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MOSCOW -- Major retailers are moving into Russia's far-flung regions to tap the rising affluence created there by strong economic growth and high oil prices.

Salaries in oil-producing regions such as Tyumen and Yamalo-Nenets in western Siberia are rising faster than in Moscow and St. Petersburg, driving retailers including Russia's Pyaterochka Holdings NV, Sweden's IKEA, and Turkey's OOO Ramenka to seek out new customers far from the country's center.

The expansion gives the retailers a chance to grab some of the sales taking place in markets and older Soviet-era stores, and to sell Russians a variety of goods they currently can't get. But in a country with 11 time zones, the expansion poses challenges with supply chains and pits the big companies against some solid local stores.

"The regions are the next frontier for retailers," says Peter Westin, MDM-Bank's chief economist.

Russia's retail sales were an estimated $250 billion in 2005, and 2006 growth is forecast at 17%, according to investment bank Renaissance Capital.

Retail space in most regional Russian cities generally consists of small-scale malls in central locations, refits of Soviet-era department stores, traditional shops and kiosks -- all vulnerable to the sweeping out-of-town megamall developments that the larger chains specialize in.

"The economic growth that we can see in many Russian regions today is leading to higher consumer capacity and, consequently, to a growing need for modern trade formats," says Ramenka Chief Executive Mustafa Saglam. His company, a joint venture between Turkish companies Enka and Koch Holdings, operates the Ramstore chain and has stores as far east as Krasnoyarsk in Siberia -- some 2,500 miles from Moscow.

Ramstore expects sales outside its Moscow base to account for 50% of total revenue in 2007, compared with 30% currently.

Russia today doesn't have a nationwide food retailer. But grocery chains like Perekryostok and OAO Seventh Continent posted bottom-line gains as high as 70% last year, showing how great the potential profits are. The supermarkets and hypermarkets are nibbling at the market vendors and traditional grocery stores, which together accounted for 77% of retail food sales last year, according to Renaissance.

Russia's gross domestic product per capita rose 19% in 2005, and Mr. Westin says monthly salaries in some oil-producing regions now exceed the official figure of $483 for Moscow. He says this newfound wealth is leading consumers to demand imported products and a more diverse variety of goods.

The furniture chain IKEA, for example, has invested more than $1.7 billion during its six years in Russia, and recently opened a store in Kazan, more than 400 miles east of Moscow. It is planning to open several more stores, distribution centers and factories around the country in the next few years.

Italian fashion retailer Benetton Group SpA has shops in 45 Russian cities, while Eldorado, which sells household appliances and electronics, has about 1,000 outlets in 600 cities across Russia and Ukraine. Although such retailers don't offer the same variety of products as in big cities, they also spend less on construction, salaries and rents.

"There's generally a lower level of consumer spending and a smaller average basket of goods, but the operating costs are lower so companies can still work profitably," says Chris Skirrow, the partner responsible for the retail and consumer practice at PricewaterhouseCoopers in Moscow.

Shipping goods around a country as big as Russia can pose heavy costs for retailers. But Mr. Skirrow says retailers can overcome the problem by using their suppliers' networks, buying more locally, or setting up regional distribution centers.

Extensive expansion can also hit profitability, as margins decline and the big players encounter capable local rivals.

Alfa Bank analyst Elena Borodenko thinks that means the big players will swallow up the smaller chains. "I think consolidation among Russian food retailers will be very active this year," she says, adding that the top 10 grocery chains accounted for just 10% of sales in 2005.