Reduced prices, amazed Estonians

  • 1999-01-28
  • Kairi Kurm
TALLINN - With reduced prices advertised prominently in their windows, Tallinn department stores were brimming with eager customers this month.

"Do you know that Seppala has the highest discount rate in Tallinn. They cut off initial prices twice now," said Mare, a mother of five children, as she rushed to the store.

But five years ago, before local stores were privatized and Western ones opened their Estonian branches, discounts were virtually unheard of.

That's all changing now. "Discounts are a normal stage of business in Western shops. Fashion products are bought for certain seasons and we cannot sell old goods," said Sari Sopanen, managing director at the Sokos department store.

Still, most Estonians are amazed when sales are announced. Foreigners, on the other hand, are already used to it and are usually among the first to save a few bucks on that jacket or sweater they've been wanting.

According to Sopanen, most of the shops hold these kinds of sales twice a year, one in winter and one in summer. "We have to get rid of the goods of the past season in order to have space for new merchandise," said Sopanen.

The starting time of discounts depends on the weather and the number of goods left, but usually this period of discounts is planned a long time before, she said.

"We did not agree about this period with our competitors. Stockmann started a day after us but some specialty stores in the Old town started a little earlier. If you start with it first, you get the first buyers. People are buying a lot at cheap prices," said Sopanen.

Kaubamaja started its clearing sale Jan. 21. Andrus Ossip, the store's sales manager, says he's reluctant to predict the end of it and has planned surprises for clients for quite a long period. Kaubamaja has traditionally held discounts at this time, roughly two weeks later than its competitors.

"After Christmas and New Year's Eve, shopping people are not ready to dive into shopping again," explains Ossip. "The idea of discounts is to increase sales. There are of course products that do not bring in profit, but we cannot talk about general loss. Money has to be taken away from the products that do not sell.

"Why should I buy a winter coat if winter is almost gone? But if the price is right, why not," said Ossip.

According to Sopanen, the month of discounts does not bring in much profit for the store. Sopanen believes that the situation is the same with most of the competitors.

The manager of Seppala, which started the discount period before Christmas, refrained from commenting on losses from discounts since it's part of the secret of a sale. Similar shops in Finland arranged the period for discounts for the Seppala shop.

"This was a good present for people, to have discounts during Christmas shopping," said Krista Luhaste, manager at Seppala.

"It is clever to start discounts before competitors and with as big a discount as possible," said Rita Gofman, sales manager at A&G Kaubandus, the supplier of 4You, Vero Moda and Jack&Jones.

"We cut prices of all products by 40 percent in a summer discount period in order to empty the shop before new products get in," said Gofman.

Unlike most of its competitors A&G Kaubandus raises the prices of some of the discounted goods back to normal level. "The discount period does not bring along any profit but we will make it up on the sales of new products. Getting rid of old goods is most important for us," said Gofman.