MOSCOW (AP) — Chairs, tables, designer chandeliers, and an enormous pink lamp in the shape of a bear’s
head: at The Red Fox and the Lazy Hound, an upscale restaurant that is one of many closing in Moscow
this month, everything must go.
And surprisingly, Muscovites have come out in numbers to find cheap deals.
Garage sales have long been a rarity here, where a decade of boom times has turned Russians into some of
the world’s biggest gourmands and luxury shoppers. But frugality is making a comeback — with no end in
sight to Western sanctions or the painful drop in Russia’s oil revenues, there is a creeping awareness
that the tough times are here to stay.
Shopping prices have jumped higher, and are expected to keep rising for months, while companies are
planning layoffs to cope with meager times ahead.
Anna Serzhantov and her husband Sergei, who on Sunday were browsing the restaurant’s fire-sale, had never
bought used furniture before. By the time they had finished renovating their apartment this autumn, the
value of the ruble — which has fallen by about half in a year — had dropped so far that they couldn’t
buy half of what they wanted. The only affordable option, IKEA, hiked its prices up in December in
response to the devaluation of the currency.
The Serzhantovs found the garage sale through a website that hooks up deal-hungry buyers with shuttered
restaurants.
"We still have to buy things for our bedroom," Anna said, "But unfortunately I don’t think
we’ll find that unless the hotels start closing, too."
Olga Ovcharova, a restaurant critic for Time Out who co-founded the garage sale website, says there are
more businesses than ever shutting down and selling off their wares.
"People’s salaries are going down while everything around them is getting more expensive," she
said.
Igor Bukharov, president of the Russian Federation of Restaurateurs and Hoteliers, told the AP that he
expects at least 20 percent of restaurants in Moscow to close this year thanks to sluggish demand and
rising prices. According to 2GIS, a company that posts restaurant listings online, Moscow saw in the
November-January period the first net decrease in venues in two years, with 46 closures.
As the ruble has dropped, the mood in Russia has darkened. According to a January poll by the independent
Levada Center, 49 percent said economic turmoil was the greatest threat to Russia, up from 29 percent
one year ago. That concern was outstripped only by that of rising prices, which 54 percent of
respondents said was a threat.
While restaurants have been the first and hardest hit, the ruble’s collapse and weakening demand is
reverberating through other sectors of the economy, such as clothes retailers and even manufacturers.

OPORA, an NGO that advocates for small business, estimates that up to 30 percent of manufacturing
businesses are planning layoffs to free up money they are not getting from loans, which have become
scarce because the financial system is frozen.
Fashion retailers, meanwhile, are dealing with both the problem of less consumer spending and the fact
that they buy designer collections in euros or dollars, which have doubled in value in the matter of
months. "They’re really being squeezed," said Robert Courtney, who leases out space in
shopping centers to small retailers.
There is only so much Russian authorities can do to alleviate the crisis. The government has pledged 2.3
trillion rubles ($34 billion), but at least half of that will be spent supporting the banks.
The central bank, meanwhile, is having to choose between supporting the ruble or the economy. Higher
interest rates can support a currency but hurt the economy by making borrowing more expensive. The
central bank is bowing to pressure from the government and businesses to bring back down its key
interest rate, which it had hiked sharply to 17 percent in December. Last week, it cut it to 15 percent,
an indication it will accept the ruble’s drop.
While so far retailers have attempted to keep costs low and not drive away customers too quickly, many
acknowledge that a further rise in prices is inevitable.
"Importers have taken a big hit for a period of four months," said Satesh Melwani, a British
citizen who owns a snack-importing business in Russia. "Now we’re starting to raise prices to our
retailers, and the retailers are going to start raising prices to the consumer. The reality is that
there’s a lag in real inflation as it hits the buyer’s pocketbook."
Alexei Amyotov, co-founder of Look At Media, a digital media holding company, estimates Russians will
really start to feel the impact of inflation this summer. His firm, which generates most of its revenue
through online ads, has not seen a mass exodus of clients, but many advertisers are now refusing to make
long-term commitments or invest in year-long campaigns.
"It’s like in the movies, when the hero is wounded but he hasn’t yet understood that he’s dead and
he keeps running," he said. "Everybody is just afraid of looking down and seeing how big that
hole is."
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