Ikea builds Russian mega-mall

Ikea's first store in Moscow was a huge success

By Alex Ritson reporting from Moscow

Construction work is well underway on the biggest shopping complex Russia has ever seen.

Moscow's $250m (£161m) mega-mall will open in December, and promises to be one of the biggest innovations for local shoppers since the arrival of the city's first McDonalds fast food restaurant more than a decade ago.

At trading centres in Moscow, there's lots of shops and things to buy but you wouldn't want to spend the day there

Martin Shankland
Adidas Russia

And once again, an international retailing giant is calling the shots - the project is the brainchild of the Swedish furniture group, Ikea.

"There will be shops everywhere," said Claes-Goran Dyhlen, the man in charge of building the mega mall.

The figures speak for themselves - there will be a hypermarket, 250 shops, two kilometres of shop fronts, a skating rink, and Russia's biggest cinema complex.

Those two-hundred-and-fifty retailers will be paying rent to the Swedish furniture giant, Ikea.

Swedish success

It built its first store in Moscow just two years ago.

Spokesman Peter Odlund says the mega-mall is a fascinating experiment.

Russians love Ikea

"We have noticed that when we build an Ikea store, very shortly thereafter we have an entourage of retailers surrounding us, because Ikea manages to draw from a great area," Mr Odlund said.

"We have people driving four hours and here in Moscow they even come from St Petersburg," he said.

Ikea believes the centre will attract between 25 and 40 million visitors a year.

'A great economy'

That would be highly lucrative if the mega-mall were in Europe, or North America, but in Russia the average wage is barely $150 a month.

That is not a problem, according to Peter Odlund.

"I think it is a well known fact that most Russians have one official job, and have six others. It's a great economy here," he said.

"Our projection for our first store was that we would reach $60m turnover after three years - we reached $100m in the first year."

That optimism seems to be shared by the centre's prospective tenants.

Retail tales

Already signed up are international brand names including fashion chains such as Tommy Hilfiger, Levi's and Reebok.

Martin Shankland runs the Russian operations of the German sportswear chain Adidas and claims Russia's retail economy is finally coming of age.

"At trading centres in Moscow, there's lots of shops and things to buy but you wouldn't want to spend the day there," he said.

"This project brings the opportunity to the retailer to attract families for a whole day."

The mega-mall's 150,000 square metres of shops are due to open two weeks before Christmas.

It is only then that Ikea will be in a position to judge whether its investment of a quarter of a billion dollars was money well spent.