Siberia’s Retail Pioneer

The success of the Gudvin stems from its excellent location, strong concept, strategic marketing and a well selected tenant pool. In 2006 Gudvin was a finalist in the shopping centers rating compiled by the Russian Council of Shopping Centers. The expert panel commented that the project was extremely progressive not just for Tyumen but for all of Siberia and the Russian Far East. According to experts, by 2009 the supply of modern retail areas will double, but even this will not relinquish the Gudvin of its leading position.

Success Story
The current population of the city of Tyumen is roughly 580,000. However the fact that it is the center of a wealthy industrial region means that for the commercial real estate market it has the attraction of a city with a population several times greater. Relatively high consumer income levels mean that the retail segment is prospering and developing at a fast pace. According to Swiss Realty Group the average salary level in Tyumen in the second quarter of this year was 900 dollars (17,700 roubles) and 70% of the population is of working age.
It is only relatively recently that the local market finally drew the attention of federal and international retail chains who rushed to occupy the vacant niche. However there is a shortage of retail areas complying with the standards of modern retail operators. There are a considerable number of retail sites which have positioned themselves as shopping centers but lack professional management and are housed in covered market places. The potential consumer market for modern retail in the city is very large. There now exists a group of consumers interested in an exciting and pleasant shopping experience.
One of the first new-wave retail attractions was the Gudvin shopping center. According to SibintelDevelopment, the second project was inspired by the success of the first retail project, the Premiere. The second project also provided an opportunity to iron out any errors apparent in the first one. Following negotiations with leading Russian and European consultancies, the decision was taken to develop the concept and locate tenants independently.
The project was financed both directly (60%) and via loans (40%) and the co-investors included several large Russian firms. The total investment was 37 million euro. The risks were considerable since it was difficult to tell whether the local market was ready for a project of this scale and format. Nationwide chains were wary of entering the city with less than a million population.
Today the company’s portfolio of investment projects includes several shopping centers in Northern cities in Khanty-Mansiisky and Yamalo-Nenetsky autonomous counties and in the city of Tobolsk. From 2007 to 2009 the developer plans to build 400,000 sqm of commercial areas.
The concept of the Gudvin matches its location perfectly. Sibinteldevelopment decided that the Gudvin should provide a shopping and leisure location for people of all ages - both city residents and tourists. It was initially estimated that the daily visitor levels would be 12-15,000 people. The local transport system in Tyumen is poor and traffic jams rival those in the capital. This means that the development of a retail site aimed at the large number of shoppers is highly significant for the city.
The Gudvin shopping and leisure center is perfectly situated in relation to pedestrian and transport flows in the densely-populated city center among residential developments. It is only a few paces from the bus stop to the entrance of the shopping center. The facade looks out onto the road and the building is visible from a number of locations. The retail corridors of Ulitsa Lenina and Melnikaite are located nearby.
Access by car is slightly more difficult but visitors are offered a spacious car park with 1,000 spaces. There is also ample parking for cargo lorries. According to SibintelDevelopment, the project was created to meet the needs of tenants. The anchors of the first phase, Perekriostok and Tekhnosila hypermarkets, were particularly interested in the logistics arrangements.

Entertainment For All
An integral element of the concept for the Gudvin shopping and entertainment center is the spacious entertainment area (6,566 sqm) on the second floor. It includes an 8-screen multiplex from Cinemapark (the largest in Tyumen, it has a total seating capacity of 2,040), GAMEZONA entertainment complex and an American cinema bar and cafe. Next door is a Bananamama children’s goods store and a food court with 5 concepts. For a retail property of this size positioned as a family and leisure center it was essential to offer a wide range of entertainments. This broadens the target market and increases consumer loyalty.
Today the Gudvin is the only shopping center in Tyumen which has its own fully-fledged multiplex. Its older brother, the Premiere, has a 4-screen Interkino cinema but all the other modern retail complexes do not offer entertainment components. All new projects being developed include large entertainment components. An example is the Ovental Rio Grand (Quarter 1, 2008) from Moscow developer Ovental which will include a children’s entertainment center, a 4D cinema and other attractions. RosEuroDevelopment plans to launch the Planeta shopping and entertainment center (125,000 sqm) by the end of 2008. The entertainment component will include a multiplex (smaller than the one in the Gudvin), a bowling alley, children’s play area all within a 1,000-sqm area. In 2009 the second phase of the Solnechny shopping and entertainment center will be delivered which will include a game center, mini-golf and ice skating rink.
“But construction on the new shopping centers has not yet started and there is still time to work on a new, enhanced loyalty program,” says Anton Korotaev, senior analyst at the Russian Research Group. The excellent tenant composition and location of the Gudvin should ensure that it maintains its position during a long time.

Customer and Tenant are Always Right
Despite the originality of its concept the Gudvin fully conforms with all the latest European standards for shopping and entertainment centers and comprises four traditional zones: a multiplex, hypermarket, food court and gallery. Market experts are impressed by the design and end result with one exception – everyone we asked commented that the third floor does not work well. “It is small and the location of the stairway is inconvenient. There are no anchor tenants to draw in shoppers,” comments Mr Korotaev.
According to Dmitry Zolin, managing partner at LCMC, the architectural design is too simple but the functional concept is very strong and competitive. The logistics of shopper flows has been well organized and the areas are properly zoned, the tenant composition is excellent and there is spacious parking. “Apart from the Premiere shopping and entertainment center there are no competitors to the Gudvin. In 2009, following the realization of all or most of the announced projects the shortfall in high quality retail areas in the city will be reduced but not eliminated,” comment analysts from LCMC.
The most convincing proof of the shopping center’s success is its occupancy rates and visitor levels. The Gudvin scores very highly for both of these indicators. The number of visitors is one and a half times higher than forecast and is 20,000 people per day during the week and over 24,000 at the weekends and during public holidays. Rental agreements with tenants of the retail gallery have been concluded for terms of up to five years and for even longer periods with the anchors and mini anchors. The tenant rotation figure is low. All the retail areas are currently 100% occupied and there is a waiting list of hopefuls even though the rental rates are among the highest in Tyumen. The precise rental rates have not been released but market experts comment that they are above average for the city (LCMC estimates 860-1200 per sqm per year).
Apart from Cinemapark and Perekriostok, the other anchors include a Tekhnosila supermarket, Vetvyana department store, a New Yorker clothing store and Bananamama. The gallery includes federal and international clothing and footwear retailers, such as Carlo Pazolini, Chester, BGN, Lady & Gentleman CITY, WoolStreet, Bustier, Domani, Olsen, Sela, Adidas and Finn Flare. There are also stores selling cosmetics and accessories, mobile phone stores and jewelry stores.