The German retailer did not get a plot of land in Kirov

The German retail operator Metro Group abandoned the project to build a hypermarket in the Kirov region worth 20 million euros. The land that the group claimed turned out to be owned by a local agricultural company, and the parties were unable to reach an agreement. Experts believe that the main reason for the company’s abandonment of the project was the administrative barriers that are typical for most Russian regions.

Metro Group became the first international retailer to officially indicate interest in opening a Cash & Carry center in the Kirov region. The group expected to build a small wholesale center Metro Cash & Carry in the region worth 20 million euros and an area of 6.5 thousand square meters. m.

Yesterday, the Russian division of the Metro Group, Metro Cash and Carry LLC, said that the site chosen by the company for the construction of a hypermarket in the southwestern district of Kirov is owned by CJSC Agrofirm Doronichi (according to other sources - CJSC Plemzavod Krasnogorsky “”, both companies belong to the same owners, whose names are not disclosed).

Metro Group managed to invest in a geological study of the land plot and began work on approving the project with government agencies, but in the end the parties were unable to agree on all the necessary conditions for registering the site. The company noted that the administration did not offer any other options for locating the facility, so the project in Kirov had to be abandoned.
Kommersant Metro Group is one of the largest global retailers, whose turnover in 2006 amounted to about 64.3 billion euros. The group unites several retail chains, including small wholesale Metro Cash & Carry, Real (hypermarkets), Mediamarkt and Saturn (household appliances and electronics), Galleria Kaufhoff (department stores). Metro Cash & Carry International GmbH is represented by 622 shopping centers in 29 countries. There are three divisions of the company operating in Russia: Metro Cash & Carry, Real and Mediamarkt. The turnover of the Russian Metro Cash and Carry LLC in 2007 exceeded 2.548 billion euros (an increase of 25.4% compared to 2006). The first Russian small wholesale centers of the Metro Group opened at the end of 2001 in Moscow. Currently, there are 40 Metro Cash & Carry centers operating in 26 regions of the country, of which eight are in Moscow, three in St. Petersburg, two each in Nizhny Novgorod, Rostov-on-Don, Yekaterinburg and the Moscow region. The case with the project in Kirov is not a precedent for the company; there have already been such examples. For example, earlier the Metro Group company refused to build a shopping center in Chelyabinsk for similar reasons, and a store had to be opened in the satellite city of Kopeysk.
According to experts, the main reason for Metro’s abandonment of the Kirov project was administrative barriers, and not the problem with choosing a land plot. According to the head of the retail real estate department at Penny Lane Realty, Alexei Mogila, administrative obstacles in 99% of cases interfere with the implementation of projects; this is a problem in most Russian regions and the case with Metro is not unique. “Indeed, in the regions it is difficult to find a plot of land, but since Metro builds, as a rule, not in the city center, the shortage of land is not a problem for them,” notes Tatyana Bobrovskaya, an analyst at BrokerCreditService Investment Company.
According to Alexey Mogila’s calculations, by abandoning the project in Kirov, Metro Group did not suffer any serious losses: “Preparation of the site cost Metro $300-500 thousand.”
Tatyana Bobrovskaya believes that Metro’s refusal from the Kirov region will not affect the plans of other large companies in this region, but does not rule out that they will study the region and possible economic risks with greater caution and thoroughness, as well as establish relationships with government agencies.
ELENA EVSEEVA; IRINA ROSTOVA, Kirov

Kommersant (N. Novgorod) No. 119 from 07/11/2008

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