Realty 2015: Retail builds on last year’s growth

After retail sales went up by 7 percent last year, shopping center owners and retailers are hoping for similarly positive results in 2015 as well, said panelists during BR’s 14th Realty event.

Simona Bazavan

“For our retail business 2014 was indeed a very good year. Compared to 2013 we had a positive result, the same as in the first months of this year. The same applies to the real estate business. We have a partnership with NEPI for Ploiesti Shopping City which posted very good results last year both in terms of visitor traffic and tenants’ revenues. Overall, 2014 was a very good year and the trend for 2015 is similar. We are satisfied with how things are going,” commented Anca Damour, director at Carrefour Property Romania.

Liebrecht & wooD Group, the owner andoperator of the Fashion House Outlet center in Militari, western Bucharest, also says it has had positive feedback from its tenants in terms of sales. “Last year was a little better than the previous one and 2015 could be even better,” said Iuliana Enescu, commercial manager for Romania at Liebrecht & wooD Group. The time visitors spend in the center has increased to about 90 minutes and some 80 percent of them also shop, a growing share, added Enescu.

Last year “was not a bad year” for the tenants of Baneasa Shopping City or for its developer either, said Georgios Argentopoulos, CEO of Baneasa Developments.

One important trend the CEO pointed out is the fact that customers are becoming more mature in their shopping behavior. “The first part of the year marked a clear shift towards maturity. People are spending more wisely. They are looking at value for money instead of expensive brands. They are really focused on getting what they need, which is probably the result of years of crisis,” commented Argentopoulos.

Damour also pointed out that customers are becoming increasingly demanding. “This happens because they know what it is they need and they want certain comfort and services when they go shopping. They are also mindful of the time they need to arrive at a shopping center and easy interior access,” she said.

Nevertheless, prices remain the main attraction point. “Prices are key and they remain a driver, but what matters is what you offer besides the price,” added Damour.

Another trend that is starting to influence the local retail scene is the growing share of online sales.

“The biggest difference that we have seen so far is the increase of online sales or a combination between online and offline. Segmentation based on gender or age group alone doesn’t make much difference. Online research and online sales are something that we’re seeing more and more. And this is influencing both the way we do business and the way retailers do business. We need to adjust to this as this is something that will keep evolving,” noted Argentopoulos.

Despite the fact that the new retail stock delivered in 2014 hit a ten-year low, retailers were still interested in opening new stores. Talking about new players entering the local market, Mihaela Galatanu, head of research at DTZ Echinox, commented that they are mostly regional players that choose to expand to Romania after they have reached a certain level of saturation in the region.

By comparison, over 200,000 sqm of new retail space will be opened in Romania in 2015. Bucharest alone has the potential to absorb more than that and the opening of NEPI’s 70,000 sqm Mega Mall in the east of the city does not change the balance of power on the local retail scene, panelists argued.

“Bucharest is a big city with a big catchment area. As time spent in traffic is becoming an increasingly important factor when choosing a shopping mall, and whether we shop online or not, we will see more dominant neighborhood shopping centers developed,” said Damour.

And while there is still potential for more retail schemes in Bucharest, new customer demand also means that developers must innovate. “There is a constant need to innovate. Shopping malls themselves need to be increasingly community oriented,” she added.

New malls as well as projects opened during recent years need to find ways to become relevant, participants agreed. “It is about creating civic centers rather than just outlets with retailers inside,” said Argentopoulos.

New shopping center openings are good news for outlet centers like Liebrecht & wooD Group’s Fashion House Militari, and retailers expanding their presence means that they are also looking for outlet centers, said Enescu. “This makes us confident that we should open a second such center in Bucharest.”

The company has previously announced plans to open a similar project in Cernica.

Read more in the next BR issue

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