Cash gap: Russian retail is in deep crisis

Retail in Russia is going through one of the most difficult periods in the last two decades. Retail chains faced falling profitability, lower demand, and rising costs. Izvestia came to this conclusion after examining the latest data from government agencies and market participants. The assessment of the economic situation in retail trade in the first quarter of 2026 dropped to -24, which is the worst indicator in all the 20 years during which Rosstat conducts such monitoring. As a result, trade is actively reducing costs: a number of chains are forced to close stores or revise their formats, as well as increase margins on non-socially significant goods. Izvestia investigated the causes of the crisis and how the market is adapting to new conditions.

Retail Transformation

The drop in consumer demand amid the general slowdown in the economy has become a key factor that accelerated the crisis in Russian retail, market participants themselves admit. And they note that customers have become less likely to go to stores, more careful about spending money, and discounts and price competition are no longer helping to maintain the previous level of sales.

Business sentiment has noticeably deteriorated against this background. According to the results of January – March 2026, the assessment of the economic situation in retail trade dropped to -24, which is the worst indicator for all time of observations, according to Rosstat data. Retailers also estimated the profitability of the business at a record low: the indicator dropped to -34 from -15 at the end of 2025. The index of business confidence in the industry dropped to -8. This suggests that most companies view the market situation negatively.

Retailers surveyed by Izvestia confirm the trend. Lenta reported a slowdown in product sales and a decrease in consumer confidence to the lowest levels in the last two years. So, according to analysts of the "Check Index" of the OFD Platform company, in January – April, the number of grocery purchases decreased by 2% year-on-year. At the same time, the average check increased by 5% and reached 1,160 rubles.

Most major retailers record a decrease in revenue growth. In the first quarter, X5's performance increased by only 11.3% year—on-year, as growth was driven by the expansion of the retail network and increased sales in comparable stores (like-for-like), whereas a year earlier the growth rate was 20.7%. Lenta's revenue increased by 23.4%, but business profitability declined. The company's representative explained that this is due to the costs of integrating the acquired assets. Rigla-Zdravcity's sales increased by 15%, to 73 billion rubles, Boris Popov, the company's CEO, told Izvestia. However, this increase is due to higher prices for medicines.

The situation in the industry could not but affect pricing. The average level of trade margins for the cost of goods sold among Russian retailers increased by 1 percentage point over the year and reached 28%, the maximum for the entire time such statistics were studied. At the same time, according to a top manager of a large retail chain, companies have to restrain prices under the threat of losing competitive advantages and a stronger decline in sales.

The Federal Antimonopoly Service, in turn, continues to monitor prices for socially important goods. The agency told Izvestia that a number of large chains, including X5, Magnit, Auchan, Dixie and Azbuka Vkusa, voluntarily limit margins on individual products at 5-10%.

The deterioration of the market situation in the market has forced retailers to actively reduce costs. Companies are trying to reduce rental rates, and if they fail to reach an agreement, they close their stores, said a top manager at one of the major chains. Additional pressure is exerted by the flow of buyers to marketplaces, as previously reported by Izvestia. According to the Ministry of Industry and Trade, the share of online in the total retail trade reached 15% by the end of 2024, and by 2030 this figure may grow to 35%.

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What is the reason and should we expect the situation to worsen?

As a result, a number of retail chains are forced to reduce the number of stores or revise their formats. In 2025, O'STIN closed 62 locations and cut 15% of its staff. Gloria Jeans has liquidated at least 100 stores in less than two years. Construction retailers were forced to take a similar step amid declining demand for repairs. And the leader of the perfumery market, Latoile, has eliminated 93 outlets and intends to reduce about 150 more in 2026, sources told Izvestia earlier. In some chains, the share of closed or reformatted stores reached 10-15% of the portfolio in 2025, a top manager of a large retail chain added.

What should the market expect next

Vyacheslav Berdnikov, head of the Public Stock Analysis Department at Sovcombank, states that the market is currently in a difficult situation: sales are still ongoing, but the pressure on business profitability has increased dramatically. Among the main problems, he named weak demand, an increasing tax burden, expensive logistics, high rental rates and expensive loans.

According to the forecast of the Ministry of Economic Development, the increase in retail trade turnover in 2026 will be only 0.8% compared to 4.1% a year earlier. At the same time, taking into account inflation, the real volume of the market will continue to decline, says Zulfiya Shilyaeva, senior director of the CMWP Retail Real Estate department. She recalled that this year the share of Russians' spending on groceries has reached its highest level in the last 18 years — about 39% of all consumer spending. At the same time, real incomes of the population are growing much slower than before. According to Rosstat, in the first quarter, this figure was only 1.5% compared to 7.1% for the same period in 2025.

With annual inflation of 5.6%, purchasing power is actually decreasing, said Ilya Bereznyuk, Managing Partner of Agro and Food Communications. According to him, people are reducing the number of trips to the shops, choosing cheaper segments and postponing non-urgent purchases. He also believes that 2026 will be even more difficult for the industry than 2025: the future situation will depend on how effectively companies can reduce costs and adapt to new market conditions.