Shopping centers have lost their childhood
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The exit from the market and the suspension of the development of large chains of children’s goods led to a decrease in traffic of the remaining stores in this segment by 25%. It turned out to be difficult to make up for the losses: the operators of shopping centers are faced with a shortage of specialized tenants. Over the past two years, about 500 children’s goods stores have closed, and new retailers are in no hurry to open. They are afraid to rent additional retail space amid competition from the online sector and non-core chains.
The number of customers in children’s goods stores in September-October 2022 decreased by 25% year-on-year, Focus Technologies calculated. This decline is more noticeable than the average market decline in shopping center traffic: the Mall Index (reflects the number of visitors per 1,000 sq. m of retail space) in Moscow in the third week of October was lower by 14% yoy. Moreover, the current reduction in buyers of children’s goods stores turned out to be higher than in March-June, when due to the massive closure of trading floors of international brands, shopping centers lost 21% of traffic.
Head of research and consulting at Focus Technologies, Mikhail Vasiliev, connects the pessimistic trend in the children’s goods market with the transition of a part of the audience to online and a reduction in the range due to the closure of some specialized stores. According to Antonina Tsitsulina, president of the Association of Children’s Goods Industry Enterprises, about 500 children’s goods stores closed in Russia in two years. She attributes this to the restrictions in place during the pandemic, management policies, and the lack of sufficient investment for development. “Networks are closing unprofitable points,” the expert explains.
As an example, Kommersant’s interlocutors in the market cite the problems of the Daughters and Sons network, which was the second player in the children’s goods market after Detsky Mir. In June of this year, the Moscow Arbitration Court declared bankrupt and opened bankruptcy proceedings in Opt Torg LLC and Volga LLC, the operating companies of the retailer.
Antonina Tsitsulina also draws attention to the intensified competition between children’s goods stores and non-specialized retailers. “She has been actively expanding the range of children’s products since the beginning of the pandemic,” she clarifies. Director of NF Group Evgenia Khakberdieva points out that many brands now have children’s clothing collections, including Sela, Gloria Jeans, Terranova, Modis.
The volume of the children’s goods market, according to Antonina Tsitsulina, increased by almost 19% in 2021, to 990 billion rubles, mainly due to inflation. In September-October, the turnover of specialized stores and the average check, according to Focus Technologies, decreased by 14% and 13%, respectively.
Leaving the market or refusal to develop large networks has already led to a shortage of retailers of children’s goods in shopping centers, says Indira Shafikova, managing partner of RedStone. According to her, facility operators compete with each other to attract specialized tenants. Alexey Vanchugov, managing partner of Vanchugov & Partners, notes that the problem is especially felt in the format of children’s goods department stores.
CORE.XP Director Nadezhda Tsvetkova calls the Detsky Mir chain the only remaining anchor operator of goods for children. Many retailers, according to her, are not ready to develop now and do not dare to invest in rent and decoration of premises. In Detsky Mir, they did not answer Kommersant’s questions.
Trade center operators cannot completely abandon children’s goods stores, since most of the visitors to such facilities are families with children, says Yevgenia Khakberdieva. “They try to provide children with everything they need, and buyers go to children’s goods stores purposefully,” she adds. Trade center operators, according to Mr. Vanchugov, can get out of this situation on their own by developing clusters of children’s goods in their facilities without anchor tenants.
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