Sedmoi Kontinent Plans to Go Lux

Six of Sedmoi Kontinent's centrally located supermarkets will soon be transformed into luxury stores, stocking expensive brands only and competing directly with the likes of Kalinka Stockmann, Eldorado and Sadko Arcade.

The Sedmoi Kontinent chain, which reported turnover of $200 million last year, currently comprises 25 stores. By the end of the year, a further seven will have opened to the public.

Sedmoi Kontinent is part of umbrella company 7K Invest-Holding, which includes Stolichniye Gastronomy, the company that actually owns the stores' premises. Stolichniye Gastronomy was formed in 1994 after the Soviet-era Smolensky, Tsentralny and Okhotny Ryad stores and the grocery store in Dom na Naberezhnoi merged.

Already prices in the central Sedmoi Kontinent stores are 10 percent to 15 percent higher than in the outlets in the city's suburbs.

"We need to bring the prices in our central stores up as high as we can get them if we really want these to be elite stores, aimed at wealthy customers and organized along the lines of Western boutiques," said the chain's deputy general director, Valentin Zapevalov.

Zapevalov said this would mean the creation of a new concept -- luxury-class supermarkets.

Interior designers have been called in to refit the former Soviet stores. After renovation, their shelves will stock only expensive labels.

"Now, for instance, our central stores stock a wide selection of alcohol. After the renovation, we will only stock premium-class drinks," Zapevalov said.

Repairs are already under way in the Leninsky Prospekt store. Then, Zapevalov said, the company will renovate the Okhotny Ryad store, located on the first floor of the Hotel Moskva.

This will be followed by the Smolensky and Tsentralny stores and then the branch on Ulitsa Serafimovicha.

Zapevalov said a further two premises would be purchased as part of the new concept. Both would be centrally located.

In the future, the company will be considering premises in the center of town and possibly on the territory of elite apartment complexes. The stores would not be large, Zapevalov said, no more than 1,000 square meters.

Sedmoi Kontinent founder Vladimir Gruzdyev has said in the past that using the central Soviet-era stores as standard supermarkets identical to those located in the suburbs is not possible. The buildings are architectural monuments, he said.

Zapevalov did not reveal the amount to be invested in the new project. Construction of a "normal" supermarket with an area of 1,900 square meters costs Sedmoi Kontinent about $3 million.

"I don't think a luxury-class store will cost more," he said. The project would be financed from funds earmarked by the company for its development. This year Sedmoi Kontinent is due to invest $100 million in its retail chain, a part of which will come from external sources.

According to analysts, it is too early to speak of competition between elite stores. The president of the National Trade Association, Vadim Zuikov, said he does not have a lot of faith in these kinds of projects.

"In order that people make a beeline for the stores, there must be a unique range of goods that is not offered anywhere else," he said. Zuikov said it was very hard to assemble such an assortment.

However, Eldorado manager Larisa Rakova said this was achievable.

"We import a large portion of our products directly from Germany. We have customers who come to us specifically to buy a German product that they are familiar with," she said.