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Are they buying less?

By RigaNOW!. 18.03.2010

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According to Tax Free statistics for 2009, the number of Tax Free purchases in the clothing and fashion sector increased by 5 percent on the previous year.

The increase in some areas was strong enough to cancel out any decline in others.
“There was decrease of 19 percent in women’s clothing, but that was compensated by a 20 percent increase in the men’s clothing sector,” said Jekaterina Alferova, country manager for Global Blue Latvija.
There are shops that have managed to keep their strong positions even during the downturn. We met Zulfukar Tosun, store manager at Riga’s Peek & Cloppenburg fashion store.
“If we look at the statistics of Peek & Cloppenburg, it’s not like this; it’s nearly equal if we compare last year with 2008. In general in Eastern Europe the situation is stable – 55 percent men, 45 percent women – but in the luxury segment the situation is that women buy less than men.”
The sophisticated Peek & Cloppenburg store is housed in Riga Plaza, a shopping mall that opened recently across the River Daugava. Its target audience is ladies of all ages and income levels, but for gents – these tend to be businessmen.
The average spending decrease is a common trend on the market, since international shoppers are mostly making purchases during the summer or winter sales. Or they just don’t buy that extra sweater or shirt when shopping at a certain store, as they did before.
Tosun said that these days customers are searching for good quality at a valuable price. But they are ready to spend money for the right things. He gave us an example: “In our other shops, one of the top three brands is Hugo Boss. But when we started to operate in Latvia we saw that we clearly needed to lower the prices. However, last year showed us that clients are really happy when they enjoy good service, no matter what the price is.”

Where foreigners shop

“The top three stores among Tax Free shoppers in 2009 were Podium, Emporio Armani and Plaza on Kungu Street. Undoubtedly, the Stockmann department store and the Galerija Centrs mall also kept a strong position in attracting Tax Free shoppers in 2009 and remained the leaders,” said Jekaterina Alferova.
By nationality, the main Tax Free customers are Russians, although this market performed poorly last year with a 17 percent decrease in sales of fashion and clothing.
According to the latest ITB (the world’s biggest professional convention in Berlin) “World Travel Trends Report”, Russia was the second-hardest hit outbound travel market in Europe in 2009 during the crisis, with a decrease in activity by 12 percent compared to 2008, not to mention the catastrophic slump in Russian expenditure abroad.
In 2008, the Russian shopper was spending €450 per purchase on average in Riga shops, but in 2009 the average purchase amount fell by 25 percent to €335.
The second biggest group of Tax Free shoppers was the Belarusians, who performed well in 2009 with an 18 percent increase in the fashion and clothing sector. The average amount per purchase decreased by only 4 percent. In 2008, a Belarusian tourist’s average spending was €270 per purchase and €260 in 2009.
The situation with Belarusian visitors looks promising as they actually made more purchases in Riga in 2009, but with a slightly decreased change in average spending.
In third place, Norwegians stayed at the same level in Tax Free shopping sales as the previous year, which is also a positive sign. Their average spending even increased, by 4 percent. However, average spending per purchase fell by 18 percent against 2008, from €370 to €304.

The year ahead

Most of the shopping malls of Riga are searching for new solutions to attract customers, for example by organizing fashion shows, weekend events dedicated to various nationalities, etc., and it is obvious that the loudest and most attractive venues will survive.
Zulfukar Tosun predicts that the Latvian market will change. “We will lose some competitors, service will become more and more important to the customers, and customers will choose shops with the best service.”
From our side, we recommend that you enjoy some quality shopping while in Riga, especially at whatever sales you can find before the downturn turns to positive upturn, while the prices are more down-to-earth and each player in the market is trying to catch the shoppers with special offers.




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