Eco­nomic in­flu­ence on re­tail trade de­pends on mi­gra­tion

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Look­ing at the in­flu­ence of Latvia’s econ­omy on re­tail trade in­dus­try in Q1 of 2016 and 2017 it be­comes clear that fu­ture devel­op­ment of this in­dus­try de­pends on mi­gra­tion and in­fla­tion growth rates, as con­cluded in re­tail trade out­look Max­ima Re­tail Trade Compass.

In this out­look, Max­ima Latvia ex­perts pro­vide their opin­ion on the sit­u­a­tion in re­tail trade and its devel­op­ment trends in the fu­ture. The coun­try’s pop­u­la­tion de­clines and res­i­dents grad­u­ally re­lo­cate to cities.

Ev­ery year Latvia’s pop­u­la­tion de­clines on av­er­age by 1%. This also re­duces gen­eral de­mand and con­sump­tion. Age struc­ture and birth rate de­cline af­fect the struc­ture of the pur­chase bas­ket and de­mand for spe­cific cat­e­gories of prod­ucts, ex­perts say.

They note that de­mand and devel­op­ment of store net­works are also af­fected by ter­ri­to­rial distri­bu­tion of Latvia’s pop­u­la­tion. Ac­cord­ing to data from the Cen­tral Sta­tis­ti­cal Bureau of Latvia, 68% of the coun­try’s pop­u­la­tion lived in cities and 32% lived in the coun­try­side at the be­gin­ning of 2016. The av­er­age de­cline of coun­try­side res­i­dents is two times more rapid than the de­cline of city res­i­dents. «Anal­y­sis of res­i­dents’ shop­ping habits at Max­ima Latvia stores re­veals cer­tain trends that point to­wards mi­gra­tion of res­i­dents from the coun­try­side to cities. This trend is no­ticed the most in Lat­gale and Kurzeme. A sig­nif­i­cant por­tion of mi­gra­tion is also no­ticed in the di­rec­tion of Riga and Pieriga,» says Max­ima Latvia busi­ness an­a­lyt­ics depart­ment di­rec­tor Zane Kak­tina.

She also men­tions that food re­tail­ers pick dif­fer­ent devel­op­ment strate­gies be­cause of that: some fo­cus on the num­ber of stores and turnover specif­i­cally in Riga and its ad­ja­cent re­gions and oth­ers de­cide to im­prove their foothold in re­gions.

2017 be­gan for Latvia with high in­fla­tion rates

This year for Latvia be­gan with high in­fla­tion rates. Av­er­age in­fla­tion for com­modi­ties and ser­vices was around 3% in Q1. Prices of food, al­co­holic bev­er­ages and tobacco prod­ucts con­tinue grow­ing, ex­perts say.

Ac­cord­ing to data from the Cen­tral Sta­tis­ti­cal Bureau of Latvia and Max­ima Latvia, prices have grown for dairy prod­ucts, fresh veg­eta­bles, cheese and curd cheese, milk, pas­tries, but­ter, fresh fruits, sugar, fresh or frozen fish, choco­late, meat prod­ucts, as well as dried, smoked and salted meat.

As noted by Kak­tina, food re­tail trade mar­ket share growth rates as not so much associated with vol­ume changes as much as they are with in­fla­tion growth rates, which are also af­fected by the rise of costs of raw ma­te­ri­als.

Turnover rises

It has been con­cluded that even though turnover of food in re­tail trade had de­clined last year, there had been a gen­eral in­crease of turnover in 2016 – es­pe­cially in non-food prod­uct re­tail trade, which means a sta­ble 5% in­crease. This trend is noted for the sec­ond con­sec­u­tive year. Turnover has also in­crease in spe­cial­ized stores. «Devel­op­ment of spe­cial­ized food stores is tak­ing place in Latvia at the mo­ment. Ex­pan­sion of spe­cial­ized al­co­hol stores was noted in 2016,» Kak­tina says. Growth is noted in the devel­op­ment of other spe­cial­ized food stores – many pro­duc­ers con­tinue de­vel­op­ing spe­cial­ized stores by open­ing new ones and re­or­ga­niz­ing ex­ist­ing ones.

Ieva Čīka/LETA

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