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The distribution network in Russia

Evolution of the Sector

Russia is Europe’s third largest consumer market by turnover, behind only Germany and France. Russia’s domestic food processing industry and developing food retail sector contributed significantly to the economy. In 2019, revenues from Russia’s food and drink processing sectors reached 102.4 billion USD. The Russian retail sector has been developing rapidly in recent years. Market concentration is moderate. According to the latest figures from USDA Foreign Agricultural Service, in 2018, the share of top ten largest retailers accounted for 32 percent of the food market. Nevertheless, there is strong competition as costs are high and profit margins are low. In 2019, the turnover of Russian food retail industry grew by 1.4 percent and totaled $223.9 billion (16,120.8 billion rubles). Russian consumers are increasingly buying food and drinks via the internet, especially in big cities. According to Euromonitor, food and drink internet retailing grew 20 percent in 2018, to reach $736 million (46.4 billion rubles) and is forecast to reach $1.8 billion (115 billion rubles) in 2023.

Well-organized distribution channels have developed significantly over the last few years, particularly in the major population centers of Moscow and St. Petersburg, and have started to expand to the regions. In the consumer sector, there are large-scale retail stores in Moscow that are able to buy in bulk. Shopping malls and big box stores are common sights in St. Petersburg, Moscow, and many other Russian cities. By employing the domestic distribution organizations, the task of bringing goods to market in Russia has been greatly eased.

The Russian market can be segmented as follows :

  • The discount channel is currently the fastest growing modern retail channel in Russia. The Russian market lacks pure discounters such as German Lidl or Aldi, and all discounter chains present in the market could be referred to as soft discounters. The major players in the discounter segment include local operators e.g. the X5 Retail Group (Pyaterochka), Magnit and Dixy Group (Dixy retail chain).
  • Hypermarkets are the second most significant modern grocery channel. There are three foreign chains among the top 10 players. The leader of the segment is France-based Auchan. The hypermarkets are located on the outskirts of large cities, or as the anchor store of a large urban shopping mall.
  • The supermarkets segment accounts for the smallest share among the top three large format channels and the segment's growth prospects are currently also the worst among the top three large area formats. This is the segment with the largest number of local and regional chains. The supermarket segment is dominated by domestic operators but there are several successful foreign companies present on the market as well. They include Spar (the Netherlands), the second-ranked chain in the segment (by sales), as well as Auchan Atak (France), and Billa (Germany). The leader of the segment is local X5 Group's Perekrestok chain.
  • Cash and carry stores are the fourth-largest format of organized retail in Russia, exceeding only the convenience store segment. It is represented by all types of players, including large foreign chains (Germany-based Metro and Selgros) and national chains (St. Petersburg-based Lenta), as well as regional operators (Linia in the Central Federal District; Lakmin in Moscow and Tula Provinces), and local operators (Cash).
  • The convenience channel is the smallest modern retail channel in Russia. All major players in the segment are Russia-based. In the long term, this segment carries the highest growth potential, due to its low level of development; however, convenience shopping has not gained popularity among Russian consumers yet. On the other hand, the current crisis is expected to increase the popularity of convenience stores.
  • An essential part of distribution is still carried out by informal means, such as stalls and markets. 20% of sales are represented by open-air markets and more than half by informal stalls.
Market share

In 2019 the top grocery federal retailers by sales turnover are:

  • X5 Retail Group : $21.25 billion in revenues
  • Tander: $18.78 billion in revenues
  • Auchan: $ 6.41 billion in revenues
  • Lenta: $6.2 billion in revenues
  • Dixy: $4.65 billion in revenues
  • Metro Cash & Carry: $ 3.60 billion in revenues
  • O’KEY: $ 2.87 billion in revenues
Retail Sector Organisations
Sector-based alert (in Russian)
Russian Chamber of Commerce and Industry

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Latest Update: June 2022

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