The past year in retail was a period of dynamic changes, bringing a range of improvements and developments which will affect the sector for years to come. These changes were brought on not only by increased competition and technological developments, but also by changes to tax policies and the increased purchasing power of the general public.
The main events impacting the retail industry in 2018:
- Low prices important to buyers. The price of products is still an important factor in the consumer’s decision-making process. Groceries have experienced low inflation thanks to both lower store price policies and changes in legislation. At the start of the year, the government introduced a lower 5% VAT rate on fresh fruit, berries and vegetables, a product group popular among Latvian consumers. This change led to significantly increased demand for these products, as well as the overall product range available in supermarkets. For example, the proportion of in-season local vegetables in Maxima Latvija stores represented more than 80% of the total product assortment. Latvia should also apply the reduced VAT rate to other grocery products, as has already been successfully introduced long-term in several Western European countries.
- Swift development of new formats. Adapting to the increasingly fast pace of life and allowing basic items to be purchased faster, small-format supermarket chain convenience stores have been introduced to the city environment. These types of stores have opened not only in the centre of Riga, but also in its residential neighbourhoods and other Latvian towns. At the same time, these has also been a noticeable reduction in the number of customers visiting larger stores, as these shopping trips can take several hours. Concept stores with smaller shopping areas are becoming more common both in Europe and in the United States. Maxima has varied its store formats to adapt to the daily habits of local residents.
- Increased public well-being. The purchasing power of Latvian residents has improved, demonstrated not only by a reduction in unemployment rates and growth in average income, but also by increased demand for more expensive, exclusive products. Disposable income allows consumers to more often consider their own needs while also resulting in an increase in healthy and niche products such as vegetarian and vegan food.
Key trends for 2019 – sustainable living, leisure, locality
- Retailers reduce environmental footprint. Despite the fact that households have a greater impact on the environment, the leading retail chains are more actively investing in the implementation of environmentally-friendly initiatives. The European Parliament has also ruled in favour of a range of measures for a greener society, limiting the production of both plastic bags and single-use plastic products.
- From efficiency to leisure. The importance of increasing efficiency in business, including the retail industry, is growing throughout Latvia and the world. Technology, including artificial intelligence and blockchain, continues to provide solutions to improve productivity, the workplace environment, and the overall shopping experience. Additional resources, freed up as a result of efficiency gains, are invested in lowering prices, and also in creating a new type of in-store and online shopping environment to satisfy the modern consumer who increasing views shopping as leisure, not everyday necessity.
- Aiming local. People are becoming more patriotic, choosing local and fully traceable products more often and encouraging an increase in the range of local products in supermarkets. Leading European private businesses are supporting the development of local manufacturers and young farmers, helping them not only in securing retail locations, but also by offering free educational lectures and marketing advice. Maxima Latvija will continue to be actively involved in local life, supporting initiatives important to local residents and encouraging the growth of small businesses.
Information for the media:
Liene Dupate-Ugule
Head of Communications
SIA "Maxima Latvija"
Tel: 26425420
email: liene.dupate@maxima.lv
www.maxima.lv
