TALLINN - Retail sales in Estonia fell to 4.6 billion kroons (295 million euros) in April 2009, equivalent to a fifteen percent year on year decline, Statistics Estonia reported.
Businesses most affected by the decline were stores selling manufactured goods. This sector saw a reduction in sales of 25 percent compared to the same period in the previous year. Particularly hard hit were stores selling household goods and appliances, hardware and building materials.
A high profile victim of the current sales slump was the Tallinna Kaubamaja Group (TKG). The company is one of the most well known retail companies in Estonia and operates department stores in Tallinn and Tartu as well as Selver supermarkets.
In unaudited accounts provided to the Tallinn Stock Exchange, TGK reported they had ended the first quarter of 2009 with losses of 52 million kroons.
This is compared to a profit of 67.5 million kroons in the same period of 2008.
In an attempt to address this decline TKG stated that during the first quarter of 2009, the Group focused mainly on adjusting the company to the abrupt change in the economic environment.
In order to reduce their operating costs, TKG has held negotiations with partners and suppliers in order to lower the cost of goods and services they are buying.
Within its own organization TKG has reached an agreement with their office staff to reduce salaries by 10 percent, starting from the second quarter of 2009. As sales volumes have decreased, the number of sales employees has been regulated accordingly.
According to company statements this had been achieved by natural attrition and people applying for part-time work.
The consequences of this fall in sales can be seen in Tallinn's Kristiine Shopping Centre. Manager Allan Remmelkoor said he worried shops were overreacting to the current economic downturn by offering too large a discount on products.
"This can become a vicious circle that you can't escape," He told Aripaev.
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Another company struggling with the current sales environment is Baltic clothing giant AS Silvano Fashion Group (SFG).
Bloomberg reports the company made a fourth quarter net loss of 160 million kroons. This was compared to a profit of 24 million kroons in the previous period.
The company explained the results were additionally affected by the depreciation of Russian the ruble and Ukrainian hryvnia. This alone cost the company 62 million kroons in losses during the period.
One small segment in Estonian retail sales is bucking the trend. Statistics Estonia reported the sale of second hand goods has increased by 26 percent during the past year. However, this had little impact on the overall results as it represented less than 1 percent of total retail sales.
The declining trend of retail sales has been so steep that some economic observers believe Estonia may be approaching the bottom of the fall.
Tarmo Prikk manager of AS Thulema the second largest producer and retailer of furniture in Estonia told Aripaev "retail sales could fall a little further but we expect them to go up in August or September."
Recent confidence indicators from the Estonian Institute of Economic Research also offer some cause for optimism.
The results for confidence in the retail sector rose to minus 28 from minus 37.
In addition, the wider consumer confidence indicator that looks at various aspects of consumer confidence also showed a positive move. The result for May 2009 was minus 27, up from minus 31 in April.
Analysts will assess over the coming months whether this improvement in consumer confidence translates into a slow down in the decline of retail sales.
