Russian Shoppers Embrace Hard Discount Stores
Discount stores are no longer perceived as exclusive to the lower-income population by the middle class.
In modern Russia, a new shopping trend is emerging: the prevalence of hard discount stores. According to Nielsen analysts, Russians are making an average of five trips a month to these bargain retailers, with families earning 90-150 thousand rubles being the primary demographic. A third of these shoppers reside in the big cities of Moscow and St. Petersburg, Kommersant reports.
Previously, the middle class viewed discount stores as a destination for the less fortunate, but Alexander Anfimogov, an independent analyst, notes this stereotype is fading. Anfimogov highlights that the attractive pricing of discount stores, coupled with their straightforward store layouts, is what draws customers in.
"From being seen as depressed stores, discount stores are evolving into a highly sought-after format," Anfimogov explains. "Of course, the prices are the most important aspect."
Hard discount stores aim to compete with hypermarkets, which have seen their popularity wane in recent years. Andrey Karpov, chairman of the Association of Retail Market Experts, advocates that this retail format benefits suppliers, consumers, and networks alike.
The average sales in each product category, Karpov notes, are 15 times higher in discount stores compared to a typical supermarket. This high turnover results in increased profitability.
By the end of 2024, discount stores represented a 5.61% share of the food retail market, almost triple the share seen in 2018. This trend is poised to continue in 2025 with an estimated 5.9% share. By 2029, the share is expected to reach 8.4%, Infoline reports.
The growth of hard discount stores can be attributed to the country's economic crises, which prompted consumers to take a more frugal approach to spending. Retailers like X5 Group, "Magnit", and "Lenta", have been developing their own discount networks for several years. In 2024, the revenue share of X5's Chizhik discount chain nearly doubled to 7%.
"Svetofor", the oldest and largest discount network in Russia, created the "Mayak" chain a few years ago and boasts over 2,000 stores across the country. Yet, dark clouds are brewing over this retail giant. State Duma deputy Sergei Lisovskih announced investigations into suppliers' complaints against Svetofor. In January 2025, the first Svetofor store was forced to shut down due to numerous violations found by Rospotrebnadzor in a Moscow location. The number of closed stores has been rapidly increasing since then.
Discount Retailers in a Nutshell
- The growth of hard discount stores is a reaction to economic pressures and changing consumer preferences.
- Despite making up a small fraction of the retail market, their role has been growing.
- Successful discount retailers focus on competitive pricing, efficient operations, and targeted marketing to lower-income consumers.
- Hard discount stores cater to the niche of hypermarkets, which have experienced a decline in popularity.
- The limited selection in each product category results in high turnover, increasing profitability for these retailers.
Sources:
- Kommersant
- Infoline
- Association of Retail Market Experts
- Association of Retail Companies (AKORT)
- X5 Group's official reports
- Our website's chronicle of Svetofor's inspections
- Government's request to verify the legality of "Svetofor" inspections
I'm not sure about the future of the traditional finance and retail business, as more Russians are shifting towards hard discount stores.The attractive pricing and straightforward store layouts of these discounters are luring in customers, especially lower-income families, leading to a growth in their market share in the retail industry.
