Russia’s agrifood industry, including processing, wholesale, and retail underwent tremendous changes since the collapse of the Soviet Union. In this transition from the planned to a market economy, supermarkets emerged as important players in Russia, affecting agrifood system via organizational and institutional changes including centralization of procurement from farmers and demanding private standards on product quality and safety.This study examines the penetration of supermarket chains and factors contributing to development of modern retailing in Russia. The panel data at regional level is used in order to investigate the factors influencing on modernization of retail sector in Russia.