New mall to enliven Kaunas

  • 2003-09-25
  • Ruta Ambultiene
KAUNAS - Construction of the largest shopping mall in Lithuania's second city is well underway.
The 22,000 square meter Hyper Maxima, whose foundations were laid last August, will feature a 630-space parking lot, a supermarket with some 60,000 items on offer and some 3,200 square meters of floor space to retailers, including a 550-seat restaurant.
The mall is due to open in time for the December shopping blitz.
For Lithuania, the Kaunas mall will be the third of its kind, as Hyper Maxima already operates twin malls in Vilnius and Klaipeda.
All three centers are owned by VP Market, which has managed to maintain its No. 1 position in the rapidly expanding Baltic retail market. Last week it opened another new Maxima in Riga (see story on Page 13).
Based on company data, the retail giant now holds a Pan-Baltic chain of as many as 246 Minima, Media, Maxima and T-Market stores, 65 of which are located across Latvia and one in Estonia.
The Kaunas superstore is likely to bring about a number of economic changes to the city.
Aside from the 70 million litas (20.3 million euros) poured into its construction, the shopping center will create hundreds of permanent jobs – something the local people badly need. Officially the level of unemployment in the area stands at 7.7 percent.
"However, the most important factor to consider is increasing competition, which will drive prices down and improve the quality of service – all for the customer's benefit," VP Market director general Ignas Staskevicius said.
For their part, VP Market's competitors are not yet raising the white flag in the relentless retail war.
"Understandably, a rival's expansion is never good news, but we are not going to sit idle and watch them grab our slice of the market," said Aidas Mackevicius, finance director of IKI, another dominant retail chain in Lithuania.
"I also don't think that other chain operators will reconsider their intentions to invest in Kaunas. Quite the contrary – [expansion] is the only way to fight off competition," he added.
But for many petty retailers, the new megamall will start a battle for survival. Laima Mogeniene, a representative of small and medium-sized enterprises in the Kaunas region, said that VP Market's aggressive move into the neighborhood would put an even greater strain on corner shops.
"They simply cannot compete with the large supermarkets on prices, and some of them eventually will be forced out of business. The authorities should supervise the whole process and look into the interests of small retailers as well," she said.
Meanwhile, the VP Group – the consortium in control of VP Market – stalled the plans to build Kaunas-based Akropolis, a massive undertaking that have spelled unprecedented prospects of regional development.
The Vilnius-based Akropolis launched over a year ago has taken claim to the title as the biggest shopping mall in the Baltics, covering around 54,000 square meters or more than 10 times the size of a typical football field. The trade and recreation mecca employs 2,000 people and accommodates over 100 independent catering and retail firms, a skating rink, an eight-hall cinema and a bowling alley.
Earlier, rumors circulated in the press that the consortium dropped the idea to erect a similar Akropolis in Kaunas in favor of their ambitions to buy Rytu Skirstomieji Tinklai, the electricity distribution company for eastern Lithuania, whose 71.35 percent stake is initially being sold for a staggering 421.5 million litas.
But VP Market director Staskevicius was quick to dismiss the speculations.
"We're not giving up on the project just because our company decided to put investments somewhere else," he said.
"There is good will and support from the City Council, but the main initiative lies with the investing parties. Now all depends on whether they find consensus on money-related issues and the location of the shopping and leisure complex."
In 2002, VP Market reported a stunning 3 billion litas turnover, which constitutes one-fourth of the state budget. Despite stiff competition from other retailers, the company continues to keep the lion's share – 30 percent – of the local retail market, drawing around 400,000 shoppers daily in Lithuania alone.