Why 99% of shopping is at the mall? Baneasa Shopping City’ tenant: It is the first choice of most international brands

06.07.2018 By Cristina Roşca

There are several thousands of local and international fashion, cosmetics and accessories brands on the Romanian market, and for each of them the first option for opening new stores is the malls rather than the street locations.

Ralf Wein, an executive who led H&M operations on the local and regional markets, previously said that in Romania 99% of shopping is at the mall, which is why retailers prefer shopping centers. The street area remains the convenience of pharmacies, casinos and banks.

The situation is similar in the region, where 95% of the population is shopping at the mall, less in Prague and Budapest where there are shopping streets. The two cities are also aided by architecture and the fact that they are much more tourist than Warsaw or Bucharest.

Dragos Nicolae, managing partner of the CELLINI chain of stores, specialized in the sale of watches and jewelery, agrees:

“Through its project in the north of Bucharest, Baneasa Shopping City has set a high standard for retail in Romania for the last ten years. We believed in this project and we have been present from the very beginning with a new concept of our CELLINI store.

The first watch monobrand store that will be opened in Romania for the TAG HEUER brand as well as CELLINI GRAND BOUTIQUE store, the most representative multibrand of watches and jewelery since the end of last year, are demonstrating the confidence we have in the Baneasa Shopping City project. "

Baneasa Shopping City has strengthened its positioning in recent years to attract more and more premium brands. Out of more than 300 stores in the mall, more than 40 are exclusive, including Chanel (cosmetics), Uterque (fashion brand specialized in the accessories area, part of the Inditex group which owns Zara), Chopard (jewelry), Furla (fashion), Boggi (male fashion) and Victoria 46 (multibrand).

"Baneasa Shopping City is a point of reference for the Romanian retail. It is the first choice of most international brands available exclusively in monobrand or multibrands stores concepts. It's the place where I always find the shopping experience that I want, " says a tenant of the shopping center.

The sales of Baneasa Shopping City tenants, including international names such as Zara, H&M or Michael Kors, as well as local names like Musette or Il Passo, jumped last year to 250 million euros, which means an average of about 5.000 euro / sq m per year.

The sales (which do not take into account the results of  Carrefour hypermarket located in the Feeria shopping gallery) increased by 85% compared to 2008, the year of opening. Only Carrefour hypermarket has sales of over 100 million euros, being one of the best stores in Romania, according to ZF sources.

„The presence of FF Group's most important retail concepts in Baneasa Shopping City commercial center is a certainty of the trust we have given to this partnership and the exceptional results we have achieved.

The performance of the stores like collective, Nike, Sport Loft and Folli Follie in Baneasa Shopping City are steadily increasing, because here we find the customers with the best affinity for the brands we sell, sophisticated customers and interested in the latest trends in fashion or latest innovations in the technology we use for sports equipment. Surely, Baneasa Shopping City will represent our first option in the future when we will launch new retail concepts, " said Cristian Beznoska, CEO of FF Group Romania

The indirect impact generated in the economy through the commercial activities of Baneasa Developments is over 724 million euros, according to the updated figures, based on the study conducted by the audit and consulting company, KPMG.

The direct impact of Baneasa Developments' investment during 2005-2016 was 229 million euros, out of which over 70% was registered after the economic crisis. Moreover, the spending on purchases of goods and services is estimated at over 599 million euros.

Net salaries, taxes and related contributions resulting from the effect of Baneasa's commercial, office and residential development are over 863 million euros (about 1.1 billion dollars), according to the updated figures, based on the study conducted by the audit and consulting company, KPMG. Thus, according to the updated study, besides the 1.571 salaries paid by the Baneasa entities during 2005-2017, during the same period Baneasa Developments paid more than 38.052 salaries. However, over 105.000 salaries were paid in the same period, as a result of the induced effect of the company’s commercial activity.

Baneasa Shopping City’s total retail space area is 55.000 sqm, with the majority (70%) dedicated for segments like fashion and beauty products, jewelery and accessories

The analysts and executives in the field say that in Romania the number of retailers is comparable to those that we can find in the developed markets. The reason? Romanians are fashion and trendy enthusiasts and are therefore more willing to spend money on clothes and footwear compared to Czech and Polish neighbors, although the salaries are half. Year-on-year Romanians spend on clothes and shoes over 15 billion lei, according to the latest data. About 99% of their shopping budget is spent at the mall.

"For the most part, the street retail areas in Romania are limited and not too much trafficked. Another reason for the retailers going to the mall in particular are the problems encountered with the rental of street locations from the owners who sometimes do not have all the necessary documents in optimal conditions.

Another aspect is the issue with the authorizations that are very difficult to obtain and which can make it difficult to start and operate properly, "says Dana Radoveneanu, senior broker Cushman & Wakefield Echinox.

She adds that the mall has all the advantages the street areas do not offer. Owners think strategically the mix of tenants, there are parking spaces, it is clean, pleasant and bring everyone in one place. And when the winters are heavy, with a lot of snow, the access is clear, providing the tenants a permanent business flow.

Baneasa Developments, which operates Baneasa Shopping City commercial center, Feeria Gallery and Grand Cinema & More in North area of Bucharest, ended 2017 with a turnover of 51 million euros, with an increase of 4% compared to 2016.

The company's turnover is actually composed from the rental income from over 300 stores in the mall that opened its doors ten years and from Carrefour hypermarket, Feeria commercial gallery’s anchor.