“SHOPPING BY ACCIDENT”

ACROSS: MR. MICHAELY, YOU WANT TO GROW STRONGLY IN RUSSIA. IF WE COUNTED CORRECTLY IN YOUR PRESEN-TATION, IKEA WISHES TO DEVELOP AROUND 10 NEW SHOPPING CENTERS IN THE NEXT 10 YEARS. IS THAT RIGHT?
ARMIN MICHAELY: Basically, yes. That is our rough schedule. It is of course dependent on how quickly we find appropriate sites. We currently own two locations that we are developing. One of them is Mytischi. At the same time, we are carrying out refurbishments on existing centers. We always try to do three centers at the same time. When one is well advanced, we start with the next. That is our strategy for extensions, too. We have ambitious plans for our location in
Adygea. We are doubling the area at that center. In addition to edutainment, entertainment, food, and socializing, we rely heavily on community involvement including sports activities and sports clustering. We believe that this is the future of the shopping center. We are planning a nursery, trying to organize exhibitions, and want to integrate the neighborhood with events. We are also planning large sport facilities that we can provide to sport clubs for competitions or to our tenants. They can then sell or test their products there. The shopping center gains a different character when people regularly go there to do sports, for example. The idea is that the shopping center can then live independently from shopping. A family should be able to spend the whole day at the shopping center and shop only by accident.

ACROSS: YOU ARE PLANNING ON AN INVESTMENT OF €2 BILLION?
MICHAELY: The exact sum is not so important to us. But yes, that is the amount that we believe we can achieve, assuming the site search and development run well.

ACROSS: HOW MUCH POTENTIAL DO YOU SEE IN RUSSIA FOR NEW CENTERS IN GENERAL?
MICHAELY: We currently have 14 centers in Russia. We are still absent in many major metropolitan areas, whereas cities with populations between 500,000 and 1 million inhabitants are actually interesting for us, too. I see opportunities for many years.

ACROSS: YOU HAVE AMBITIOUS PLANS AT THE MOMENT. WILL YOU EVENTUALLY BREAK OFF FROM IKEA AND BECOME A KIND OF RUSSIAN ECE?
MICHAELY: No. On the contrary. Ikea is unique for us. We benefit greatly from Ikea in centers and are embedded in a good commercial concept. That is, we have 4-5 million visitors each year from Ikea alone. If we then add a good hypermarket and a good home improvement warehouse to it, we double the number of visitors. We then add a good mall concept. Our center with the lowest number of visitors receives 12 million people per year, the one with the highest sees 38 million visitors.

ACROSS: HOW DO YOU FINANCE YOUR DEVELOPMENTS?
MICHAELY: We are in a fortunate position in that Ikea is a very solid, well-positioned company. We do of course also use bank loans, but we are not dependent on them to the same degree that other developers are. We are able to ensure a certain level of funding ourselves. That means we reinvest what we earn in Russia. We are therefore very popular with our tenants as well. Many of them have ruble contracts. This is extremely important for tenants right now.