One in ten shopping centres in Russia is expected to close or undergo a complete transformation by the end of 2027, according to industry experts cited by the Izvestia newspaper.
Between 500 and 700 retail complexes across the country will have to significantly change their business model, while up to 250 are forecast to shut down entirely.
The shift is being driven by a fundamental change in consumer behaviour. Shoppers are increasingly abandoning physical stores in favour of online marketplaces, leaving traditional retail formats struggling to meet modern demands.
Russia has seen a massive expansion in e-commerce over recent years, with domestic online platforms capturing a significant share of the retail sector. This transition has put intense pressure on traditional physical shopping destinations.
Older regional malls face risk
Large regional malls that are more than 10 years old face the greatest risk, particularly those that rely heavily on clothing, footwear, and electronics stores.
The profitability of these older, larger shopping centres has dropped to between 6 percent and 7 percent per year. In contrast, smaller and more compact neighbourhood retail centres are currently generating returns of 10 percent to 12 percent.
Property owners dealing with struggling sites now face a stark choice. They must either invest heavily to redesign their buildings or demolish them to make way for more profitable developments.
Impact on consumers
The restructuring of the retail property market is likely to result in higher prices for consumers on the high street. Shops suffering from lower footfall will attempt to cover their high rental costs by increasing the price of goods.
However, experts note that pushing prices too high will simply drive even more customers away to online alternatives, worsening the cycle of decline for physical stores.
As traditional shopping centres become obsolete, industry observers expect the vacant spaces to be replaced by new venues focusing on experiences rather than retail, such as dedicated food halls and leisure complexes.
