The Finnish retail sector is experiencing a ‘slightly brighter’ Christmas, however, recent challenges facing the marketplace haven’t gone away, representative group Kaupan liitto has noted.
According to Kaupan liitto expert Arhi Kivilahti, strengthening consumer confidence in the marketplace is likely to create a “foundation for growth” in the new year.
Finnish grocery stores and department stores – especially hypermarkets and discount stores – experienced slight growth in the third quarter of the year, while speciality stores continued to decline, Kivilahti said.
‘Buying Less, And Cheaper’
“Consumers are still willing to buy, but they are buying less and preferring cheaper products,” he commented. “Strong sales of products at a low price point have been reported in the interim reports of Tokmanni, Puuilo, and also the Swedish Rusta.
“Although lower average purchases are a challenge for sales growth, cheaper products are often more profitable, as their sales margins are better.”
Consumer Confidence
For specialty retailers, the gradual recovery of consumer confidence is a positive signal – although confidence is still negative, it is slowly moving towards positive figures, boosted by a decline in inflation and interest rates, Kivilahti noted.
“The difficult market situation has even affected IKEA’s business,” he said. “IKEA’s sales fell by almost 10% in the financial year ending in the autumn. In contrast, Danish retailer Jysk reported growth in Finland for the second year in a row, showing what kind of stores thrive in challenging times.”
As Kivilahti added, if recent years have demonstrated one thing about the retail trade, “[it is that it has] underlined the importance of diversity in the selection.”
