Footfall falls at Russian malls

By bne IntelliNews September 16, 2015

Ben Aris in Moscow -


Foot traffic at Russia’s leading malls is collapsing because of the grinding crisis that has seen real incomes fall the first time in a decade and a half, according to the most accurate index measuring Russians' shopping habits. 

Moscow boasts some of the biggest and most profitable malls in the world on a square-metre (sqm) basis. The spend per sqm at the modern Europa mall next to Kievskaya railway station in central Moscow is the highest in Europe and in the top five in the world, outstripping giants like the Mall of the World in Dubai and the Golden Resources Mall in Beijing. Indeed, colossal malls is very much an emerging market phenomenon; the biggest mall in the developed world is the US’ King of Prussia Mall in Pennsylvania that only ranks at number 30 on a Wikipedia list of the world’s largest.

As most emerging markets, and especially Russia, have only recently created a significant middle class that love to shop, these markets have gone straight from empty corner stores, or produkti in Russia, to titanic state-of-the-art buildings in strategic urban locations, each with billions of dollars of turnover a year.

As malls take about three years to build, the first half of 2015 saw a record number of new floor space come on the Russian market. With development starting in 2012 when the economy looked like it was bouncing back from the 2008 crash, in the first six months of this year 342,000 sqm of new mall space was added to Moscow, up 41% from the same period a year earlier, to bring the overall volume of quality shopping centres in the capital to 4.5mn sqm, according to real estate consultants Jones Lang LaSalle. This increase has pushed Moscow into first place in terms of supply of shopping centres in European cities in 2015, ahead of Paris, Madrid and St Petersburg, in that order.

Shopping index

The fact that so many modern malls are being built at once has created an opportunity for Russian consulting company Watcom to create a management tool for shopping centers based on shopping centers’ people counting solutions’ devices, which is unique to Russia, claims Roman Skorohodov, Watcom President. “We have created software that uses the 3D camera to count the number of people shopping in a mall in real time. This information is then correlated with sales in stores and other information including some personal data on location if a customer logs into the free WiFi in the building. You can then follow their movements and see how much time they are spending where, which again can be tied back to the revenue of the locations they are in.”

“For example, when the ruble dramatically devalued in December, the next day you saw the Shopping Index collapse as well,” adds Vakatova, referring to the company’s main shopping traffic index.

Thus, the index shows there is a very direct link between the health of the macroeconomy and shopping volumes. And things are going from bad to worse in Russia.

Foot traffic was already slowing from 2011, despite the fact real incomes were still rising, but that fall really started to accelerate in 2014, the year Western sanctions were imposed on Russia. And things are going to get even worse for the high-end retailers that populate these malls after real income growth turned negative in December last year for the first time since President Vladimir Putin took office in 2000.

As the index not only shows how many people there are in a mall at any one time, but also where they spend their time and how they spend their money, it also gives a pretty accurate insight into how spending habits are changing. “Buyers now increasingly study the price tag, try to buy at discounted rates, and actively respond to all kinds of promotions and bonuses to which chains and shopping malls carefully prepare for,” Watcom president Roman Skorokhodov said in a recent report.

As the chart below of superimposed annual cycles from January to New Year’s Day shows, the Shopping Index for Moscow’s leading malls has fallen every year since 2011, with the tumble accelerating in 2014. Faced with even more volatility on currency markets as the summer comes to an end, and the most recent report from Watcom showing nearly all the indicators are pointing downwards, the index for this year will only be worse. 


Related Articles

Drum rolls in the great disappearing act of Russia's banks

Jason Corcoran in Moscow - Russian banks are disappearing at the fastest rate ever as the country's deepening recession makes it easier for the central bank to expose money laundering, dodgy lending ... more

Kremlin: No evidence in Olympic doping allegations against Russia

bne IntelliNews - The Kremlin supported by national sports authorities has brushed aside "groundless" allegations of a mass doping scam involving Russian athletes after the World Anti-Doping Agency ... more

PROFILE: Day of reckoning comes for eccentric owner of Russian bank Uralsib

Jason Corcoran in Moscow - Revelations and mysticism may have been the stock-in-trade of Nikolai Tsvetkov’s management style, but ultimately they didn’t help him to hold on to his ... more

Register here to continue reading this article and 2 more for free or 12 months full access inc. Magazine and Weekly Newspaper for just $119/year.

If you have already registered, enter the information below with the same email you used previously and you will be granted immediate access.

IntelliNews Pro subscribers click here

Thank you. Please complete your registration by confirming your email address. A confirmation email has been sent to the email address you provided.

Thank you for purchasing a bne IntelliNews subscription. We look forward to serving you as one of our paid subscribers. An email confirmation will be sent to the email address you have provided.

To continue viewing our content you need to complete the registration process.

Please look for an email that was sent to with the subject line "Confirmation bne IntelliNews access". This email will have instructions on how to complete registration process. Please check in your "Junk" folder in case this communication was misdirected in your email system.

If you have any questions please contact us at

Subscribe to bne IntelliNews website and magazine

Subscribe to bne IntelliNews website and monthly magazine, the leading source of business, economic and financial news and commentary in emerging markets.

Your subscription includes:
  • Full access to the bne content daily news and features on the website
  • Newsletters direct to your mailbox
  • Print and digital subscription to the monthly bne magazine
  • Digital subscription to the weekly bne newspaper

IntelliNews Pro subscribers click here

bne IntelliNews
$119 per year

All prices are in US dollars net of applicable taxes.

If you have any questions please contact us at

Register for free to read bne IntelliNews Magazine. You'll receive a free digital subscription.

If you have already registered, enter the information below with the same email you used previously and you will be granted immediate access.

Thank you. Please complete your registration by confirming your email address. The confirmation email has been sent to the email address you provided.

IntelliNews Pro offers daily news updates delivered to your inbox and in-depth data reports.
Get the emerging markets newswire that financial professionals trust.

"No day starts for my team without IntelliNews Pro" — UBS

Thank-you for requesting an IntelliNews Pro trial. Our team will be in contact with you shortly.