Will Castorama rub along OBI and fourth Megastroy?
Two DIY hypermarkets open in Kazan at once. One of them is across the road from Mega shopping centre. What awaits the market?
Everything that happens in the DIY market doesn't affect the life of an ordinary consumer as much as changes in the sphere of food retail. In case of a home improvement or beautification of the garden in the summer season, these type of shops is indispensable. The official opening ceremony of Castorama hypermarket in Kazan was on 25 April. The French chain of shops with goods for garden and home improvement is included to British corporation Kingfisher. The first hypermarket of this chain opened in Kazan across the road from Mega shopping centre, which has its own DIY hypermarket – OBI. But this is not the end of details. The fourth hypermarket of the local Megastroy chain will open in Kazan in the short run. Realnoe Vremya's correspondent found out together with experts whether the market selling electric drills, cornices and screwdrivers would be crowded.
Opening for official guests and hypermarket's team
The opening of Castorama hypermarket in Kazan will take place only on 29 April, while the opening on 25 April was held only for the hypermarket's team and official guests, including Director General of Castorama Russia Vincent Guffroy, head of the Tatarstan Investment Development Agency, Deputy Minister of Industry and Trade of Tatarstan Denis Valeyev and head of Soviet District Rustem Gafarov.
Almost all speakers agreed the new DIY trading facility was socially important. ''It's an alternative opportunity to project and build houses, flats and gardens for residents of Tatarstan,'' Vincent Guffroy explained Castorama's mission. ''It's a new innovative drop in the ocean of quality of our citizens' life,'' Taliya Minullina figuratively replied him.
However, if the scale of the very DIY hypermarket isn't an ocean, it's quite a big sea. The total area of the shop is 11,000 square metres. There are 32,000 names of goods, 190 working places. As Guffroy noticed later in a talk with official guests of the hypermarket, Castorama planned to move further. The chain will have a new IT system, which will enable to make online shopping reach another level, about in a year.
Opening of the fourth Megastroy scheduled for the middle of April but not confirmed yet
As Realnoe Vremya's sources found out, it was planned to open the fourth shop of Megastroy chain in Kazan on 113, Gorky Highway, at the crossing with Mozhaysky Street, which belongs to Agava PLC, on 27 April. The vacancy of café administrator was posted on Avito classified advertisements site on 29 March 2018 where the middle of April was mentioned as the time when the hypermarket opened. However, Agava refused to comment further plans and didn't confirm the opening day of new Megastroy was on 27 April.
Agava announced the construction of the hypermarket on Gorky Highway as early as 2014, but the construction began only in 2017. The total area will be more than 18,000 square metres, while the shopping area will be over 12,000. Parking is designed for 937 lots. Realnoe Vremya's experts agree that Agava chose a very good location for the new hypermarket.
''The southern part of the city is already full of such facilities. This is why the place for the next shop on the way out of the city. Well done,'' think Director General of Kolorit Group of Companies Ayrat Gainullin.
''Gorky Highway is convenient because it's from where people go to Zelenodolsk, Staroye and Novoye Arakchino, Zaimishche, Innopolis, Salavat Kupere,'' Director General of A-Development consulting company in commercial realty Murat Akhmerov commented.
''People won't have more money due to the number of shops. The current flow is redistributed''
The opening of Castorama within walking distance from Mega shopping centre with OBI home improvement hypermarket will considerably complicate the structure of the Kazan DIY market. But can we say the market is too full? Will there be a fall after the record rise in trading areas? Our experts have different opinions about this.
In Ayrat Gaynillin's opinion, Kazan approaches this scenario, though not fast: ''There is an approach that one hypermarket is designed for 200,000 people, and it's enough. To approximate, now Kazan has 1 million 400,000 citizens. There are already two Leroy Merlins, one OBI, fourth Megastroy opens, plus, Castorama, and there is Maksidom, which is a bit different from these shops but also offers goods for the home. And I think total revenue won't increase due to the number of open hypermarkets because the market isn't infinite. People won't have more money due to the number of shops. The current flow is redistributed. Those who occupy the best places have more opportunities.''
Murat Akhmerov compared the modern-day state of the Kazan DIY market with what other segments have already gone through: ''Do you remember how the cell phone market looked in the past? There was a shop at every turn, then they closed. Banks aren't located at every turn any more. Cyclic fluctuations will affect the DIY market too. There will be oversupply because a home improvement is usually done once in 10 years. And many developers offer equipped flats.''
Artyom Andreychenko, head of the DIY sector in the Industrial Goods Research Department at GfK Rus, doesn't agree with the opinion of the director general of A-Development: ''A home improvement and finish of bought flats stimulate consumption of DIY goods.'' In addition, ''my home'' where consumers invest time, efforts and money to improve their home is one of the main trends in the 2017-2018 in Russia as well as around the world. For a modern urban consumer, the home becomes refuge and a serene harbour where he can rest from stress and high life paces. It is said it's impossible to finish a home improvement, one can just stop it. So we hope the DIY market won't fall with the stable economic development because the number of deals on the property market still continues recovering, what more humane mortgage rates help.''
The smaller city, the more electric instruments needed
The representative of GfK provided interesting data on separate groups of goods. For instance, according to GfK, the market of paint coatings in urban Russia grew by 5% in the first quarter 2018 in physical terms, in comparison with the first quarter 2017. The growth of the demand for water-based paints whose share exceeds 50% goes on. Consumers choose more expensive and quality paint coverings more often and prefer popular brands, while demand for chains' own brand falls.
As for sale of electric instruments, according to GfK, turnover of electric instrument market grew in the first quarter 2018 mainly due to a rise in an average price, while demand in items reduced. As usually, sales of drills and hammer drills supported the market's turnover. The growth of electric instrument market (and the whole DIY sector, in general) depended on purchasers in cities with a population of less than one million people. For instance, sales of electric instruments in these cities increased two times faster than in cities with a population of more than one million people.
Online sales grew almost three times faster than in traditional retailing. But an average price on the Internet reduces unlike the tendency of offline shops.
The trend of transition to more advanced models continues in 2018. The professional segment of electric instruments showed a considerable growth. This tendency is mainly noticeable in drills, hammer drills and construction dryers where the growth exceeded 40% in comparison with the previous year. Users switch to more advanced professional battery-powered instruments despite the growth price for not cheap instruments,'' told Artyom Andreychenko to Realnoe Vremya.
Local producers should enter not only big chains but also Amazon and Alibaba
The topic of participation of local Tatarstan manufacturers was raised in official and unofficial speeches at the opening of Castorama hypermarket in Kazan. Deputy Minister of Industry and Trade of Tatarstan Denis Valeyev told Realnoe Vremya what the country did to help Tatarstan producers:
''Seeing the assortment, a professional can always offer his product. The most important thing is to meet complicated quality, price and volume requirements because the work with Castorama chain, for instance, is a major responsibility because you need to provide a big volume of a product in your warehouse for its uninterrupted supply to the chain. On the other hand, all big trading chains come here and are obliged to carefully consider offers of local suppliers.''
The country has several tools that help producers. The Tatarstan Ministry of Economy has scholarships for small and medium-sized business. The Ministry of Industry and Trade of Tatarstan also coordinates cooperation with international and Russian trading chains and works to inform our producers about their opportunities. For instance, there was to be a free seminar in the Chamber of Trade and Industry on 26 April where Moscow lecturers would tell how to sell goods to the USA and China on Amazon and Alibaba. It's absolutely real for Tatarstan producers. I will say more, it's our Kazan programmers designed Amazon Scout. Any producer can check out the name of his good and understand how popular his product is in the USA market with its help.
