TALLINN - Despite the worsening economic climate and grim outlook for the coming year, a major Estonian retailer has announced plans to build a massive new hypermarket in North Eastern Estonia.
In a press release issued on Jan. 12 Prisma Peremarket, which is owned by the S-group, announced that it would open a huge hypermarket in the Estonian town of Narva.
"It is a natural next step, we prepared our plans last year, we started exactly a year ago and during last year we made our plans. Then after the summer we received bad news everyday, but we didn't change our minds," AS Prisma Peremarket Managing Director Janne Lihavainen told The Baltic Times.
Construction on the new, 13,200 square meter hypermarket is due to begin later this year, and to be completed sometime in 2010.
Despite the fact that most retail outlets are cutting back on expenses and preparing to weather the widely predicted nation-wide drop in retail sales, Lihavainen said that the current economic climate was actually favorable for expansion.
"Compared to the situation this time last year the terms of negotiation are more profitable… The favorable rental terms of our business premises give us the possibility to operate effectively and keep our prices low," the press release said.
Lihavainen told TBT that the company had survived difficult times before, and that he was confident the phase would soon pass and things would return to normal.
"It is a hundred year-old company, and it has seen also bad times. This is only one phase during our history and in the future. It is only a natural part of life," he said.
The managing director also said that the company was able to expand despite the economic crisis because of its track record of performing well during difficult economic times 's largely due to its goal of providing the cheapest possible food basket.
"Our business has been successful so far. For example, during this fall 2008 we had a lot of new customers… Our promise to offer the cheapest product basket during these bad times in economy I think it is quite logical that people are even more careful," he said.
"During previous years our growth has been market growth plus something, but now our figures are positive, but the market is [shrinking]," he said.
The product range and structure of the Prisma hypermarket in Narva will be similar to the Rocca al Mare Prisma in Tallinn, which was opened at the end of last year. The store will host a range of food products, as well as electrical products, furnishings, sporting goods and clothing.
Prisma Peremarket has signed a contract with Vicus Limited, a large real estate development and investment company, agreeing to cooperate on the project. The development and building will be done by Estonian company AS Oma Ehitaja.
Vicus Limited is a real estate development and investment company operating in Estonia, Latvia, Lithuania, Ukraine and Russia. Prisma, which expanded to Estonia in year 2000, operates in Finland, Estonia, Latvia and Russia. Prisma Peremarket employs over 800 people in Estonia.
