IKEA ‘still believe in Russia’
- New Europe Investor
- December 03, 2014
IKEA’s MEGA Malls business in Russia is to push forward its plans to continue a vast expansion and renovation program.
This is despite the current economic difficulties.
Mega Malls currently has 14 outlets in Russia with work set to begin on a 15th location shortly. To be completed by 2018, ‘Mega Mytischi’ will be one of the larger locations.
According to the head of IKEA Shopping Centres Armin Michaely, business in the malls has grown in 2014 and international retailers are continuing to use the malls as an entry point to the Russian market.
Many of the foreign retailers already occupying the malls, are setting up new stores, expanding or at the very least, extending their leases.
Western brands include Lacoste, Lefties, Penti, Forever 21 and Uniqlo. IKEA themselves are the anchor tenant in all of the Mega Malls. Surprisingly 2014 has seen a 6% sales growth for occupying retailers.
Mega Malls Expansion Russia – The Numbers
The cost of the expansion and renovation program that IKEA have put forward for the malls comes to €2 billion. Of this, 40% will be used to renovate existing stores. Of this €208 and €158 million will be used to renovate and expand the two existing Moscow stores.
Aside from the €260 million Mega Malls are spending on ‘Mega Mytischi’, IKEA are also looking to enter new locations in smaller Russian cities of a population of 500,000 to 1,000,000.
Michaely stated that IKEA, ‘still believe in Russia’ and will continue investments with a view to the long term.
Retail space in Russia is considered in relatively short supply compared to Western European. Russia has 327 square metres of retail space per 1000 people compared to 690 square metres per 1000 in Western Europe.
With the ruble currently down 40% to the dollar in 2014, IKEA have stated that their increased costs of raw materials will force them to raise prices in their stores.
They have not yet given a date as to when this will happen.
View IKEA’s Mega Malls Official Website Here.