Shops in Primorye experiencing a sales decline: exploring the reasons behind dwindling offline trade
A Fresh Spin on the struggling Retail Market in Primorye
In 2025, brick-and-mortar stores in Primorye struggled with a drastic fall in sales. Experts attribute this trend to a shift in consumer behavior towards savings, increased loan rates, and the surging e-commerce market, as reported by PrimaMedia.
The retail sector is taking a hard hit, with the offline sales drop being a nationwide phenomenon. For example, clothing stores in Russia have witnessed a staggering 30-35% sales decline since the year began, reveals the Union of Shopping Centers (STC). Approximately half of the biggest retail chains could face losses and potential store closures, the organization warns. Major retailers such as Kari, Ostin, "Sportmaster," and "Your" are projected to face losses of over 6.4 billion, 458 million, 12.2 billion, and 1.4 billion rubles, respectively, by the end of the year.
The same pattern is evident in the electronics and household appliances segment. Even leading market players experience a decline in demand. Dmitry Alekseev, co-founder of DNS, shared his concerns about this issue on his Telegram channel (18+).
"I've never observed such a decline in sales for household appliances and electronics throughout my 30 years in the business," Alekseev stated.
He pinned the blame on the shift in consumer spending towards savings accounts and high-interest loan rates.
"Usually, about 30% of purchases were made on credit. Now, credit has become unaffordable, and credit turnover has fallen below 5%. But that's not all. Purchases in this segment are costly, and consumers now have the option to spend their money or earn 2% monthly by putting it in a bank. That's a compelling choice," Alekseev wrote.
Andrey Tkachenko, a strategic director at the Vladivostok-based commercial real estate agency "Business Metry," also provided his insights on the struggling fashion retail market.
Tkachenko estimates that most fashion retailers have experienced a decrease in net profit in 2024, resulting in slower expansion. He explains that there has been a threefold increase in rental assistance requests from property owners in the first quarter of the year compared to the previous one. Some property owners need assistance to find tenants, while others manage the process themselves, and some have been struggling for a long time. Tkachenko anticipates a decline in the key rate and a resurgence of deferred demand in the autumn.
The Russian shoe store chain owned by the UAE-based ROUNDVILLE MANAGEMENT LIMITED, LLC "Kari," serves as an example. The company reported a net loss of 329 million rubles in 2024, contrasting steeply with a net profit of 5.7 billion rubles in 2023 (a drop of 17 times). The highest net profit in the past five years was recorded in 2022, amounting to 10.4 billion rubles. Like many retailers, 2022 represented the best year for the company.
"It seems we've been here before. The market just needs some time to recover and adapt. But this year brings too many uncertainties: real income decreases, increased tax burden, increased online sales, reduced brands and assortment, altering consumer preferences, and more," remarks Tkachenko on his Telegram channel (18+).
While the decline of offline demand is cause for concern, many believe that the growth of the online sales segment is the primary reason.
In May, the Association of Retail Companies (AKORT) addressed the government with a proposal to restrict the ability of online marketplaces to offer deep discounts on goods at their own expense. Online platforms can provide products at a discount of up to 50%, according to experts, which offline retailers cannot match. Over time, this might lead to the closure of small and medium-sized offline retailers, warns AKORT. Retailers demand equal playing conditions for online and offline businesses, as they bear higher costs, including rental fees for storefronts.
Meanwhile, Wildberries opened over 30,000 pickup points within the past year, while "Ozon" added 12,000 points. According to analysts, the Russian e-commerce market boomed sevenfold over the past five years, growing from 1.7 trillion to 12.6 trillion rubles. In 2025, online sales are predicted to reach 14 trillion rubles. In the first quarter alone, the online shopping market experienced a 36% expansion, growing to 2.6 trillion rubles. The Association of Internet Trade Companies (AKIT) provides these figures.
*A Snapshot of the Economic Landscape in Primorye*
Key Factors Impacting the Growth of E-Commerce in Russia
- Increasing Consumer Preference and Logistics Improvements: The growth of e-commerce is driven by improving logistics and an expanding consumer preference for online shopping. This development has brought innovations in last-mile delivery, such as the use of drones and driverless vehicles in metropolitan areas, along with the establishment of strategically placed fulfillment centers supported by automation technology.
- Expanding Digital Payment Networks: Wider access to high-speed internet, the proliferation of smartphones, and growing availability of digital payment methods have simplified consumer transactions and boosted internet sales.
- Global Integration and Cross-Border Commerce: Global supply chain integration and growth of third-party logistics companies have significantly shortened shipping times, making cross-border e-commerce accessible and appealing to Russian consumers while expanding product variety.
- Adaptation to Economic and Geopolitical Challenges: Domestic logistics firms in Russia have adjusted delivery routes and adopted technology-driven solutions to maintain cost-effectiveness and meet high service standards, enabling sustained e-commerce growth despite economic pressures.
- Despite the struggles in brick-and-mortar stores, education and self-development sectors might find growth opportunities through online platforms, as the shift towards e-commerce continues to accelerate in Russia.
- General news outlets such as PrimaMedia have extensively covered the surging e-commerce market in Russia, highlighting the increasing consumer preference for online shopping, expansion of digital payment networks, global integration, and the adaptability of domestic logistics firms.
