Estonia's economic downturn has forced retail customers to postpone certain manufactured goods purchases, including home appliances. This, in turn, has led to a noticeable drop in volumes and turnover for home appliance retailers.
"Sales figures this year are indeed lower than last year's figures," admitted Euronics CEO Aare Koppel.
"We're seeing several reasons for this," he explained. "First, due to the increase in interest rates, less real estate is being bought that would require appliances; second, the increase in interest rates has impacted purchases made on installment plans; and third, the increase in interest rates is affecting consumption choices, and purchases that can be postponed are postponed."
Koppel noted that another factor the decline in demand to follow the boom seen a few years prior.
"During the [COVID-19 pandemic], we saw more home electronics purchases than usual," he said. "In some groups in particular, such as the IT product category — computers, laptops — the increase was very big."
He cited major price pressure on the market as yet another cause of the decrease in turnover, as this has led to a slight drop in retail prices.
Prisma hypermarkets, which sell a broad range of home appliances in addition to groceries, have likewise felt that fewer home appliances are being bought than before.
"In the first seven months of this year, home appliance sales have declined by more than ten percent on year," said Kristiina Tamberg, Prisma's communications manager. "This has been mainly due to the general economic situation, pice increases across essentially all vital sectors as well as people's need to save on expenses and, where possible, postpone bigger expenses."
Tamberg said that in the case of certain product groups, other reasons beyond the general economic situation can be observed for more modest purchasing. Fan sales, for example, were much more robust last summer in connection with hotter weather than this year.
Should the decline in sales and volumes continue, retailers will end up with increased stocks, which, best case scenario, may mean sales as businesses want to clear their stocks while also winning customers over from competitors with lower prices, SEB economic analyst Mihkel Nestor told ERR.
This decline hasn't yet lasted very long, however, and the rate of decline isn't high enough to have a major impact on the economic environment, Nestor continued.
But should the problem persist, or worsen, then fall and winter may prove more challenging.
"Then some companies more concerned about the future may make business decisions on that basis as well," he explained, adding that these decisions could impact the situation on the labor market, for example, as the customer service sector accounts for a signifcant share of the labor force.
According to Statistics Estonia, the turnover of retail trade enterprise in June totaled €896 million, marking a decrease of 8 percent on year at constant prices. This overall drop was most affected by stores selling manufactured goods, where turnover fell by 12 percent on year.
Volumes are down as well: according to Eurostat figures, Estonia's total retail trade volume fell 8.7 percent on year in June, accounting for one of the largest drops in the EU.
Editor: Aili Vahtla