Retailers in Latvia currently have little interest in expanding rapidly - director of Spice shopping center

RIGA - Retailers in Latvia currently have little interest in rapid expansion, Iveta Priedite, manager of the Spice shopping center, said in an interview with LETA.

"I definitely agree that the market is saturated. My conclusion is largely based on the fact that retailers currently have little interest in rapid expansion," said Priedite.

She added that while some retailers want to expand and others are making changes, the situation is not the same as, for example, in 2011, when one, two, or even three new stores opened almost every season and growth was very rapid.

"Right now, everything is proceeding at a moderate pace. If retailers are not demanding additional space, shopping centers do not really have anywhere to expand either. Given the population size, I believe the range of brands on the market is sufficiently balanced," said Priedite.

She noted that shopping centers used to be a very rapidly changing environment, but now it seems a calmer phase has set in. "Maybe the stories are not as loud anymore, but the situation is more stable. And in this chaotic world, stability - that is already a lot," said Priedite.

The head of Spice mentioned that the shopping center has to compete with people’s desire to shop abroad, including both in physical stores abroad and online.

"When talking about Spice, I usually say that our biggest competitor is Riga Airport. Those thousands of people who fly out every day. Not just for tourism or business - they also take advantage of shopping opportunities abroad. We have heard a lot that in Latvia the selection is too small, the sizes are not sufficient, or the prices are too high. Although I think the price level is similar to elsewhere in Europe, foreign markets still have an advantage in terms of selection and variety," said Priedite.

She also noted that the online environment poses significant competition. "We see how actively international platforms are operating. No one can really say exactly what market share they serve; even bank data does not always fully reflect it. The volumes are not small. I would even say that the online environment is a bigger competitor for us than other shopping centers," said Priedite.

She added that publicly available information suggests that the percent share of e-commerce has decreased slightly, but the total volume continues to grow. This means that both total revenue and revenue in physical stores are increasing. "This suggests that every consumer and every shopping channel has its own time and its own need. People might shop online one day, but go to a shopping center the next day or week - depending on their needs or mood," said Priedite.

When asked whether there might still be a location for a new shopping center in Riga, the head of Spice noted that physically, space is available, but building a new shopping center is not rocket science - it is relatively easy. The most important thing is to fill it with an attractive enough offering so that retailers can do good business and there are enough visitors to cover the rent.

She also noted that construction costs have risen significantly in recent years. "I will not give an exact figure, but in my opinion, they are close to double the pre-pandemic level. All of that has to be recouped. Building a shopping center costs tens, if not hundreds, of millions of EUR," said Priedite.