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Estonian apparel retail market overview.

The economic crisis that began in Europe in 2008 had a huge impact on different Estonian industries. During the crisis the growth of fuel and utility prices significantly reduced people`s ability to buy clothes and food.


Clothing and footwear retail sector reached rock bottom in 2009, at that time the market volume declined approximately 25% compared to 2007. According to Statistic Estonia, the market volume decreased more than €50 million during the two years. Since 2010 the clothing retail market started to recover. In the third quarter of 2012 the market reached volume of approximately € 58.5 million, which was equal to the fourth quarter of 2007.


Retailing companies were affected by the crisis in different ways. Two of the biggest Baltic clothing retailers, Baltika and Apranga, sales volumes did not recover to the 2007 level. Their sales volumes were lower in 2011 compared to 2007, respectively -31% and -19%. Both of them showed a growth in sales in January of 2013 as compared to the last year, respectively 4% and 7.6%. Other medium-sized retail companies showed a decrease in turnover as well, like A & G retail store chain, which has lost significant market share.


High-end brand, such as Denim Dream, Guess, Tommy Hilfiger, consumers remained true to their preference, and at the end of the crisis continued to buy from their favorite clothing stores. This is evidenced by the luxury brand retailer quick post-crisis recovery. The company turnover has increased by 23% in 2011 compared to 2007.


The stronger growth was showed by the retail companies that are specialized in selling women's and children's clothes. Lindex retail chain has doubled its turnover from 2007 to 2011. N-kaubandus, which is represented in four Estonian cities, has increased its turnover by 50% over five years. N-kaubandus has increased its market share in the retail and also wholesale business.


One of the growth drivers of the market is a growing inflow of Russian tourists. Several companies showed Tax-Free retail sales growth. Clothes sold in Estonia, especially children's clothes, are cheaper compared to the Russian market. It is expected that the Tax Free sales push up retail segment growth in the coming years.


Despite the high competition in clothing and footwear retail market, the big retail chains want to come to the Estonian market. H&M and Debenhams are planning to open their shops in Tallinn. It is believed that the retail market will go through big changes in the coming years. In order to maintain and increase its market position, the companies will have to consolidate market. Several smaller companies merge or are acquired by the bigger competitors. For example, last year Baltika acquired Bastion.