Less is worse: Russian grocery stores are getting poorer.
Tatiana Rybakova
Expensive loans, competition from major players and cheap Chinese companies – on one hand. Falling demand from a population growing poorer and fearful of the future – on the other. These are the conditions facing the consumer sector and retailers today. They see only one solution: narrowing the selection and lowering quality. Russian store shelves have chosen the path of their Soviet predecessors.
No need for stress
Retail chains are massively reducing their product selection. Consumer demand is falling, and people increasingly want lower prices rather than a wider selection. Therefore, to maintain profit margins, retailers are focusing on the most popular and cheapest products. count them. According to the analytical agency INFOLine, the boom years are over, and stores can no longer afford to buy everything they can. Plus, to maintain profit margins, they're trying to cut out intermediaries and launching private labels (PLs). They can sell products from little-known, but inexpensive, manufacturers: customers won't trust them, while they do trust a well-known retailer. They're downsizing stores—the smaller the selection, the fewer shelves they need, which saves on rent. Some are even going online entirely—it's convenient for customers, and the store saves money.
Experts note: Private label sales are growing (by 7,5% last year, 12,3% of all sales) – and their share is predicted to soon reach 40-50%, while sales of expensive products – such as butter – are falling (by 9,6%). By the middle of last year, analysts from the Nielsen research group calculated, that the range of food products in Russian retail decreased by 2,3% year-on-year, and non-food products by 1,8%. The reduction in product range has even affected such a recently rapidly growing segment as the market alcoholThe number of specialized liquor stores is shrinking, and so is the product range. Fun in Rus' is no longer about drinking—it's more fun to drink less, and something proven and cheaper. According to the Russian Academy of Sciences, last year consumer spending sagged by 3%, and the share of business complaints about lack of demand reached 70,6%.
“2026 is the year of product range optimization and mono-product range for manufacturers,” sure Mikhail Lachugin, an independent expert in food product promotion in retail chains, tells the story of a confectionery factory that, instead of nearly a hundred products, has reduced its offerings to only about 20, eliminating a large number of chocolates and bars—and is doing just fine.
The decline in demand and product range is also a function of human psychology, says political scientist Alexander Saygin. "The fact is that for many, variety stresses them out rather than brings joy (there's plenty of research on this, and it's easy to find on Google). Therefore, people don't experiment for long and settle on a specific basket of products (and I don't need to tell you how irritating even a packaging redesign can be)," he explains.
In short, Russian shoppers don't need the added stress of being spoiled by too many choices, especially in a stressful life. It seems like Russian grocery store shelves will eventually resemble Soviet ones, where they offered a couple of types of sausage (boiled and smoked), a couple of types of milk (regular and baked), and exactly one type of meat, called "chopped along with the booth." Then, perhaps, the exhausted shopper will find complete zen.
Between the streams
In reality, of course, the reasons for such behavior on the part of trade and producers are much more serious.
On the one hand, this is the result of increased business costs. It is the consumer sector of the economy that is experiencing the greatest pressure from expensive loans, the VAT increase, and its introduction on many small and medium-sized businesses that previously operated under the simplified tax system or patent. Retail has always relied on credit: it's impossible to sell all your goods and then purchase a new batch, so purchasing credit is a common practice. Furthermore, many stores, especially non-chain stores, operated under the simplified tax system or patent, and it is precisely these stores, due to the nature of their business (relatively high turnover), that will now have to switch to VAT.
Manufacturers face their own challenges: raw materials are becoming more expensive, especially imported ones—and many products are imported, and many production lines are foreign-made. Replacement is expensive, and repairs are also costly. And again, without loans, it's impossible to ensure continuous production. It's no wonder that 38% of retailers in the survey complained a drop in revenue, despite the fact that last year, in general, small and medium-sized businesses were doing well.
On the other hand, the growth of population incomes slows down The wage race is over, the employer market has returned, and some places are already implementing layoffs and switching to a shorter workweek. More importantly, while inflation expectations for the population didn't rise in January, they remain very high: 13,7% over a one-year horizon. counted Central Bank. Of course, the shock of new prices after the New Year had a significant impact, but businesses are also pessimistic – their price expectations have even increased. When businesses are projecting a 10,4% price increase, and consumers are seeing price and tariff increases – and are promised further price increases – it's no surprise that, according to the same Central Bank, 52,5% of citizens prefer to save their spare cash rather than spend it on things they can do without. And since a significant share of Russians live paycheck to paycheck, it's no surprise that price becomes the determining factor in many store purchases.
There are also other factors that are likely leading to a redistribution of consumer interest. For example, more and more goods are being purchased in supermarkets and hypermarkets, and less and less in niche stores. Economist Dmitry Prokofiev wrote on his Telegram channel. приводит An example is a bakery located next to a large department store. It was initially popular, but as similar establishments (all of which had more or less the same selection) and chain bakery departments popped up nearby, people stopped going there. There was no point in buying the same thing over and over again. Eventually, the bakery moved out, and its place was taken by a donut shop with a very basic selection of donuts with a few toppings and a basic selection of hot drinks: coffee, tea, and instant coffee with condensed milk (which is marketed as "the same" and is a huge seller).
By the way, catering too suffers - people are increasingly eat at home, and increasingly, it's not food from restaurants or cafes, but ready-made meals from supermarkets. Because, again, it's cheaper.
The chains are not facing competition from niche stores, but from online sales – and not only of non-food products, but also of food products, which grew last year. at a record paceWhat matters here is that it's easier for customers to choose and compare products, even though prices are competitive, as retail outlets here save on space.
In such conditions, producers and traders are looking for ways to reduce prices.
One of the first things to do, back in the day, since the introduction of counter-sanctions on Western products in 2014, was to replace ingredients – and this wasn’t just the famous palm oil, but also the use of cheap chicken parts in sausages, and mechanically deboned meat (practically the same “chopped up with the booth” – ground up remains of meat, fat and tendons), and soy, and starch, and much more, which has been discussed more than once Wrote "NonMoscow speaking."
Another option is shrinkflation, a reduction in the volume or weight of conventional packaging: all those 900-gram packets of sugar, 0,4-liter cartons of milk, and “lightweight” packages of butter or chocolate.
This also includes a reduction in product selection to the most popular items and brands, the proliferation of private labels, and the reduction of store space and even the stores themselves—primarily in rural and less-frequented locations. "Three local stores have closed, a store in the neighboring village has closed at our dacha, and now you have to travel to the nearest city to get to the nearest store," says a Zvenigorod resident. The reduction in stores selling socially important goods is particularly painful, for example, in Yakutia Up to 25% of such retail outlets closed.
Where is this all heading?
It would seem like—so what, low-quality goods and inefficient stores will disappear from the market? Most people buy the same selection of products from the same brands anyway. Will those products that people previously bought "out of curiosity" disappear? Oh well, the money will be safer.
But the trend toward smaller, simpler, and cheaper products never leads to improved quality. On the contrary, counterfeiting and deception will increase, and the quality of even currently good brands will deteriorate—after all, it was precisely the excess competition that forced manufacturers to maintain their reputation, while under a monopoly, that's all they need to do.
The best example here is AvtoVAZ products. Have they improved since some competitors left the market, while others were pushed aside by exorbitant recycling fees? The question is rhetorical. Meanwhile, as of February 1, the government made life even easier for manufacturers and sellers. low-quality productsNow, penalties for pre-trial disregard of consumer complaints are being softened, consumers' ability to protect their rights is being limited, a "ceiling" is being established, and the ability to transfer claims to lawyers is being curtailed. And for "complex household goods," from electronics to cars, the return policy has been completely changed: defective equipment can no longer be returned at full price; now, compensation for wear, condition, and year of manufacture will be deducted from the price. Just think about it: will this lead to more high-quality products?
The trend appears to be gaining momentum, as it benefits both producers and retailers, and even, to some extent, consumers themselves, who are forced to economize. It's worth noting, however, that if the economy worsens (and for now, forecasts not joyful), the classic behavior of the consumer goods and services market is its division into a premium segment and a hard discount, with the middle class eroding. In its extreme form, this could look like this: on one side, premium stores closed—by price or even by physical means—to the "common public"—like the hard-currency Beryozka stores and the famous "5th Floor of GUM" in the USSR; on the other, the same dreary Soviet-era counters with a meager selection of "food and everyday goods." Marketplaces won't help here: their selection of goods for the middle class is also gradually eroding. Unlike in Soviet times, however, you might get a courier to deliver that same soy sausage and "mechanically deboned meat" to your home.
This plays into the government's hands: it has long since given up on developing a consumer economy, embracing a "new industrialization": the development of the defense industry, raw materials export sectors, and "import substitution" in heavy industry, from aircraft to machine tools. The latter, admittedly, is not working well, but pro-government experts are convinced it's because too much is still being channeled into the consumer sector. With capital (not just finance, but also all resources and equipment) and labor force limited, habitual consumption is becoming "superfluous." In this sense, the Ministry of Finance of Karelia, proposed By encouraging citizens to "play at financial literacy" by cutting back on cafes and clothing, he merely inadvertently voiced what's already being said in government offices: our people have become spoiled, consume too much, and refuse to give up the good life. It's time to teach them a lesson. Now is not the time to splurge, not the time. Ice cream, look, was once only one kind, but how people remember it!
