NEW YORK — Americans watching the “Today” show last week were treated to breakfast views of host Matt Lauer drinking coffee in the Bosco Café in the giant GUM shopping mall on Red Square. But behind the picturesque scene, a $116 million deal to buy the mall was taking shape.
In the biggest retail deal in the Russian market, luxury retailer Bosco de Ciliegi, which owns 46 designer boutiques across Russia, including Givenchy and Max Mara, has bought a controlling stake in Moscow’s famous shopping destination.
Commercant, Russia’s answer to The Wall Street Journal, valued the deal for 50.25 percent of GUM at close to $100 million. But Mikhail Kousnirovich, president of Bosco di Ciliegi, insisted his company spent even more money to take over Russia’s premier retail property.
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“GUM is the most important retail space in Russia and it’s a worldwide symbol of our country. The deal was closer to $116 million,” said Kousnirovich in a telephone interview. “But I’d like to add that more important than money, I am about to invest all of my brain, my soul and my time.”
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The property itself is 742,720 square feet, including 387,500 square feet of retail space over three shopping floors dotted with marble fountains and massive chandeliers. In national prestige, the Russian deal is akin to GE buying Rockefeller Center.
When it opened in the tsarist era in 1893, GUM — the acronym stands for Government Department Store — was a leading trade center. The communist government that came to power in 1917 turned the iron-balconied, marble-floored galleria across from the Kremlin into the Soviet Union’s shopping showplace; residents from the provinces who lacked consumer goods would fly in from Siberia to shop in stocked generic stores called “Men’s Shoes” or “Ladies Clothes” where Soviet-factory made goods were on offer.
Since the Soviet Union collapsed in 1991, the world’s mass market and prestige brands have been flocking to GUM. Estée Lauder opened its Russian flagship stand-alone boutique in 1993, followed by its flagship 800-square-foot Clinique boutique in 1995. In the Nineties, many other international brands from Benetton to Reebok and Revlon set up in the upscale three-story mall.
But during the last decade, retailer Bosco has been the main force in updating the retail giant and restoring it to its original grandeur. In 1999, Bosco renovated one lane of the first floor, opening its own 14,000-square-foot Articoli boutique, which has become Moscow’s fanciest parfumerie. At the same time it launched stand-alone Max Mara, Max & Co., and Marina Rinaldi boutiques. Its own swank Bosco Café, with a view over the cobblestones of Red Square and Lenin’s tomb, has served the world’s fashion luminaries and once rejected Harrison Ford because reservations were already overbooked. Bosco Café’s most famous fashion moment occurred a few years ago when the Prada and Etro families found themselves seated at adjacent tables. Bosco also owns its own eponymous department store on GUM’s ground floor.
Over time, Bosco also opened La Perla, Calvin Klein and Hugo Boss boutiques in GUM and held gala parties in the space, including a runway event for the launch in Russia of MAC cosmetics. Kousnirovich, 37, for years has been itching to take over a massive space and transform it into the top luxury department store — a Russian Harrods. So when the possibility opened of buying a controlling interest in GUM, he could not pass it up.
“Bosco has been retailing in GUM for nine years. But I’ve been coming here since I was a kid. Every Russian remembers that in his childhood GUM had the best ice cream in the country. And it will again soon,” said Kousnirovich, whose six-year renovation plan for the space includes the opening of Russia’s top gourmet emporium.
“Enough about Harrods food halls! What I have in mind will be more luxurious than Harrods,” he promised. This year, Bosco plans to open Moschino and Iceberg boutiques in GUM. There is talk that Louis Vuitton will open a stand-alone boutique there, too, although a Vuitton spokeswoman said the project there is not certain.
The plans may sound grandiose, but not unrealistic, considering that Bosco is the company that once managed to close one of Moscow’s busiest subway stations in order to ferry VIPs — who never take the subway — to an underground depot for a Givenchy show and visit by Alexander McQueen.
And GUM isn’t the only project on Bosco’s agenda this year. Next Sunday, the company is opening another one of its luxury Articoli boutiques, this time a parfumerie and accessories store on downtown Moscow’s Arbat Street to be filled with designer cosmetics, accessories, jewelry and Champagne. The company is spending $1 million to outfit Russia’s Olympic team for the 2004 Olympics in Athens.
“It’s not about opening boutiques anymore,” said Kousnirovich. “We are building a luxury brand image and luxury environments where our clients can come to see the latest trends, buy interesting objects, and relax.”