Russia may have introduced the world to delicacies such as borscht, blini, beef stroganoff and caviar, but the country's booming shopping centre pipeline is leaving little room for the increasingly important Food and Beverage (F&B) component, new research by JLL shows.
According to JLL estimates, the average F&B share in total GLA of Moscow shopping centres is about 4%,compared to the European average of 15%. However, in some Moscow malls it is well above this level and close to the European average. In St Petersburg shopping centres, the average F&B share is slightly higher than in Moscow, at 5%, as there are fewer large centres in the city.
These are key findings in the 'Food & beverage (F&B) in Moscow and St. Petersburg shopping centre's report which JLL published at the MAPIC retail real estate fair in Cannes on Thursday.
JLL notes that there is a global trend towards recognising the dining areas as a destination within shopping centres. According to JLL, food in European shopping centres averages 15% of the total GLA and is a crucial anchor in the tenant mix. Landlords, the report states, are giving preference to F&B tenants due to the increasing acceptance of the importance of wining and dining to attract and keep customers in centres.
At the same time shopping centre development is booming in Russia. Moscow is ahead of other European capitals by the total shopping centre supply, with 4.9 million m2 of quality retail space in 104 shopping centres, while the total retail stock in St Petersburg is 2.2 million m2 in 58 malls.
Shopping centre supply
'The overall supply of quality shopping centres in Russia has doubled over the last five years, exceeding 20 million m2. In 2015, 1.9 million m2 was added, and similar volume is expected in 2016,' said Maria Shpakova, senior retail market analyst for JLL Russia & CIS. 'Such high volume of new retail space provides consumers with more choices. Their preferences also evolve. During the acute phase of the current recession, consumers have had to cut their spending and adjust shopping habits. As a result, competition between shopping centres for a loyal customer has become more intense. Well-organised dining area has become one of the ways to attract more people.'
The largest F&B shares in Moscow are in Evropeisky (15.4%), Afimall City (10.9%), Atrium (10.7%), and Okhotny Ryad (10.3%). The largest number of F&B units is in Evropeisky (67 units), Aviapark (60), and Afimall City (51).
Nevsky Centre has the highest density of foodservice units among St Petersburg shopping centres (12.5%). Other malls with large F&B shares are Galeria (9.5%), and Grand Kanyon (7.7%). The largest number of food concepts among St Petersburg shopping centres is in Galeria (34), Leto (31), Grand Kanyon (28) and Piter Raduga (27).
Dining categories
Apart from the F&B space allocation, another ingredient of a successful F&B offer in a shopping mall is diversity, according to Tatyana Malyanova, head of shopping centres agency, JLL Russia & CIS. 'A broad range of operators helps to attract more customers. A combination of brands with high awareness and new interesting local concepts can boost the operational performance of a shopping centre. In particular, landlords need to pay attention to unique, one-of-a-kind food concepts which can become attraction points.'
There are five typical food service categories in a shopping centre, Casual Dining, Café, Fast Food, Impulse Kiosks, and Gourmet Food.
The Fast Food category in Russia is the only one comparable with Europe in its share in the total F&B space (about 30%). The shares of other categories divert from the European levels: the share of Casual Dining in Russia exceeds 50% of total F&B supply versus 35% in Europe. The Café category is relatively undersupplied in Russia compared to Europe: its share in St. Petresburg malls is 15%, in Moscow – 10%, while in Europe it accounts for 25%. The dominance of a single category in Russia indicates a limited variety.
'Most Russian shopping centres have standard food offers, which does not serve as an anchor and attraction point. Still, there are examples of well-organised, attractive concepts with a modern design and a unique variety of food operators,' Shpakova said.
'For example, in Moscow, some newly constructed malls provide visitors with trendy F&B areas, and a few older malls are in the process of F&B refurbishment. Russian shopping centres follow the global tendency of paying more attention to F&B by allocating larger areas and diversifying F&B offers. We also see that the F&B share in most successful and popular malls in Moscow and St. Petersburg are higher than the market averages. Developing a unique F&B offer attracts more consumers, supports tenant turnover, rental payments and capital values. Careful selection of food concepts enhances the overall attraction of a shopping mall and boosts its competitiveness in the current market.'
