Impact Analysis of Magnit Network's Expansion in Yakutia: Examining Its Advantages and Disadvantages
Yakutia to Welcome Magnit Stores in 2026
Yakutsk, Russia – The regional government of Yakutia has announced that Magnit stores are set to open in the region in 2026. The arrival of the leading Russian retailer has sparked debate among local business leaders, with concerns over its potential impact on the local market and small businesses.
Kirill Bychkov, the Chairman of the Government of Yakutia, expressed optimism about the collaboration with Magnit, stating that it would help boost the local consumer market. The Tander Company, owner of the Magnit network, plans to develop two store formats: Magnit supermarkets "near home" and specialized Magnit Kosmetik stores.
Magnit is recognized for its commitment to corporate social responsibility, which includes implementing charitable programs for socially vulnerable segments of the population.
However, concerns about the impact on local businesses have emerged. Lena Danilova, the Chairman of the Yakutsk Small Business Union, shared her apprehensions about the entry of Magnit, based on the experience of Pyaterochka, another major Russian retail chain. Danilova pointed out that prices are likely to remain similar in Magnit stores, as they do in Pyaterochka. She worries that local businesses will not be able to compete with the federal network, leading to their closure and potential increase in prices due to the region's complex logistics costs.
Yakutsk's small and medium-sized businesses pay various taxes, such as USN, patents, property tax, and land tax. Irina Kotenko, the Chairman of the Yakutia Regional Branch of Delovaya Rossiya and the Chairman of the Union of Goods Producers of Yakutia, highlighted that federal networks like Magnit only pay NDF, and the region could potentially lose 2-3 billion rubles in revenue. Kotenko also warned that tax risks have not been calculated in agreements, and there is no assurance that the region will compensate for the lost revenue.
According to antimonopoly legislation, federal networks in regions should not occupy more than 25% of the market; however, it remains unclear if anyone is monitoring this ratio in Yakutia.
Whilst admitting that the arrival of Pyaterochka had some positive effects, such as lowering prices on some goods in local networks, experts reiterate the potential challenges Magnit might bring to the local market. They emphasize the need for government support and subsidies to help local businesses remain competitive in the face of larger retailers' entry.
[1] Alrosa’s diamond mining operations, while providing significant economic benefits, do not directly compete with local businesses in the same way retail chains do.
The Tander Company, owner of Magnit, intends to invest in the local business sector by developing two store formats: Magnit supermarkets "near home" and specialized Magnit Kosmetik stores, thereby injecting finance into Yakutia's economy.
Despite Kirill Bychkov's optimism about the collaboration with Magnit, Lena Danilova and Irina Kotenko, representatives of local businesses, express concerns about its potential impact on small and medium-sized enterprises, as they worry about their inability to compete with the federal network, potentially leading to increased prices due to the region's complex logistics costs.
