The Baltic retail market continues to develop and transform, as leading players make a push into neighboring markets and toughen competition throughout the industry.
Lithuanian retailer VP Market, which operates Maxima hypermarkets and T-Market stores, intends to capitalize on its skyrocketing sales by expanding into Latvia and Estonia.
Finland's Kesko, which dominates the Estonian market with its Citymarket and SuperNetto stores, has also stated its intention to increase investments in Latvia. The company has announced it will invest 20 million lats (32.2 million euros) in expanding its supermarket network in Liepaja and Ventspils.
Liga Busa, marketing coordinator for Kesko Latvia, said the company, which started operating in Latvia in 2001, was ready for the challenge of developing its operations on a more competitive market.
"It's simple," she said. "Our competitive advantage is the great assortment of our food products, especially fresh food products in our Citymarket stores."
Meanwhile, ICA Baltic, owner and operator of Rimi in the three Baltic states, announced March 10 that its sales in 2002 increased by a whopping 75 percent year-on-year.
But the recent accounting scandal with Royal Ahold, the Dutch retailer that has a 50 percent stake in ICA Ahold, has the sharks in the water.
Ignas Staskevicius, CEO of VP Market, whose company posted total sales of 149.2 million euros for the first two months of the year, said last week that VP market would be ready to buy the Rimi chain stores in Estonia.
"Everything depends on the price and the offer. We would be interested in an offer regarding the Rimi chain in Estonia, in which we have only one store," he said, adding that no offers have been forthcoming.
But the jury is still out on ICA Baltic. Judging by the company's 2002 financials, which attest to superior top-line performance, Rimi stores are all but impervious to scandals concerning its owners.
Inta Krasovska, public relations officer for Rimi Latvia, said she believes that Rimi's future results and development are not likely at all to be impacted by the situation at Royal Ahold.
"There is no direct link with ICA Baltic," Krasovska said, adding that Rimi was unafraid of of increased competition on the retail market.
"There has always been competition, so there is nothing new, really," she said.
Still, the competition promises to be fierce, as investors are prepared to suffer formidable short-term losses for the sake of long-term gains.
Kesko Food Latvia, which operates Citymarket and SuperNetto stores in Latvia, announced on March 7 that it finished 2002 with a loss of 2.9 million lats on a turnover of 10 million lats.
According to Kesko Food Latvia director general Henrijs Fogels, the company's objective for 2002 was to take position on the Latvian retail market. It tripled its fixed assets last year and aims to take 25 percent of the Baltic retail market.
Mego, one of Latvia's biggest retailers with the brands Mego Mix, Max and Mini Market also promulgated its 2002 results last week, posting profits of 558,000 lats on turnover of 33.6 million lats.
Company representatives said that profit - up fourfold - came from expansion of Mego's network and its marketing improvements.
Mego expects to open 21 new supermarkets in Latvia by the end of this year and to launch operations in Ukraine.
The rapid expansion by the big players on the retail market, especially in Latvia, has led smaller competitors to reorganize.
Last week three Latvian trade companies that operate 47 stores in Ventspils, Liepaja and Smiltene established a new joint venture. The new entity, called Iepirkumu Grupa, aims "to compete on the Latvian food retail market and to build market share."
On a market that analysts expect to grow by 5 percent - 8 percent over the next five years, consolidation and expansion is likely to prove the only path to survival.
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