Imitation may be the sincerest form of flattery, but Russian consumers aren’t buying it. Over four years after Western retailers largely abandoned Russia following its war with Ukraine, the country’s retailers are facing a fresh crisis as stores shutter and malls and main streets see clearance sales and boarded-up windows.
Is Russian retail growing? And the answer is: The war with Ukraine has hit home in Russia with Western brands leaving the marketplace and Russian brands struggling.
Russian Retail Is Bankrupt
Whatever the protests from Putin and his cronies over the vitality of the Russian economy, the consumer is increasingly voting with their empty pocketbooks and their feet. Many malls remain quiet, and retail closures are accelerating. New entrants are drying up, and domestic retailers find higher costs and lower spending a toxic combination.
The situation has been brewing slowly and systematically. The Russian retail market survived the initial exodus remarkably well, with domestic operators, Turkish brands, Chinese retailers, and local franchise operators eyeing an opportunity and rushing to fill the void left by prime store locations occupied by the likes of H&M, Zara, Uniqlo, Nike, and IKEA.
“After careful consideration, we see it as impossible given the current situation to continue our business in Russia,” then H&M chief executive Helena Helmersson said as the company exited in 2022, while in the same year McDonald’s chief executive Chris Kempczinski said the fast food giant’s decision to leave was “extremely difficult” but necessary as the company’s “steadfast” commitment to its values and the global community “means we can no longer keep the Arches shining” in Russia.
As Russia’s economy slowed resulting from the costs of the ongoing Ukrainian conflict, a more fundamental problem emerged; replacing international brands with new concepts has proven easier than replicating the brands and the demand they generated. Nowhere is this more evident than in Moscow and St. Petersburg, Russia’s two largest retail markets and home to many of the country’s most prominent malls.
International Abandonment
According to IBC Real Estate, formerly the Russian arm of real estate broker JLL, international retailers vacated significantly more space than they took up in 2025, with nearly 190,000 square feet of retail space surrendered in Moscow and St. Petersburg compared with a little over 100,000 square feet leased by new entrants. The pace of foreign brand arrivals has also slowed sharply, with only 12 new international brands entering Russia during 2025, roughly half the number in the previous two years.
In early 2026, there were 82,500 retail outlets operating in Moscow, 4,500 fewer than a year earlier, while in St Petersburg the number had decreased from 44,000 to 42,200. And the situation is getting worse. In the first quarter of 2026, absolutely no new international brands entered the market. This has only happened once before, in the immediate aftermath of the start of the war with Ukraine. Moreover, international players that have entered the market over the past three years continue to close stores; over January to March, retailers vacated nearly 60,000-square-feet of space.
“Overall, the situation across the country is no better than in the capital. This applies to all retail outlets—from neighborhood grocery shops, supermarkets, and fruit kiosks to cell phone stores and clothing shops,” according to Ivan Fedyakov, founder of consultancy INFOLine. He blamed the closures on worsening business conditions, competition from online marketplaces, rising operating costs, tighter migration legislation, and higher taxes.
Russian Brands Feel the Heat
It’s not just international retailers that are getting cold feet. Russian brands are increasingly cautious and postponing the launch of new stores until customer traffic recovers, according to data from real estate consultant CORE.XP. Shopping center traffic also continues to decline. According to traffic monitoring analyst Focus Technologies, in the first quarter of 2026 the number of visitors per 1,000 square feet space of retail across Russia decreased by 2 percent year-on-year and by 25 percent compared with the same period back in 2019.
Russian brands, including Gloria Jeans (100 stores shuttered), Concept Club, Finn Flare, O’stin, All We Need and Desport (previously Decathlon, down from 29 stores to 21) have reduced their retail presence. And international brands, including Les Benjamins, Karaca Home, Gaissina, Face Code, and KChTZ have already left the Russian market this year.
As a result, the vacancy rate in Moscow shopping centers increased by 1 percentage point year-on-year to 5.7 percent across 2025. A survey by the Center for Social Policy Platform and OnIn finds that 82 percent of Russians are concerned about the economic situation and expect food and utility prices to rise faster than their incomes this year.
Reflecting this, the latest consumer confidence index compiled by the Russian Federal State Statistics Service fell to -12 in the first quarter of 2026, one point down on the previous quarter. It was the lowest result in over two years, and the survey was completed in the first week of February, so the results did not reflect the impact of the war in the Middle East.
Filling a Void
That weakness is becoming increasingly visible, and landlords have responded by offering rent discounts, temporary leases, and more flexible terms to retain tenants. It’s a far cry from pre-war times, when Moscow’s leading shopping centers resembled those in Europe and the U.S., with international fashion chains dominating prime locations, particularly in GUM, Aviapark, Metropolis, and Afimall City retail destinations. New mall development across Russia dominated Europe’s overall figures, and the real estate arm of IKEA developed 14 MEGA Malls in its biggest international drive.
That landscape has changed dramatically. Research from consultancy Nikoliers found that the share of foreign brands in Moscow’s largest malls fell by almost half following the sanctions-driven exodus. Many former Western stores continue to operate under new names and under new Russian management: McDonald’s became Vkusno i Tochka, Starbucks was rebranded as Stars Coffee, while Subway restaurants continue to operate as Subjoy.
Yet, many consumers still view these domestic clones as inferior to the brands they replaced. It turns out that Western retailers did more than pay rent; they acted as anchor tenants that generated footfall and encouraged visitors to shopping centers. In early 2025, Russia’s Shopping Centers Association, representing hundreds of malls in Russia, publicly encouraged the return of retailers including H&M, Uniqlo and Zara, acknowledging that many domestic replacements had struggled to replicate their success.
“We’d like to address possible changes in the current political landscape and their implications for the return of your brands to the Russian market,” the Association wrote in a letter in which it noted that “not all” Russian brands that replaced departing Western retailers had been successful. It reportedly offered mediation and logistical support to facilitate “unhindered reintegration,” although it acknowledged that their return remained unlikely unless Western sanctions are lifted.
The Leftovers
Despite the departure of many international household names, a few major U.S. and European companies continue to maintain a presence in Russia, with food and consumer goods groups particularly reluctant to exit entirely.
PepsiCo remains active through dairy products, baby food, and other essential goods despite suspending sales of some flagship sodas. Mondelez International continues to sell products, including Oreo and other snack brands (ironically, the Mondelez factory in Ukraine was hit by a Russian missile earlier this year), and Mars remains a major participant in Russia’s candy and pet food sectors.
European supermarket groups Auchan (which has recently been linked with the sale of its Russian arm), Metro, and O’Key Group (which in June 2026 agreed to sell to Russian group Lenta) have continued to operate stores in the country.
When confronted, the companies have generally argued that food products and essential consumer goods serve humanitarian needs and should remain available to Russian consumers. Make of that what you will as pragmatic, ethical doubletalk.
Luxury retail remains surprisingly resilient. Moscow’s luxury districts continue to offer access to many Western luxury products despite sanctions and corporate withdrawals. Through parallel imports, third-party distributors, and grey-market channels, affluent consumers can still purchase brands ranging from Gucci and Prada to Brunello Cucinelli through department stores, independent distributors, and unofficial import channels.
Even so, the shutters are set to be nailed on more storefronts. CORE.XP estimates that vacancy rates in shopping malls could rise to nearly 10 percent over the remainder of the year as Russia’s ill-conceived war continues to hit the home front. The market has given way to a long-term malaise that puts Russian consumers in a bind, although many international geopolitical critics will not shed any tears.
