Maxim Levchenko: MAPIC Has Been Replaced

Last week, an annual MAPIC 2018 exhibition took place in Cannes. According to  tradition, owners of major shopping centers, large retail companies, and consultants that inspire everyone in this market met at Palais des Festivals.

            There were just a few of our compatriots at MAPIC this year. You could count the Russian companies by hand. There were probably less than five, and they were very modest.

            Why didn’t Russian companies attend? It is probably easy to blame it on crisis and sanctions. One could say that business is not in good shape in Russia now, and many companies stayed back. Yes, the current situation is not the best, and the economy is not in its best shape, but it is not the only reason. This explanation would be too simplistic.

            There are several reasons for the decline in interest to MAPIC among Russian companies. It is not about isolation or self-isolation. The West is still interested in our markets, and the lion's share of retail in Russia belongs to foreign companies. Russian market employs Western architects, engineers, consultants, developers, and even banks.

            There is another reason. There are fewer offers and new shopping malls; many chains have lost their momentum; the retail industry is not developing as rapidly as in previous years; and many companies are simply leaving this business.

            We heard rumors in Cannes that Stockmann, Hamleys, and Castorama are leaving Russia.

            We were tempted to cry: “Stagnation!” But, in my opinion, everything is going in the right direction.

            The laws of dialectics still exist, and quantity still translates into quality. New players come to replace those who are leaving and pedestals don’t stay empty for long.

            Here is a logical explanation: objectively, there are fewer new offers on the market, including new land lots; the population is not growing at an accelerated pace.

            This is reason number one. Reason number two is that market development is mainly happening through re-concept of the existing shopping centers.

I would like to use Fort Group as an example to illustrate it.

We have been attending MAPIC for seven years.

In 2012-13-14, we had a lot to offer to the market. It was a period of active development and introduction of new shopping and entertainment centers, as well as re-concept of the existing malls.

            In 2015 and 2016, we were involved in operations. Our malls in St. Petersburg were 100 percent full.

            In 2017, we took control of five existing shopping centers in Moscow.

            As a result, in 2018, we had probably the largest and very informative Russian booth of about ninety square meters. It was designed in the national style and decorated with patterns from Gzhel and Khokhloma. We offered champagne, coffee, and cookies to our guests. However, people visited our booth for a different reason: we had something to offer once again.

            Today, Fort Group is the largest commercial real estate owner in Russia. It manages five shopping and entertainment centers in Moscow and ten in St. Petersburg. We have been conducting several major projects simultaneously, including a large-scale renovation of Europolis Rostokino and other malls in Moscow, as well as City Mall in St. Petersburg.

            The market is interested in it, and especially when the number of participants becomes smaller. Ilya Kabakov, one of the most famous living Russian artists and probably the most expensive, said that not everyone will become a part of the future.

We have to reserve seats in the future.

However, the main or the essential question is this.

          My colleagues and I have realized that everyone with whom we communicated at MAPIC 2018 were people with whom we interact in Moscow and Saint Petersburg on a regular basis. We barely saw any new faces. The questions is: why did we go there? It is easier, cheaper, and makes more sense to meet at home. After all, we now have MAPIC in Moscow, which is very well organized and everything is great there.

            A CEO of one of the largest Russian chains came to see us. The key issue for both of us was the type of stickers on the windows of our stores in Moscow.

            Was it really necessary for the Fort Group to construct a booth and send so many people to France so that they could discuss stickers?

            Certainly, I am glad to see my esteemed colleagues, but I would like to see more new faces and make new business acquaintances.

            MAPIC in Cannes, first and foremost, is an event that is needed for maintaining an image: it is important to be recognized and known. It is also an opportunity to learn about European projects, and to enjoy oysters and drink Bordeaux with good friends. Moscow MAPIC is a working event where everything is strictly business.