Crisis just another fad

  • 2009-06-10
  • By Adam Mullett

SHOP HAPPY: Lithuania has seen a spike in retail sales as people tire of the crisis and begin to return to their old habits.

VILNIUS - Many times during my tenure in Vilnius I have fallen in love with fleeting moments of restaurant genius 's great service here or an amazing desert there. Inviting my local friends along is easy the first time I go someplace because they are always on the look out for something new. Once I've gotten them in the door, they get hooked and go every day for a month or so. After that, they become sick of the place and I can't get them to join me no matter how hard I work at convincing them.

Invariably this leads to us repeating the same ceremony in a new bar or eatery only to leave it behind sooner rather than later.
Perhaps it is just this writer's opinion, but Lithuanians seem to have a short attention span sometimes. Like the restaurants that do well for a season here then go bust because people become bored of them. After serving a few good meals, they are promptly forgotten.

The latest statistics on April's retail spending tell a similar story 's Lithuanians are sick of crisis and recession and are opening their purse strings. The Statistics Department of Lithuania reported that for the first time this year there has been an upward trend in retail spending. Lithuanians are sick of their old clothes, their old household goods and have begun spending away to keep up with the trends.

Excluding motor vehicle sales, retail turnover rose 5.2 percent against March 2009. Though this still constitutes a drop of 18.7 percent compared to April last year, the trend shows that the people have had enough of saving every penny.

Winter is over 's along with its unbelievably high heating bills 's and people are out to enjoy themselves. Nerijus Udrenas, a senior economist at SEB Bankas told TBT that he sees a good summer in store for retailers.

"The increase indicates stabilization in retail 's especially in food and local items. It gives more confidence for retailers for the next months 's it will be a more sustained situation. Maybe the first initial shock of the crisis is gone and people are getting ready for some summer things," he said.
Retail sales year-on-year for the first quarter plummeted 29.8 percent, making the current figures look relatively bad, but Udrenas said that these figures have been skewed because of the base it was calculated against. The first quarter of 2008 was when all government wages went up and people began to prosper, he said.

Out of all the sectors of retail, Lithuanian shoppers could least resist buying new clothes and shoes.
"Textiles and apparel and footwear have declined the least and we see the same trend [continuing] while other items decline more. This is declining the least, so it shows that footwear and apparel companies have had clever marketing campaigns that are bringing people in," Udrenas said.
Though official statistics aren't in, Panorama shopping mall director Raimondas Bureika told TBT they had seen a 6 percent rise in sales again in May compared to April.

Panorama opened in late 2008 to the worst economic welcome possible and has seen only a trickle of clients wandering around its halls. To get people through the door they have employed clever marketing campaigns such as "4,000 free ice creams today," encouraging people to visit the shopping center, indulge and spend.

Bureika said they would continue to operate such marketing campaigns throughout the summer to keep bringing customers in.

The largest rise in sales in May against April was automotive fuels, which increased 11.3 percent.
Sales of information and communication equipment, cultural and recreation goods, jewelry and other new goods rose 10.9 percent.
Retail sales of audio and video equipment, recordings, hardware, paints and glass, electrical household appliances, furniture and lighting equipment was next with a 10.4 percent rise.
In fact, the only retail sectors to note a drop in sales again were second hand goods, which fell 1.8 percent, and sales of pharmaceuticals and medical goods, cosmetics and toilet articles with a 4 percent drop.

Northern neighbors Latvia and Estonia have seen mixed fortunes. In keeping with its struggling economy, Latvia's retail sales have continued to plummet with a 26.1 percent drop for April against March.

Estonia has seen minor stabilization with a 1 percent rise in retail spending with a strong improvement in non-specialized items offsetting other declines.

Though increases in retail spending are expected during summer, autumn will see a decline in spending again, Udrenas said.

"Given such high unemployment, which increased in the first quarter, and weak labor market and the challenges ahead, it is hard to imagine that it will be a sustained trend. Some stabilization in summer might give some confidence and get people to go shopping. Some more decline could happen 's towards the fall, we will see more decline."
Swedbank released a far more negative outlook for the year than previously imagined, with domestic demand expected to nosedive.

"We downgraded our GDP forecast, and expect a circa 13 percent fall instead of 6 percent for this year due to a sharp fall in investments and larger than anticipated before contraction in household consumption and government spending," the bank said in its most recent Baltic Outlook.
"Household consumption 's the former main driver of the economy 's is contracting rapidly and will continue to do so. We expect the fall in consumption to be deeper and longer than previously anticipated. Household consumption grew by 4.7 percent in 2008, but is expected to contract by circa 15 percent this year and circa 5 percent in 2010," the report says.

Rapidly rising unemployment, wage contraction, credit squeeze, pessimism and fewer contributions are expected to force consumption down. Workers in places like Ireland and the U.K. will have less money to send to relatives.

Not everyone is happy and spending 's some are still struggling with bills and the loss of income, The Baltic Times found out as it went in the streets to ask people about their spending habits.

Ugne Kavaliauskaite 's student, 23
I stopped buying things actually. I think the last thing I bought was a hair-straightener at the beginning of March. Oh, and I bought something for my Mum. But now I have put away my retail-shopping list, as I have not enough money for that 's even if I'm in desperate need of a new washing machine. I tried to buy some salad in Iki supermarket and none of my three credit cards had a sufficient amount of money in them.

Mindaugas Sakalauskas 's salesman, 40
I stopped buying retail items last autumn when the crisis kicked off and my wife lost her job. Since then, I only bought shoes, because it would have been indecent to go with a hole in my shoe. It's getting worse 's my wife's still in the same situation, now I'm going to have to leave my job and retail goods are the last thing I'm thinking about.
Earlier, it was about buying quality things and things in fashion, now it's about buying the cheapest food and borrowing some clothes from my mama, grandma or sister's closet for my wife to wear.
I think it's worse when people deny it, like still buying fashionable clothes, even though the loans are rising, and wives still getting their manicure, even though they can't cover the holes in the credit card. I know some people like that. But, I imagine for those who have some money, it's a golden age...

Kristina Rainyte 's beauty consultant, 31
I feel like it's bad 's when you have the money, you spend the money. But I am optimistic [that] someday all this will end. I am buying things when they are on sale.

Haroldas Marcinkonis 's consultant, 27
When I go shopping I am seeing things that are much cheaper than they were before. I am worried that a lot of things are going to be more expensive later on, so I am buying many things 's I have four tents and three pairs of shoes for work. I can also trade these things with my friends later when the crisis is over and prices go back up to normal levels.