Russian discounter Svetofor struggles amid regulatory and competitive pressure

Sebastian Rennack
international retail analyst
Aletos Retail

Russian ultra-hard discounter Svetofor, which recently relaunched operations in Western Europe under the ‘My Price’ banner, is facing growing regulatory and competitive pressure at home. The retailer had previously closed its Mere stores in several Western European countries but has since returned under a new identity.

According to Forbes Russia, the country’s consumer protection and public health authority, Rospotrebnadzor, has ordered the closure of half of Svetofor’s more than 70 stores in Moscow and the surrounding region, with further inspections still ongoing. The decision follows multiple allegations, including hygiene violations, poor product quality, late payments to suppliers, and improper returns of goods. Industry trade body Rusprodsoyuz, which represents Russian food manufacturers, reports that Svetofor accounts for half of all complaints against food retailers in Russia. The retailer is currently the subject of a nationwide regulatory review, highlighting growing concerns over its operational practices.

Just a few years ago, Svetofor was widely considered the rising star in Russian grocery retail. The no-frills discounter, headquartered in Krasnoyarsk, Siberia, quickly expanded into the top ranks of national food retailers. According to Ivan Fedyakov, CEO of market research firm Infoline, Svetofor entered the top five largest Russian grocery chains by revenue in 2022. However, according to Fedyakov’s estimates, in the first nine months of 2024, the retailer’s sales declined by 2.2% year-on-year, marking its first negative revenue development in years. In 2023, the retailer’s net sales were estimated at more than 340 billion Russian roubles (RUB, €3.4 billion).

Svetofor’s rapid expansion had previously prompted Russia’s two largest food retailers, X5 Group and Magnit, to launch competing hard-discount formats. X5 Group, the market leader, introduced its Chizhik banner in October 2020. By December 2024, Chizhik had expanded its presence to 2,346 stores. The format’s full-year 2024 net revenue surged by 102% year-over-year to RUB 84.3 billion (around €830 million), underscoring strong consumer demand for discounters. Meanwhile, Magnit launched its Moya Tsena (‘My Price’) discount chain in 2021, growing its footprint to over 1,200 locations by mid-2024. Long-term, the retailer has announced plans to open more than 10,000 of these stores across the country.

Regulatory scrutiny and rising competition from major grocery chains pose a serious challenge for Svetofor, potentially disrupting its renewed momentum in Western Europe.