Supermarkets move in
During the second half of the 1990s, Estonia followed the lead of the West by launching several supermarkets and chain stores; such chains dealt mostly in the sale of food products and convenience goods. The beginning of this process was dominated by chains supported by local capital (e.g. Selver, which is a subsidiary of the Tallinn Department Store) and by the Estonian Consumers’ Central Association (ETK and the Maksimarket chain). ETK is one of the biggest groups selling food products in Estonia and their association covers the chain of rural shops that used to function back in the Soviet times. One of the biggest trade centres in Estonia – the Kristiine Kaubanduskeskus [Kristiine Trade Centre] – was established on the initiative of a company supported by the capital of Ernesto Preatoni, a real estate businessman of Italian origin.
A Finnish group, Kesko, started an active market invasion by establishing the Säästumarket chain, with tens of stores whose strategy focused on low prices, a limited choice of goods and a simplified service environment. Subsequently Kesko launched the Citymarket chain designed for consumers with slightly more money to spend; Kesko is also the owner of K-Rauta – one of the biggest chains selling building materials. Trade centres have been created on the basis of both local and foreign capital. In Tallinn, the Stockman department store has risen to be the main competitor of the ever prestigious Kaubamaja [Department Store].
Development of the big chains has been boosted, on the one hand, by Estonians’ increased purchasing power and a general upwards trend in the economy and, on the other hand, by the drop in the number of small grocery stores and a shrinkage of markets, especially in city centres. Establishment of new chains of stores has also had a beneficial effect on the activities of real estate companies. However, no massive close-downs of small groceries can be detected, at least in those areas of Tallinn where there are big blocks of flats Enterprising businessmen established a number of such small stores in basements of houses and other buildings, thus making small improvements to the infrastructure that did not get much attention at the end of the Soviet era. Such small stores had many advantages: first of all their proximity to the customer and also direct and immediate communication with a regular clientele, which is usually characteristic of stores in the countryside. It has been claimed that a certain amount of illegal alcohol and other illegal goods are sold via such stores.
A number of open-air markets have also moved towards more customer-friendly trade in order to improve their image. In the 1990s, for example, one of the biggest open-air markets in Estonia, the Kadaka Market, which had become a favourite shopping spot for Finnish tourists, was gradually turned into a closed shopping centre and the open-air market was closed all together. The fact that marketplaces are characterised by fairly low prices and relative popularity owes much to the sale of forged trademark clothes and footwear and to pirated records, videos and computer software. This brings them under constant police surveillance. Obviously it is easier to sneak around surveillance on taxes and documentation obligations if one works in an open air market.
Fulfilling the sanitary requirements regarding sales conditions for foodstuffs is a major problem now as Estonia approaches accession to the European Union. However, specialists say that some norms and regulations are actually more strict in Estonia than they are in the rest of Europe, especially in southern European countries. Sanitary requirements will be a significant problem for rural areas and they will also have an impact on small communities and poorer providers of catering services (e.g. school cafeterias).
It seems to be easier for traders and service providers to survive in the face of ever tougher competition if they are a part of a group, because such groups can buy larger amounts of goods and materials at lower prices and they can also invest more money in contemporary technology and know-how. Small scale producers have also complained about the invasion of major traders: large chains do not want to buy their products because they are often available only in small quantities and are not of consistent quality.Details about this article
Created: 30.09.2003 17:12
Modified: 28.09.2012 15:33