Marketing Week (MW): Why did Debenhams decide to launch its first store in Russia last year?
John Scott (JS): One factor is the emergence of the fashionable middle class in Russia in recent years. Seven years ago, the middle class wasn’t as developed but they are now very much early adopters in a fashion sense. I think they are travelling a lot more and seeing more of what’s out there in the rest of Europe and the world, and they are embracing those trends. Also, generally from a strong economic outlook, low unemployment point of view, it is all moving in the right direction.
MW: Does the retail environment in Russia suit Debenhams?
JS: It’s one of the only places in Europe where a lot of big malls are still being built. There are some big store opportunities that we’re not seeing in the rest of Europe.
Department store retailing in Russia is fairly small. There are very few operators – most just operate one independent store and all of them are really aimed at the more luxury end of retail. So there is a distinct lack of anchor retailers and we are getting lots of developers and landlords coming to us with schemes and wanting to get us involved.
MW: Is Russia a challenging place to do business in terms of the level of bureaucracy and logistics?
JS: There are hurdles – customs is difficult and the extra documentation you need to get into the country are a major hurdle for a lot of people but we have a team that can work on that. The crucial thing is if you’re going to do it with a [franchise] partner, make sure you’ve got the right partner. We went with someone that had previous experience of operating department stores in Russia, so that means they both understand retail and are a strong Russian partner.