Distribution network within the country from how products enter to final destination.

St. Petersburg remains the main port of entry for a variety of consumer and industrial products for European Russia (Russia west of the Ural Mountains). Vladivostok is the main port of entry for the Russian Far East. In general, the transportation infrastructure of this vast country is still underdeveloped and in need of major upgrades. The majority of cargo moves by rail, and the road network is in need of capacity expansion. Major western freight forwarders and express couriers are active in Russia.

Well-organized distribution channels have developed significantly over the last 20 years, particularly in the major population centers of Moscow and St. Petersburg, and have started to expand to other regions. In the consumer sector, there are large-scale retail stores in Moscow that are able to buy in bulk. Shopping malls and big box stores are common sights in St. Petersburg, Moscow, and many other Russian cities. By employing domestic distribution organizations, the task of bringing goods to market in Russia has been greatly eased. However, distributors’ geographic coverage may be limited, and accessing regional markets remains problematic. In more remote regions, U.S. firms may encounter erratic distribution, unpredictable schedules, and tough competition.

2017 was a pivotal year for Russian retail. According to the Federal State Statistics Service, the 27-month decline in retail sales ended in April 2017, at a level of 2.33 trillion rubles.

In 2018, despite the instability of the domestic economy, the retail trade turnover in the country continued to grow. This indicator, in accordance with the report “Social and Economic Situation of Russia” published by the Federal State Statistics Service, from January to October of 2018 amounted to 25.47 trillion rubles, which is 2.6 percent more than in the corresponding period of 2017. The turnover of food retail from January to October 2018 grew 1.7 percent, year-on-year. The turnover of retail trade in non-food products increased 3.4 percent compared to 2017.

From January to September 2018, retail chains accounted for, on average, 32.6 percent of the total volume of retail trade turnover (in January-September 2017, it was 30.7 percent) in Russia. In the retail trade turnover of food products, including beverages and tobacco products, the share of retail chains turnover was 38.5 percent (in January-September 2017, it was 35.7 percent).

In 37 regions of the Russian Federation, the share of network trading structures in the total volume of retail trade turnover exceeded the average Russian level. At the same time, in the republic of Dagestan and the Chechen republic, retail trade networks in January-September 2018 accounted for less than five percent of the total retail turnover. The same indicator in Moscow was 33.2 percent, and in St. Petersburg it was 57.2 percent.

Despite the growing popularity of online purchases, Russian consumers still tend to make in-store purchases, much more so than their web-saturated American counterparts. According to Dmitry Lyakhovets, director of the Department of Consulting Services and Operational Efficiency of PWC, the current segment of e-commerce in the Russian Federation is only four to five percent of the total retail turnover. According to the Ministry of Industry and Trade, internet trade was only three percent of the total retail turnover in 2017. At the same time, the Ministry believes internet commerce in Russia will account for 20 percent of retail sales by 2025 and Russia will account for 10 percent of the global internet commerce. This goal is outlined in the Ministry’s “Strategies for the Development of Electronic Commerce until 2025.”