What is crucial factor in success of retail scheme?

In light of the strengthening competition in the sector, the Ukrainian market will offer more opportunities for retail chain expansion, but localised retail rents will be subject to further downward pressure, particularly in poorly conceived first generation retail schemes. In order to stay competitive, owners need to proactively implement repositioning of underperforming schemes, - DTZ.

The potential of the retail market in Ukraine remains high, despite presently unfavorable economic and political conditions, the country’s perceived risks and comparatively low income of the population.

Though remaining rather immature in terms of quality and formats of existing stock compared to other CEE countries, the retail property market in Ukraine benefits from large country size, significant population density, perceived high brand awareness and propensity to spend of population.

However, the competition in the retail property sector has been strengthening with more modern retail projects delivered and planned. Therefore, quality and professional management remain crucial factors for the success of all existing and new retail developments in Ukraine.

According to DTZ research total retail stock in Kyiv as of December 2014 increased by around 16% compared to late 2013 and more than doubled since 2008. Cumulative gross leasable area of multi-tenant shopping centres in the Ukrainian capital amounted to approximately 1,063,000 sq m (GLA), with around 35% of this figure formed by first generation and/or poor quality schemes with some redevelopment potential.

In order to retain and attract quality tenants to retail schemes most developers have to be flexible in structuring rental terms in negotiations with tenants however, the need for such concessions can to a degree be offset by owners improving the existing retail schemes, through a process of repositioning, upgrade and in certain cases even rebranding of shopping centers.

As the conversion of a visitor into a purchaser is the responsibility of retailers, the main target for shopping centers owners is to attract as many of the right profile of visitors to the shopping centre and, keep them inside for as long as possible.

To ensure social attractiveness developers should make an entire complex of measures which includes:

• analysis of tenant mix
• visitor amenities and environment
• marketing
• internal circulation and navigation within the shopping center.

This often requires consultants to work alongside with architects and technical engineers so as to ensure not only the efficiency of layouts but, appropriate mechanical and electrical system upgrades and, operation.

Above all, any repositioning theme should be developed based not on physical attributes, but on the targeted customer attraction toward the shopping area.

The desired effect of re-positioning efficiency can be reached only through synergy effect of professional management and strong tenant mix which should always be considered as a complex process.

Source: DTZ Ukraine