Arabs are looking for place for French ‘Crossroads’ in the heart of Kazan
After a negative experience in Moscow and Krasnodar, the retailer Carrefour does not want to go to the outskirts of cities.
Entry to Tatarstan of the world-famous hypermarket chain Carrefour turned out to be doubtful: the retailer and Tatarstan Investment Development Agency, guiding the project, failed to agree on the location of the first store so far. They haven't found sites in the center of Kazan, complied with investor's requirements. The Chief Executive of the Tatarstan Investment Development Agency Taliya Minullina is convinced that the line hasn't been drawn yet, and the experts are surprised by the company's intention to occupy a place in the center of the city and doubt that it is possible technically.
'The line has not been drawn yet'
The negotiations on opening of the hypermarket chain Carrefour in Tatarstan have come to a standstill, because they didn't find suitable location for the store. Taliya Minnulina said to Realnoe Vremya: 'They have special requieremnts for the location: they need wide area in the centre of Kazan, but it physically doesn't exist. We offered them other variants, took them to Innopolis and so on…' However, Minullina takes it optimistically: 'I think, the line has not been drawn yet. We will cooperate, as it is the world brand.' She didn't comment on the requirement to build the shop in the center of city. 'It is their policy. They layed down their requieremets, which we tried to meet, including on the number of people living in the area,' she replied.
Carrefour — the second largest retail chain in the world after Wal-Mart and the first retailer in Europe. Carrefour has more than 15 000 stores selling clothes, food, household goods in Europe, Brazil, Argentina, North Africa and Asia under different brand names: hypermarkets Carrefour, hypermarkets Carrefour Market, small stores Shopi and March Plus, low-budget Dia, Ed, stores cash-and-carry Promocash. There are more than 400 000 employees. The company's sales have been growing for four years in a row: excluding gasoline and currency fluctuations, they increased by 5.3% last year(in organic terms, the increase amounted to 3%).
Do French learn from their mistakes?
Carrefour is not performed in Russia. However, it has already tried to enter the market: in 2009, it opened two stores in Moscow and Krasnodar and invested more than 15 million euros. The intention for success was serious, as its business was based on the successful in Russia business-model — 'Perekrestok' (Crossroads) ('carrefour' in French means 'crossroads'). However, in the report for III quarter of 2009, the company reported about the lack of prospects for growth and for acquisitions, and thus for capturing the leading positions. And, in 2010, the French chain closed both stores. Among possible reasons the media with reference to experts called slightly higher prices than the competitors had, and unsuccessful stores locations: in Moscow hypermarket was away from the main roads and not in a very populated area, and in Krasnodar – in the neighbourhood with old rival Auchan. Taking this into account, it seems quite logical that they doubt to open a new store on the outskirts of Kazan.
Besides, the store in Moscow didn't have license to sell alcohol, that deprived them of the lion's share of buyers. According to the experts from slon.ru, it indicates the poor understanding of the specifics of business in Russia: managers tried to act in Russia too straightforward.
It became known about another attempt to enter the Russian market last May. However, this time the intention was expressed by the Arabic company Majid Al Futtaim (the UAE). Its founder and the President is a billionaire Majid Al Futtaim. His property assets are estimated at $2.5 billion (according to Forbes magazine).
Majid Al Futtaim leads one of the largest retail chains in Middle East, and its stores operate under the sign of Carrefour (the group has exclusive rights to represent the brand in the East). Headquarters in Dubai. In 2014, the group owned 69 supermarkets and 58 hypermarkets of the French brand in 12 countries — the UAE, Oman, Pakistan, Bahrain, Saudi Arabia, Qatar, Iraq, Georgia, Egypt, Jordan, Kuwait and Lebanon.
'We operate in 13 countries and now we want to gain a foothold in Russia. Tatarstan is near Central Asia. In addition, it is known as one of the most dynamically developing regions of the Russian Federation,' the press service of the President of RT quoted the Executive Director of MAFR Frank Vitek at the meeting with Prime Minister of Tatarstan Ildar Khalikov.
In 2014, Arab company actively worked on the development of the chain. It opened two hypermarkets and 16 supermarkets operating under the Carrefour brand, and, in 2015, it planned to open eight more. Where exactly was not specified.
'It is basically wrong to construct such things in the center'
Realnoe Vremya asked experts about the prospects of the chain in Tatarstan and its possible locations.
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Linar Yakupov an adviser to the Prime Minister of the Republic of Tatarstan on Cooperation with Islamic Financial Institutions, the President of Fund of Development of Islamic Business and Finance (IBFD Fund), the President of the Association of Regional Investment Age
- Carrefour is an equivalent of Auchan or Real. In Kazan the niche is vacant for them. Such player will always find a place. It is very competitive player with a good set of products. The discussion about the construction in Kazan lasts since 2013. It is basically wrong to construct such things in the center. It is clear that everyone wants the greatest intersection of various transport arteries and so on. Such facilities must be located on the outskirts of the city. I don’t have detailed information about the project. But I can say that there was an interest. Carrefour is not performed in Russia yet, but we tried to get them from the East. Maybe – they, or maybe – someone else. Majid al Futtaim Group is a very serious company, that is actively developing and has a huge potential. If this company will enter, it will open a hypermarket. Once I was in their headquarter and met with top management. In 2013, they visited Kazan, we discussed the possibility of opening of a hypermarket. Who has come now and who will lead, I can only guess.
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Murat Akhmerov General Director of A-Development
- Carrefour – it is good. I think, it will find its niche. As for location, in the center, I think that it will be hard to find. Usually, hypermarkets are built on the outskirts, because it is easier to access, there is a big parking lot. As for the cost, one hundred square metres cost, I think, 1.5-2 million rubles. The building will occupy 5 000 square metres.
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Nikita Kuptsov YARD company
- I’m not familiar with Carrefour brand, I pronounced it only at the third time. I don’t see the place in the center, the hypermarket needs at least 4 hectares. There is no such space in the center, only if near the close port of near Magistralnaya area. I think that in the nearest 2 years a hypermarket will not open, even if everything will go megasuccessfully. The reason is that Arab colleagues should conduct serious marketing research and analytical work. As for the place in the center, I think, one hundred square metres cost at least 1 million rubles.
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