Auchan in the frame to expand Russian operations

Related tags Department store Hypermarket Retailing Auchan

Auchan is rumoured to be a prospective tenant at a huge 118,000
square-metre mall to be built near Moscow's third transport ring,
writes Angela Drujinina.

This would further underline the involvement of west European retailers in the ongoing redevelopment of business in Russia.

The press department of the Central District of Moscow said that the prospective mall would be built on the ground of the former First Refrigeration Factory, situated on the third transport ring. The factory ceased operating at the beginning of this year. The project investor, ELM Story Company, owns about 90 per cent of the factory shares.

Vladimir Mazur, chairman of the directing council, told​ that "the company was created last year especially for building a mall by the founders from Canada. It plans to invest $100 to 130 million and the project will be completed in 2006."

Mazur did not, however, answer questions about who will rent the mall. One of the first potential candidates for the mall, a division of retailer Perekriostok, said that its proposal had not been accepted by the mall's owners. But according to the company, the French hypermarket operator Auchan is in the picture.

Indeed, Auchan's Russian representative has confirmed that the group has held negotiations over renting space in the mall. According to the general building plan, an important part of the territory near the third transport ring is to be set aside for trading purposes, which suggests that this might well be the site in question.

Market analysts warn that other retailers will find it tough, should Auchan expand its operations in Moscow. When the France-based retailer opened a hypermarket in Liublin, sales at neighbouring outlets owned by Sedmoi Kontinent and Paterson decreased by about 15 per cent.

However, some market analysts think that the third ring is not the best place for a hypermarket - it is, after all, an industrial zone. Others, however, think that while it is currently an industrial zone, the implantation of a mall and an Auchan store would help regenerate the area.

French retail giant Carrefour and German discount retailers Aldi and Lidl are also lookng into expanding in Russia, in particular in St. Petersburg.

According to Nikolay Arhipov, vice-chairman of the committee for economic development in St. Petersburg, Carrefour is thinking of building its own outlet, while both German companies plan to purchase existing premises.

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