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. Last Updated: 07/27/2016

'Hypermarkets' Herald New Phase in Retail

Two giant new supermarkets have opened their doors in Moscow's outskirts, placing high-stakes bets that they can draw consumers with a combination of wholesale market prices and Western-style shopping comfort.

Both are roughly based on the "hypermarket" concept popular in Europe: Such stores offer low prices by locating out of the city center where rent is cheaper and making profits on high volumes rather that big markups.

Ramstore -- a 6,000 square meter hypermarket that sells everything from washing machines to canned corn -- aims to attract middle class shoppers to its site near metro Molodyozhnaya in prestigious western Moscow. Judging by the cars packing the supermarket's lots and the customers lining up at its 30 cash registers just one month after its opening, Ramstore is off to a flying start.

Eldorado M, a wholesaler set to open this week on Ryazansky Prospekt in southern Moscow, is barely visible from the street and doesn't aim to attract the shopping masses. The 10,000-square-meter warehouse and showroom will compete directly with Moscow's numerous outdoor wholesale markets for the business of restaurants, cafes and stores that buy in bulk and resell food at higher prices.

Although the stores have different target markets, both fill a void in Moscow retailing: They offer a wide selection of goods and modest prices in clean, comfortable sales outlets.

"It demonstrates something we've thought for a long time," said Marc Treves, associate director of retailing at real estate agency Jones Lang Wootton. "There is much to be done in out-of-town supermarkets -- this is the future, and there will be more and more international operators involved."

In case the giant green kangaroo gracing the entryway doesn't do it, Ramstore's shiny-new shopping carts and light-rock soundtrack indicate that this is a different kind of supermarket.

Half Wal-Mart and half Safeway, Ramstore sells a wide array of electronics, clothing, kitchenware, cosmetics and food. The $34 million market includes a glass-fronted butcher shop and a bakery offering a dozen kinds of bread. Ramstore takes up half of a 12,000- square-meter site, anchoring a complex that also houses 45 retail stores including Levi's and Swatch, a compact disc store, and yet-unopened McDonald's and Rostik's fast-food outlets.

Most prices in the supermarket are considerably lower than those in central Moscow stores. A liter of French President-brand milk costs 4,000 rubles (65 cents), a kilogram of bananas is 3,500 rubles, and 125 grams of imported butter runs 4,200 rubles -- about half to two-thirds the prices in smaller shops. Shoppers at Ramstore said most prices were roughly equal to those found at Moscow's outdoor wholesale markets, although some were higher.

"We are focusing on volume, not on profit margins," said Ramstore general manager Aziz Bulgu. "If sales are in big quantities, then this is where the customer wins and the store wins."

Ramstore was built by Turkish real estate giant Enka, which runs the store in partnership with Turkish food trading mogul Ram Foreign Trade and the Turkish supermarket chain Migros.

The store buys most of its goods in Moscow, negotiating bargain prices with distributors who welcome the high-volume sales, Bulgu said.

Distributors that clinch business partnerships with Ramstore now will certainly benefit later if the company makes good on its expansion plans: The partners say they plan to open four more stores in Moscow by 1999 and will branch out to St. Petersburg, Nizhny Novgorod and Rostov-on-Don.

Ramstore attracts about 7,000 customers a day, Bulgu said, although he declined to divulge the store's sales numbers.

Retail expert Treves estimated sales turnover should reach about $15,000 per square meter annually, compared with sales of $8,000 to $10,000 per square meter at similar stores in the West.

"We are the first in modern retailing here," said Bulgu. "We want to be a leader in chain markets."

Serious competition in the "hyperstore" class is soon to follow, however. A two-story, Russian-owned market is set to open near metro Yuzhnaya by month's end, and a major international operator is eyeing Moscow for a probable store opening in the next two to three years, Treves said.

The average Russian consumer will probably not notice the Russian-owned Eldorado M, a 10,000-square-meter warehouse wholesaler hidden behind a big gate on a side street off Ryazansky Prospekt. But then, the average consumer is not Eldorado's target.

The market is hoping to attract Moscow restaurants, cafes and resale shops to buy in bulk. The minimum purchase is about $300, a price that should keep all but the New Russians away, said general manager Konstantin Serebryakov.

With the conveniences Eldorado offers, a New Russian might be tempted to shop there. A sales manager accompanies the customer around the sales floor, scanning the desired purchases into a hand-held computer. The order is relayed to the warehouse while the customer waits in the store's cafe, and is ready for pick-up within 20 minutes.

"Any store can come to us and buy everything at once," Serebryakov said. "These kind of wholesale markets with such assortment don't exist."

Eldorado M imports all its products from Europe, aside from the breads and cakes it bakes on the premises. A stroll around the sales floor reveals 20 types of fresh fish, 8 kilogram packages of beef, 1 kilo bags of frozen vegetables, and California wines -- but no marked prices.

"We'll mark the prices by the time the store opens," Serebryakov said during a recent sneak preview of the store for Moscow journalists. He said prices would be about 60 percent lower than those in central Moscow stores and equal to those at outdoor wholesale markets.

Eldorado, which runs a restaurant and supermarket of the same name in central Moscow, owns the building in which the wholesale market is housed, Serebryakov said, and conducted extensive renovation on the site with the help of Italian design firm Alessandro Milza. Serebryakov would not state the cost of the renovation, but the green marble floors and expensive light fixtures suggest the outlay was high.