SberCIB discusses the future of shopping centers

Apr 28, 2021

SberCIB was a strategic partner at the Future of Shopping Centers shopping center managers congress held April 22-23 in Moscow. The conference participants discussed strategic issues regarding the transformation of the industry during the crisis period, reviewed the most interesting shopping center development cases in Moscow and Russia’s regions, and determined vectors of growth and professional development.

Addressing the conference was Sber Investment Department Managing Director James Corrigan. In his capacity as an expert, he noted that multiple factors simultaneously had an impact on the industry in 2020: restricted shopping center activity due to the pandemic and the related reduced footfall, the adoption of a law allowing SME tenants from the list of the most affected sectors of the economy to unilaterally terminate their lease without a penalty, the reduction of basic rental rates by 15%, an average increase in vacancies of two to three percent, as well as growth in the e-commerce segment in response to the COVID-19-related restrictions that surpassed forecasted figures.

Sber Vice President Stanislav Kartashov also took part in the congress. During his presentation, “The Fight for the Client: How Big Data Helps Shopping Centers Find Growth Zones,” Kartashov explained what SberAnalytics’ nonfinancial product Shopping Center Analytics has to offer.

According to Kartashov, analyzing the actual financial behavior of shopping center visitors using modern big data processing methods allows clients to accurately describe and segment the target audience and its needs. For shopping center managers and owners, analytics open new horizons for increasing footfall and reach and structuring rental and business strategies.

Experts believe that retail property prospects will depend to a great extent on what the situation with the pandemic looks like in 2021. Footfall is currently expected to recover to around 80-85% of pre-pandemic figures. A large AOV will partially compensate for the decrease in footfall: customers will pay fewer visits to shopping centers but will buy more while they are there. Surveys show that people reduced their trips to shopping centers primarily because of financial difficulties and the risk of infection – temporary factors that are unrelated to long-term changes in consumer habits. The rapid growth of e-commerce, however, is a long-term factor and could lead to shopping centers shifting to segments that require shoppers’ physical presence: public catering, beauty, entertainment, leisure, and sport. Shopping in the neighborhood is also becoming increasingly popular, with customers choosing stores close to home.

When Sber clients found themselves in a difficult situation during the pandemic, we moved to quickly provide support by launching our own debt restructuring program. At the end of 2020, the bank had restructured RUB 1.1 tn in commercial real estate company debt, RUB 790 bn of which correspond to the retail property segment. We also offer clients nonfinancial products and services. The pandemic raised the question of the need for transformation in the shopping center segment, including through digital initiatives. Sber ecosystem solutions enable clients to use big data to study consumer needs, make decisions about streamlining their tenant pool, and develop the best concept for the growth of their business.

James Corrigan
Managing Director, Investment Department, Sber