For the sixth month in a row, the turnover of Latvian retail trade enterprises shows an increase compared to the corresponding period of the previous year at constant prices. In August of this year, it was 3.7% higher than a year ago, but in the eight months of the year, the turnover has grown by 2.8%. In turn, the increase in the corresponding period last year was only 1.1%.
In August, growth was driven by both non-food and automotive retail trade, but food products were traded more in August last year than this year.
Retail sales of non-food products, excluding fuels, increased by 9.8% in August, including a decrease of 2% only in ICT sales, which can be explained by specific product shortages due to supply chain disruptions. In contrast, increases were recorded in all other product groups. As last year, this year the trade in household electrical goods grew rapidly – by 18.1%, which is the largest increase among all product groups.
Despite rising prices, sales of construction materials have also increased by 7.7%. Retail trade of cultural and leisure goods has grown by 16.8%. There is still a high demand for disinfectants and equipment for Covid-19 tests, which has also increased sales of pharmaceutical products by 8%. In August, due to colder weather conditions, the retail sales of clothing also increased by 11.1%. Sales in mail order or online stores have been growing rapidly since May this year, reaching 40.6% in August, due to both the sharp decline in the base last year and the worsening of Covid-19 disease in August, with people again preferring distance shopping.
Retail sales of automotive fuel increased by 3.5% in August, compared to an increase of 12% in June and July. This can be explained both by a slightly higher base in August last year and by the unfavorable weather conditions in August, when the desire of the population to go on long trips by car decreases.
Food retail sales in August decreased by 3.8% year-on-year, the largest decline since December 2016, due to factors such as rising food prices, declining tourist numbers and restrictions on the full functioning of the catering industry. .
The total retail trade volume in eight months has increased by 2.8% compared to last year. Of which, food sales increased slightly by 0.2%, while retail sales of non-food products, excluding fuel, increased by 4.4%. Fuel trade growth remains high at 8.4%.
What to expect next?
Lidl has not yet announced the date of opening its stores in Latvia. Experts admit that the entry of the largest group in Latvia will affect large food retailers such as Rimi and Maxima. It is expected that Lidl will be able to offer lower food prices, but store chains operating in Latvia are actively working on various solutions to maintain the usual turnover, for example, by offering a wider range of food products from local producers.
The retail situation in the coming months may be affected by new restrictions that will apply more to non-vaccinated individuals as the number of Covid-19 cases increases rapidly. Excessively high price growth rates can also have a negative impact on food retailing, reducing the purchasing power of the poor.