Celebration of International Women’s Day on March 8, one of the biggest holidays in Russia, did not bring any respite for Moscow’s leading retailers.

The Watcom Shopping Index during this period actually fell by 2.2% in week 10 of the year compared to like-for-like (LFL) sales in the same period a year earlier.

There were similar results in St Petersburg (-3.3%), Yekaterinburg and Kazan where growth was a meagre 0.1% in both regional cities.

Watcom chairman Roman Skorokhodov said: “Competition in Moscow is much higher than in the regions today. This is the effect of the high base. Shoppers that headed to the shopping centres for leisure and entertainment earlier, can choose now a different format – gastro food zone, gastro market, restaurants located on a street.”

The performance of individual shopping centres has become very dependent on their location, says Skorokhodov.

In the large Vegas mall on Kasshirskoe shosse in Moscow, for example, footfall decreased by 15% in the tenth week of 2019, while the Vegas Kuntsevo footfall was up by 20% and at Vegas Myakinino it was up by 5%.

Retail in Russia remains depressed by stagnation in the growth of real wages.

The volume of retail sales grew by 2.6% y/y in 2018. The pace of growth varied during the year, however, slowing to 2.3% y/y in December. After several years of contraction, Rosstat reports that the volume of retail sales increased by roughly 5% in the time period of 2017–2018.

In January 2019, retail sales volume growth was dragged down by a general increase in the value-added tax (VAT) rate from 18% to 20%. January retail sales volumes rose by 1.6% y/y, while growth in sales of non-food goods slowed sharply to just 1.2%. The VAT rate on food was unchanged, however, and growth in food sales picked up slightly month.

Shopping malls are also suffering from the flourishing growth of online retail. The share of online retail sales has already reached 4.5% of total retail sales and it is expected to double again in the coming years.