Ülemiste Centre: March Demonstrated a Sobering Reality

Retailers believe in economic recovery and are renewing their stores with more enthusiasm than ever before, but people’s actual purchasing power is not yet keeping pace with this optimism – as shown by the first-quarter results of Ülemiste Centre.

“While the beginning of the year is always quieter than usual, the figures for March were sobering. People clearly visited stores less and spent significantly less money than, say, a year ago,” noted the Director of Ülemiste Centre Guido Pärnits.

Since Ülemiste is one of the largest shopping centre in the Baltic region, its turnover figures serve experts as an alternative indicator of the state of the economy. Results from the first three months of the year show that, compared to last year, Estonian residents have spent less in nearly all product and service categories – with the biggest savings made on home furnishings, clothing, footwear, sports goods and jewellery. “While there’s a lot of talk right now about economic recovery, from the perspective of an average person’s capabilities, this upturn is happening more slowly than was predicted or hoped for,” said Pärnits. “There is certainly no reason to panic. Rather, it is a sign that economic uncertainty unfortunately remains.”

Nevertheless, the drop in turnover cannot be explained solely by the prolonged crisis, the high Euribor rate, electricity prices or fears of an uncertain future. This season, weather-related factors have also done considerable harm to retailers.

“For example, in Ülemiste Centre, fashion, footwear and sports goods make up nearly 40% of all stores. Their sales are heavily dependent on the weather, which cannot be reliably predicted 2–6 months ahead – when retailers are placing their orders. If there is no winter, then winter clothes won’t sell. If spring is late, spring coats won’t sell either. People have probably noticed that the discount periods at the start of this year were unusually long. That is largely a result of this year’s exceptionally warm winter – the discounts were needed to find buyers for pre-ordered goods. Ultimately, this has affected all the key indicators,” Pärnits explained.

While economic uncertainty and an absence of real winter affected turnover across all shopping centres, Ülemiste faced a third factor in the first quarter. “We are currently undergoing a large-scale refurbishment across nearly 3000 square metres of retail space. In the first quarter, four of our largest stores were closed – not to mention the smaller ones – as they completely rebuilt their premises. The timing for boosting store appeal is ideal, so that we’re ready when better times arrive,” Pärnits noted.

According to Pärnits, retailers’ belief in the approach of better times is also reflected in the fact that this summer and autumn, several global brands will refurbish stores at Ülemiste Centre with new concepts. “The situation is far from ideal, but we have reason to look to the future with moderate optimism. The next quarter or half-year will likely bring better results. Our task is to be ready for that,” said Pärnits.