Shrinking packaging sizes, and a nearly twofold increase in the share of promotional items in purchases, have also been observed, Rohtla said.

Rohtla told ERR that his retail chain closely monitors consumer behavior, and the developments outlined above are no cause for joy.

He said: "Due to rapid price increases, consumers have less money each day to take to the store and to fill their shopping baskets with. In fact, these changes have been taking place for over two years, starting even before the war began."

Fewer products are being purchased, and more promotional items, marked with yellow tags, are finding their way into shopping carts, he added. The share of promotional items has grown significantly across the entire retail sector, nearly doubling.

"The reason for this is that consumers want to keep their meals as similar to what they had before, and to do that, they need to base their choices on promotions. If cheese is on sale, they will choose that instead of the regular-priced options, yet without compromising on quality," he said.

Rohtla noted the impact of Lidl's entry into the Estonian market, which he said is mainly felt by those stores who have always positioned themselves as low-cost shopping options. Stores like these have lost market share somewhat, he said, particularly smaller outfits.

"Over the past two years, the most significant losses have been experienced by the smaller, non-chain stores. Since Lidl positions itself as the cheapest shopping destination, their entry into the Estonian market, during a difficult time for consumers, proved very timely," Rohtla went on.

Coop stores located near Lidl initially saw a drop in turnover after the new chain's arrival, but turnover has since recovered. Rohtla believes that consumers do not buy all their groceries at Lidl but supplement their shopping at other chains.

"Lidl is gradually opening more stores, as they have announced as planned, so they will gain some market share, but I don't see it drastically changing the position of major retail chains in Estonia," he added.

"Perhaps market share percentages might shift here and there, with some chains losing more, other less, but some sort of very significant shake-up, which would lead to a chain exiting the Estonian market, we don't see" Rohtla went on.

When asked if all current chains operating in Estonia will still be here in three years, given the rumors that for instance A1000 Market is up for sale, Rohtla answered that A1000 Market's market share remains very small, so it wouldn't significantly change the overall picture if someone did buy them out.

"Today's current on the Estonian market is very favorable for consumers, because competition in the Estonian market is intense. There are four strong chains competing between themselves every day, to attract customers, offering customers very good products at great prices and excellent customer programs," he said.

Rohtla noted that Estonian retail chains's profits historically lie at around the 2-percent mark, while in neighboring countries, they are much higher due to less competition, which leads to slightly higher prices for consumers.

Coop closed its online stores two years ago, and has no plans to re-enter the e-commerce sector.

The Coop chief said that e-commerce did not provide any added value for the chain, while it incurred annual losses of around a few million euros, so it was something they did not want to subsidize.

"We would prefer to invest that money in new stores, renovating old ones, and strengthening our chain in different regions," he went on.

The sustainability of Prisma, the only Finnish chain operating in Estonia, at a relatively low incidence of stores, hinges greatly on the decisions of its Finnish parent company, according to Rohtla.

"Just a few days ago, I reviewed the annual results of our competitors, and Prisma was the only one among the larger chains to still be in the red in 2023. They were also in the red in 2022. Much depends on how long the Finnish parent company will allow this situation to continue, and whether they can turn a profit, at some point," said Rohtla.

He added that given the market dynamics, it is hard to believe they would recover unless there is a significant improvement in consume' purchasing power.

According to a market survey conducted by Coop, Prisma's customer perception deteriorated the most last year, among all chains.

Product selections will continue to change based on consumer purchasing power. In the last two years, products from smaller producers, with low volumes and high prices, have disappeared from shelves, as customers have avoided buying them.

"We have also seen that, due to rapidly rising input costs, food packaging sizes are being reduced. Hiking prices further to consumers is no longer viable, so to keep products affordable, packaging is made smaller," he went on.

Rohtla said he does not foresee a quick improvement in the near future, meaning this trend is set to continue. He said he doesn't forecast significant changes in the breadth of selections either, due to intense competition; everyone wants to offer as wide a range as possible to consumers in any case.

According to Statistics Estonia, compared with July of last year, the prices of goods this July rose by 1.7 percent, while services became 6.3 percent more expensive on year.

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