debenhams has opened in Moscow only two stores in the shopping center “Mega Belaya Dacha”, shopping center “Aviapark”. And this is the second British network to the Russian market. The first store on Krasnaya Presnya street for less than a year and a half and was closed in 2008 due to losses.
“When customers leave Stockmann in the General stores of those brands that were represented there, Stockmann just couldn’t offer anything new. Similarly, passive now and Debenhams, which, as well as Stockmann, came up with a conservative market”, — says head of shopping centres at Knight Frank Eugene Akberdieva. In her opinion, to the format of the Department store proved to be successful, you must assemble a competent team that would carry out constantly “marketing research, trying to find the needs of your target audience” and “added something new”.