This year’s biggest challenges for retailers will include the decline of numbers of residents and buyer, as well as growing labor force costs, says Swedbank economist Agnese Buceniece.
“The change of buyers’ habits and e-commerce remain notable challenges and impressive opportunities at the same time,” says the expert.
“International observations show that e-commerce development is going slowly in Latvia. Although sales volumes in Latvia’s online stores had increased rapidly last year, they remain at 3% of the total retail trade turnover. Meanwhile, Latvia residents purchase goods using foreign Internet stores more and more actively,” explains the expert.
Buceniece expects moderate increase for retail trade in Latvia this year. Retail trade companies share this opinion, expecting growth in the next three months.
“Surveys also reveal that households’ opinion in regards to their financial welfare has improved slightly and now they have plans to finish their home. There is also an increase of caution among residents. This could have a positive influence for non-food goods,” the economist expects.
Buceniece adds that in spite of a moderately rapid average wage increase and growing household consumption, retail trade companies’ sales increased by a mere 2.4% last year, which was nearly half less when compared to 2018. She explains this with weaker contribution to trade of food and beverages, as well as slower motor fuel trade volume increase. She adds – retail trade of non-food products continued demonstrating good results, as growth of sales turned out slightly faster than before.
“Sales volume increase for food and beverages in store was likely limited by residents going out less often and turnover decline at alcohol stores situated close to the border,” says the economist.
Buceniece also allows that the excise tax on alcohol in Estonia may have slowed alcohol tourism in Latvia. (BNN/Business World Magazine)
