Thursday, April 29, 2004

In the past six months three major shopping centers have opened in Kiev. Two, Karavan and Gorodok, are in the north of the city, well away from the center. The third, the Ukraine Department Store is in the center. All three offer many of the features and services of a modern shopping mall. The targeted market for each is slightly different but the malls share many of the same retailers.

The first, Karavan, has the largest scope of the three. It is a complete make over of a former manufacturing facility. Its exterior is more or less a large shed but its interior is very close to a modern mall anywhere in the world. The mall features name brand stores and large retailers well known to Ukrainian shoppers. The mall calls itself a ‘hyper-market’ but is really a traditional mall. It features a large super-market and perhaps other sixty or more shops. It is currently in the process of expanding. It greatest weakness is that it is outside the traditional shopping areas of the city and is without good public transportation. To alleviate this issue, the shopping center has a fleet of mini-buses that off free transport between the center and the three nearest metro stations. Its target market is the upper middle class who have access to a car and is looking for a complete shopping experience in one place. It should be a success and it has the room to expand as the market demand grows. Locations are still being filled but it has only been open a few months.

The second, Gorodok, is perhaps the most modest in scope but perhaps, at this point, the most successful. It is located in a major shopping area in southern Obolon with very good public transportation connections. The retailers in the center are almost all small Ukrainian businesses trying to upgrade their location into a modern shopping environment. The mall is a rebuilt industrial facility that limits the size of the retail spaces but a good effort has been made to open up the space and bring it up to modern standards. Its target market is middle income Ukrainians without the need for brand name goods. This mall is the only one of the three that is fully rented out. Lately there has been some turnover of retailers but it has remained fully rented.

The Ukrainian Department Store was the largest department in Soviet Ukraine. It featured four large floors, badly laid out, with poor services. It took over a year to remodel and it is now complete. A great deal of money has been spent on the interior but the general layout of the former department store has been maintained. There is a large movie complex on the top floor and a middle sized supermarket in the basement. The remodel has not broken up many of the design restrictions of the old Soviet department store. The very large stair wells remain as do the location of the one-way escalators. The flow of the floor plans is not rational and there are a great deal of wasted space and dead end. Even with these restrictions, the mall should be successful. It has a good location, a large parking facility and very good public transportation. The mall is currently about 70% leased but a few large spaces are still empty.

With these three malls, Kyiv might now have enough retail space. A few locations in the very center of the city are still filling in, i.e. Mandarin Plaza. There are large regions of the city without modern retail areas but these will be filled in the near future. The retail market of the city might now have to await further growth in consumer spending to see continued growth. It is interesting to note that many of these malls share retailers and there is little diversity in retailers between many malls. This is especially true between the Ukrainian Department Store and Karavan.

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