The largest shopping mall to reopen in Donetsk

Attracting tenants back to Donetsk-City will not be an easy task

Photo: Ivan Chernichkin

Donetsk businesses are trying to adapt to the new operating conditions. The opening of the Donetsk-City shopping mall is planned for the middle of December, Commercial Director of the Investment and Development company Liliya Mynenko told Capital. She said the plans are to initially open the first floor of the mall, where the Varus supermarket and a checkout zone will be located.

“The Investment and Development company indeed offered us to open the store in the Donetsk-City shopping mall,” General Director of the Ultra group of companies (Baldinini, Levi’s, Pierre Cardin, Lagerfeld and Guess) Andriy Makarov confirmed. “We were offered to work for free [without paying the rent – Capital] for three months. But the store must be registered in the self-proclaimed Donetsk People’s Republic,” the director of the clothing network, who requested to remain anonymous, told the publication.

Chains unchained

Donetsk-City is the largest shopping mall in the oblast center with a total square area of 115,000 sq. m. This center is commercial real estate under the control of businessman Ihor Humenyuk and was considered to be one of the most popular in Ukraine. Last year, there were no free spaces in the mall and potential lessees stood in line to grab them up. But due to the enhanced military actions Donetsk-City has not been operating since the end of May.

Retailers who earlier rented spaces in the mall are not planning to return to Donetsk. For example, the press service of Varus informed that at the moment the company has no plans of opening a supermarket in Donetsk-City. “How can any business operate in Donetsk these days?” Leasing Manager of the Argo company Valentyna Yaroshchuk asks. Director of Baltica Ukraina (of the Monton and Mosaic chain) Maksym Chechelev agrees with her. He said the international company does not see any possibility of working in an unrecognized republic. “After all, who needs top-of-the-line clothing in Donetsk at the moment?” he asks.

Director of Development of the MD Group (Tommy Hilfiger, Gant, G-Star, Diesel, Pepe Jeans, WALKER, Accessorize and so on) Maryna Naboka says many retailers have pulled their collections out of stores in Donetsk. “Who today will venture to open a store in an unstable region?” she wonders. The problems of logistics, collecting money and staffing remain unresolved.

Private vendors will be attracted

The desire of the owners of Donetsk-City to open this mall is understood, says Managing Partner of the Retainet consulting company Oleksander Lanetskiy. He explains that from October 15 to the end of December clothing and footwear outlets sold the same amount of goods as in the period January to the middle of October. “Nobody wants to lose such high sales indicators,” the expert noted. However, Lanetskiy admits that even if the situation is stabilized in the oblast center major chains will not agree to return to Donetsk that quickly. The situation is similar in Transnistria and Chechnya, where contemporary formats of trade appeared only after the situation in those regions was stabilized and investments flowed in.

Lanetskiy presumes that private investors could become the mall’s tenants. “Many of them live in Donetsk and it is much easier for them to resolve the problem of delivery of goods,” he says. Moreover, the Investment and Development management company already has solid experience in this sphere. For example, expert on commercial real estate Vadym Zinchenko says such investors are leasing many spaces in the Continent shopping mall in Donetsk. However, he says they will only open their stores in Donetsk-City if the authorities of the self-proclaimed republics can mitigate the number of thefts during the delivery of goods. “It is also not clear from where potential buyers will get their money,” he summed up.

On the legislative level, sanctions against running a business on the territory of self-proclaimed republics are not stipulated, says Managing Partner of the AstapovLawyers law firm Andriy Astapov. But if retailers pay taxes in the DPR, this will not mean they will tax-exempt in Ukraine, General Director of E.C. Consulting Oleksandra Tomashevska concludes.