The distribution network in Estonia

Evolution of the Sector

Retail trade enterprises expect their sales to continue rising (by 6.1% in 2017, according to a the Swedbank annual survey) and they plan to create more jobs, like in the previous years. The profitability is still a concern, however. Profit to turnover has been on a declining trend in recent years. Surging labour costs hamper profitability like in other sectors in Estonia.

Situation in the retail market is only becoming more challenging in the future. Firstly, the purchasing power of wage-earners will grow much less this year than in the past. This, in turn, would limit households’ consumption. Secondly, competition will grow. In addition to the increasing popularity of e-commerce, new retailers could enter the market. As there are retailers who earn part of their turnover through online sales, and Estonians also order goods from abroad, the actual share of e-commerce is much higher than 3%. According to a recent Swedbank survey3, 39% of retail trade enterprises were engaged in e-commerce, mostly to support traditional sales.

Developments across sub-sectors vary, however. While the sales of primary necessities, including food and motor fuel, still constitute the largest part in consumers’ basket, people spend more and more on other goods. Currently, supermarkets amount to around 40% of the total retail sales in Estonia. Automotive fuel comes second with a 13% share, followed by stores specialising on household goods, construction materials and other goods. The purchasing power of Estonian consumers has risen rapidly in recent years due to a strong wage growth and stable prices, and, therefore, people can afford to spend more on entertainment, hobbies, etc. Sales of convenience goods has grown much less than the sales in stores specialising on non-essential goods, compared to one year or five years ago.

Market share

Private wholesalers and trading firms are particularly strong in certain specialised sectors, such as electronics, electrical components and instruments, pharmaceutical and health care products, technical products and machinery, and raw materials and chemicals.

There are several competitors in the Estonian supermarket industry:

Maxima: Lithuanian group operating in hypermarket, supermarket and convenience store format: 84 points of sale in Estonia
Selver: Estonian group operating in hypermarket and supermarket formats: 71 points of sale in Estonia
Coop (previously ETK): over 330 stores, in Estonia more than 100 supermarkets under the Konsum banner, and 14 supermarkets under the Maksimarket banner
S Group: Swedish group owns 9 hypermarkets under the name Prisma
OG Elektra AS: Estonian group distributing in 67 outlets in Estonia (supermarkets and convenience stores) under the brand name Grossi

Retail Sector Organisations

Estonian Association of Small and Medium sized Enterprises
Estonian Traders Association
Estonian Chamber of Commerce and Industry
Estonian Ministry of Economic Affairs and Communications

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