Russian retail is gradually moving away from a growth strategy built on the constant opening of new stores. Grocery chains in particular, which spent years expanding aggressively, have noticeably slowed their expansion. The reasons: rising costs for building and maintaining retail facilities, expensive lending, and shifting consumer behavior.
The DIY segment is also facing headwinds. In the first quarter of 2026, turnover in the market for construction and finishing materials, home and garden products fell 8% year on year. At the same time, the average basket in DIY rose 8% between January and August, reaching roughly 10,000 rubles ($124) – and for some large players, as much as 16%. But higher spending per purchase does not necessarily signal a recovery in demand: it may reflect higher prices and a shift in the sales mix.
Despite the differences between grocery retail and DIY, companies face a common challenge. With costs rising and demand subdued, retailers need to squeeze more returns out of their existing stores, while adjusting for the specifics of their industry.
Store formats are shrinking
According to market participants, the average footprint of new grocery stores has decreased by approximately 15% year-over-year. Meanwhile, the average size of new home goods stores in shopping centers across Moscow and the Moscow Region has contracted by 8.6%. This trend reflects retailers’ push to optimize space utilization and rein in the costs of launching and operating brick-and-mortar outlets. Under these tighter operating conditions, the performance of a retail property is increasingly driven by the breadth of opportunities and convenience it delivers to the consumer.
For the DIY segment, product assortment and value-added services are critical. Specialized shopping centers are addressing this need by bringing together diverse product categories and brands under one roof. When renovating an apartment, for instance, a shopper can select finishing materials, plumbing fixtures, furniture, and lighting in a single visit – allowing them to compare specifications and ensure design compatibility. This format effectively satisfies complex consumer demand and maximizes returns on existing retail space without requiring physical network expansion.
E-commerce is redefining the physical storefront
Another structural shift in Russian retail is the ongoing redistribution of consumer demand between online and offline channels. Specifically, data from the Association of Internet Trading Companies (AITC) shows that in the first half of 2026, online grocery sales reached 1.06 trillion rubles ($13 billion), or 14.8% of the Russian e-commerce market. At the same time, home goods and furniture overtook the food segment for the first time, reaching a turnover of 1.13 trillion rubles ($13.9 billion), or 15.8% of the market.
At the same time, the expansion of e-commerce affects individual retail segments differently. Grocery items fall into the category of routine purchases. Consumers usually know exactly what they need and can place an order without setting foot in a store. As a result, a portion of these transactions is steadily shifting to delivery, transforming the physical store into just one component of a broader, multi-channel service ecosystem. For instance, a location can simultaneously operate as a traditional retail outlet and as a fulfillment hub for online orders.
In the DIY segment, the dynamics are more complex. Many purchases here require upfront research and professional advice. The color of a finishing material on a screen can easily deviate from its actual shade, and a surface’s texture is difficult to judge from a photograph. When choosing furniture, buyers must evaluate not only dimensions but also comfort, craftsmanship, and compatibility with other interior elements. Furthermore, higher-priced products involve more nuances during selection, making personal, hands-on familiarity with the assortment far more critical for the consumer.
Consequently, online channels in this segment do not so much replace physical retail as redefine its purpose. Consumers frequently research products online before visiting a showroom to compare materials, seek expert advice, and finalize their decision. For retailers, this underscores the necessity of treating online and offline operations as complementary channels rather than two independent lines of business.
Retail development is therefore becoming increasingly less dependent on expanding the number of physical stores. In the grocery sector, the emphasis has shifted to optimizing existing store networks and expanding delivery services and online sales. In the DIY segment, a wide product range, additional services and the ability to meet a variety of customer needs in one location have become particularly important. In both sectors, success increasingly depends on how efficiently retailers use their space, rather than the number of stores they operate.
By Boris Sidorov, Director of the Kashirsky Dvor shopping center