Mixed Retailers in Estonia

2020 IMPACT

Pandemic accelerates underlying negative trends

Mixed retailers saw a sharp fall in sales growth in 2020, partly as a result of the government-mandated closure of non-essential retail outlets in March. However, the pandemic has only accelerated strong underlying negative trends, with department stores, the largest part of the channel in value terms, coming under rising competitive threat over the review period from other sales channels.

Curbs on social gathering, work weaken demand for department store offer

Department stores have also been hit hard by the government’s response to the virus. The temporary shuttering of non-essential retail was part of this, but far more important have been the restrictions on movement and in particular large scale social gatherings.

Digital weakness exposed by crisis

Mixed retailers are also set to see sales hit by their comparative lack of investment in e-commerce. The pandemic has shunted many consumers online in 2020, as restrictions on movement and other measures disincentivise them from visiting stores.

RECOVERY AND OPPORTUNITIES

Department stores can benefit from sleeker model going forward

Mixed retailers are set to return to growth in 2021, although the channel is not to return to pre-pandemic levels before the end of the forecast period. There remain significant barriers to growth, especially in the larger part of the channel, department stores.

Variety stores meeting wide variety of needs, but face challenges

Variety stores are set to perform marginally better than department stores over the forecast period, largely as a result of the comparative newness of the channel, and the very different sales propositions of leading players like Magazijn, which offers a wide range of home and garden products from big-box outlets, to Flying Tiger Copenhagen, which offers a rapidly changing line of low-priced small items from high street sites. These mixed offers cover a very wide range of consumer demands, and very often include products that consumers cannot find elsewhere.

Challenges from online, but new models may offer opportunities

Mixed retailers are coming under threat from new retail formats, above all the rapid evolution of the country’s e-commerce channel. The pandemic has driven a marked uptick in consumers shopping online.