• American inspiration
  • Opportunities for shopfitters in Russia


    An interview with Neil Whitehead, Stuff International Design Ltd by Winfried Lambertz, Editor-in-Chief

    1. What do you think about the chances and risks for Western European retail companies planning to establish stores or shopping centres in Russian cities? What kind of problems could they face and how could these problems be solved? 

      Russia offers a huge potential for growth for those retailers searching for it beyond the relatively mature retail markets of Western Europe.  I have designed and developed over 40 retail and mixed used developments over the past 8 years in Russia and so I have seen first hand the opportunities for those international retailers capable of overcoming the entry hurdles for this market.

      The Russian retail market is changing rapidly, offering significant opportunities for Western European retailers. Russia is the fastest growth market in Europe and is performing well ahead of Turkey and Poland, its nearest CEE competitors.  Its middle class is rapidly expanding and Russians have a higher level of disposable income per capita, compared with developed economies, where consumers typically carry much higher levels of personal debt.  According to Ernst and Young, Russia will be the largest consumer products market in Europe by 2022–24.

      The younger generation of Russians travel more internationally and have greater aspirations for both themselves and their future families than their parents.  Through their travels, satellite/cable TV, foreign films and social media they have a greater level of knowledge of other peoples’ lifestyles internationally and the products they use, which has made their tastes and expectations more sophisticated.  They will expect to be able to buy the products they see abroad and be able to purchase them in an environment that is more developed than often found in Russian shops today.

      Russia is the biggest land mass in the world, so it is vital for European retailers to decide which cities to target for their shops and logistic warehouses.  This decision will be affected by the poor road maintenance and infrastructure as it makes it difficult and expensive to transport goods.  There are also a range of other variables which will need to be considered, for example, while it may be logical to select cities with the highest populations, such as Moscow or St Petersburg, the rental costs for the retail space are also higher than other cities and the competition is greater.  I believe that the biggest opportunities could be found in the Urals, where cities such as Chelyabinsk and Yekaterinburg boast large populations, but the cost of real estate and the competition is less.

      In a less developed retail market than Europe, there are significant hurdles for a retailer to overcome wishing to enter the Russian market.  For example, the European retailers’ expectation and need for well-manufactured and carefully planned shop fitting equipment is just not understood in Russia and is not available locally. Russian Customs can also prove a significant challenge for both importing and exporting goods.

      One way of overcoming many of these challenges would be to establish a good partnership with a Russian company who could also act as a guide around the political issues that will be confronted.  It would also be necessary to find or establish a local European style manufacturer who could supply quality shop-fittings in order to minimise the generally high transportation costs and to prevent delays caused by trying to ship fittings and products through customs.

    2. How would you describe the retail structure in St. Petersburg in comparison with Moscow?

      Nothing compares to the wealth of Moscow, as this is where the Oligarchs live. Moscow is twice the size of St Petersburg and is one of the world’s most expensive cities. It is located inland, centred around Red Square on the Moskva River and is the northern-most “Megacity” on Earth, the most populous city in Europe and the fifth largest city in the world, with a population of some 12 million.  Forbes in 2011 lists Moscow as having 79 billionaires, displacing New York City as the city with the greatest number. As a result, Moscow is a “must” for the expensive luxury brands. 

      St Petersburg (formerly Leningrad and Petrograd) is Russia’s most Western and considered its most beautiful city.  It is Russia’s second largest city with some 5 million inhabitants.  Situated on the Neva Bay on the Gulf of Finland on the Baltic Sea, much of it was built on the islands of the river delta.   The brain child of Peter the Great, it is a well designed and laid out city with stunning architecture, canals and wide roads. While the consumer wealth is not as great as in Moscow, it is well located for the Scandinavian retailers and businesses to expand into and so has a significant Finnish influence.  Tourism is very strong here, which drives a lot of revenue and without doubt St Petersburg is becoming a world destination for all nationalities. 

      In both cities at the moment many of the retail brands are federal and local, though this is changing, and have very poor retail system manufacturing.

      St Petersburg is quite European in atmosphere and has a number of shopping centres including The Galeria, which has predominantly federal and local brands over three levels; Stockmann Nevsky Centre, is a modern centre and has a number of international brands from the Nordic countries; Grand Palace is in an old soviet format; Passage, is one of the oldest shopping arcades in the world.

      There are also a number of shopping centres on the perimeter of the city which are well visited.   The city now has a good retail footprint to attract foreign retailers into the market.

      However, while the two biggest cities in Russia offer international retailers and premium brands many opportunities, I don’t think that retailers should just assess these two cities, as I believe there are good opportunities in other Russian cities, such as those located in the Urals.

    3. Please name 2 or 3 examples of retail projects your company has carried out in Russia. And some short information about your company.

      Stuff International Design Ltd specialises in Commercial Architecture, Commercial Interior Design, Branding and Product Development.  We are passionate about delivering commercial success for our clients.  Our work touches millions of people’s lives -   our portfolio gives just an indication of our vast experience and the resulting success of our projects in the UK, Europe, Middle East, Russia and Worldwide ( We have now completed over 50 projects in 12 cities in Russia, including mainly shopping and mixed used developments. 

      The exciting experience for us in the Russian market has been the speed at which projects move from the idea and design stage, to being built.  Russia has yet to be tied up in the planning bureaucracy of the UK and Europe.  As a result projects move at great speed and it is highly satisfying to watch their rapid development.  This is why we have been able to undertake so many projects within such a short time in Russia.

      Two of our retail/mixed used projects stand out on reflection:

      Raduga (“Rainbow”) which is a 20,000 square metre retail and mixed-use development aimed at the family. We able to influence the whole design and branding and it won “Best shopping centre design” in Russia in 2007.

      Another is the project we are currently working on - Raddisson - an iconic building in the financial district of Yekaterinburg.  We have designed and are developing it for a very forward thinking client.  It is a mixed use 24 storey building, combining luxury residential with cinema, commercial offices, retail and hotel. It is early days yet, but although we only started on the project recently, it is due to be completed in 2015.

      I have observed that colour plays an important role in new design in Russia as, I believe, it acts as an antidote to the many months of dark grey days.  Russian contractors are highly practical and this drive can, during the construction process, win over the aesthetics of the original architectural designs, with a loss of the aesthetics and considerations of ideal retail space, lines of vision and people/traffic flows.  The quality of construction is basic but generally adequate.  However, shop fitting is an industry few understand in Russia at this point and most of what is undertaken is of poor quality and design.

    4. How important are store design aspects for Russian retailers? Would you agree that Russian retailers have another understanding of retail design?

      Before 1997 there was little sophisticated retailing in Russia as there was very little choice of products to buy.  Do you remember seeing pictures of Russian women with many wearing the same dress that clearly came in a choice of only two colours – and the queues?  As a result, the resourceful Russians made their own products and sold their home grown produce in “people’s markets”.

      Today, with high disposable incomes, travel and a young, increasingly middle class society, retailing is becoming big business. The first step after 1997 was to simply copy international brands, which was a satisfactory formula until some of the international brands arrived with their European shop fittings.  With the increased competition, infrastructures for shopping centres and their logistic centres are improving, which will result in the expansion of true federal brands.

      Currently, a major hurdle for European retail expansion in Russia is the ability to produce top quality merchandising units to the standards expected in Europe.  The time is coming when it will not make economic sense to continue importing this equipment in containers and it should be produced locally. This offers retailers and their support services huge opportunities in this expanding Russian market.


    March 2012