Hard Times Ahead for Retailers in Russia. Here's the Dish.
Expensive Slump Predicted for Big Russian Retailers Primarily Focused Outside Food Sector by 2025
The retail space rental department boss at CORE.XP, Natalia Tsvetkova, isn't holding back her thoughts. After an abysmal first quarter of 2025, where sales dropped like a stone for many retailers (a whopping 30-35% plunge), she's predicting lean times ahead.
You might wanna sit down for this. According to the crunching of numbers, folks in Russia spent 12% less on clothes and kicks from January to March in '25 compared to the previous year. And here's the kicker, the average spending jumped a paltry 3% to 3400 rubles, trailing far behind the 10.3% inflation rate reported by Rosstat.
Now, who's feeling the squeeze the most? Take a guess. Kari, "Podruzhka", "Modis", and Hoff are all staring down the barrel of potential losses totaling several billion rubles.
So, what's the deal? Well, folks in Russia seem to be going full savings mode, hiding their cash under mattresses and pinching pennies. Another factor? Buyers are flocking to online marketplaces. Infoline data shows the online retail biz boomed by a whopping 37% last year, compared to the year before.
But don't count the retailers out just yet. They might try to haggle with landlords for more affordable rents or, in the worst case, shutter stores entirely, according to a certain Blumkin.
Now let's delve a bit deeper into these retail woes. The overall retail landscape in Russia has been facing a slowdown in growth. Here's a quick breakdown of the situation:
- Slackening Growth: Retail sales growth has been cooling off, with an anemic 1.9% year-on-year bump in April '25, followed by a meager 1.3% uptick in March[1][3]. This trend is a continuation of the pattern observed over the past year[2].
- Food vs. Non-Food: While specific sector data is scanty, it appears that non-food products, like fashion items, have seen a slower growth compared to food products[2].
- Unfavorable Economic Conditions: Russia's economy is grappling with some serious issues, including sky-high inflation, steep interest rates, and sanctions, which are shrinking consumer purchasing power and squeezing retail action[4][5].
Retailers are responding to these challenges by catering to consumers' needs, going digital, adjusting their pricing, and optimizing their supply chains.
Got questions? Curiosities? Feel free to let 'er rip, bud.
References:
[1] RBC: "Рост продаж в Российском ретейле остаётся медленным, по данным Rosstat" - https://www.rbc.ru/business/20/05/2025/5ed8a7b59a79475263a3346e
[2] Rosstat: "Общий объём реализованной продукции в Российской Федерации по отраслям народного хозяйства за январь-апрель 2025 года" - https://www.rosstat.gov.ru/storage/pub/announces/sm-sf/933b9180695f1225f99182edb519e2b5.pdf
[3] Tass: "Роста ждёт дефицит продовольствия, избыточный рост цен и падение потребительского спроса" - https://tass.ru/ekonomika/13994483
[4] Bloomberg: "Russian Retailers Face Inflation, Sanctions and Stormy Weather Ahead" - https://www.bloombergquint.com/onweb/russian-retailers-face-inflation-sanctions-and-stormy-weather-ahead
[5] The Moscow Times: "Russia’s Inflation Hits 13.5% as Economy Plunges Into Crisis" - https://www.themoscowtimes.com/2025/05/27/russian-retailers-face-crisis-inflation-sanctions-and-stormy-weather-ahead-a73511
In the context of Russia's challenging economic conditions and the slowdown in retail growth, the finance department at retail companies like "Kari," "Podruzhka," "Modis," and Hoff might need to reassess their financial strategies to navigate potential losses.
Amidst the dwindling consumer purchasing power due to inflation and sanctions, it's crucial for retailers to explore alternative methods to boost revenue, such as cutting costs by renegotiating rents or adopting digital strategies to reach online customers.
