Latvian Economy – I don’t get it.

I recently had need of a bicycle pump. I noticed on the road out of Riga, just past Spice, a sign saying Elkor Sports. So in we went. WOW!!!! Possible the best stocked sports shop I’ve ever seen. Huge range of bicycles, gym equipment, clothing, shoes etc etc The amount of stock they had was staggering. Now for the but. BUT there were no customers, just loads of employees. Now his is not an unusual occurrence in Latvia. There are more shopping centres per head of population than anywhere I’ve seen on my travels through Europe.

To the retail shopping enthusiast, Latvia must be a paradise. The shopping centres are great. Containing their fair share of designer shops, they are a delight to shop in. Why? Because they are never busy.

So  here’s the conundrum. In order to keep their business afloat, wages and rents must be low. If wages are low, who shops there. If rents are low, who would want to invest there.  Your answers would be greatly appreciated so I can continue with my Latvian education

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16 Responses to Latvian Economy – I don’t get it.

  1. Totally agree, as a latvian my self u still don’t get it! Why?

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  2. Aggie says:

    first of all depends what time you been there cos all the shops get`s busy after 5 p.m.

    second: how many times I have been in Spice there is always quite comparing with my favourite shopping centre Alfa

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  3. Trent says:

    This obviously isn’t related to your post, but could you please turn this into an ebook? I’d buy this on Google Play (not an iTunes or Kindle user, sorry) for a couple of pounds/euro. Partly to thank you for your efforts and how interesting I find it and also because I’d really like this in a form I could read comfortably on a tablet. Web apps are fine, but not always optimal.

    A part/chapter for a small amount every few months and then the final book when you’re done (which would cost more, of course) seems fair and useful to me.

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  4. Igors says:

    “Spice” is by far not the busiest shopping centre in Riga – it is full mostly on weekends. Just try to visit “Alfa” on a weekend and you’ll understand. + “Spice” is more orientated towards tourists/residents of Jūrmala, which usually have more purchasing power. 

    However, saying that, I can’t deny that your observation is true. Latvia has one of the highest shares of trade in the structure of GDP in the EU.

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  5. First off.. With this being my first comment on this blog I must compliment the owner – it makes a very good reading to me personally.. I’m one of the many Latvians who’s been through the same in the UK – the process of getting to know the culture, all the ins and outs, trials and tribulations :).. Very interesting to see it from a ‘reverse’ perspective..

    As for the subject of this post – I think it has a lot to do with the recession.. In pre-recession boom craze people used to spend an awful lot on things they did and didn’t need and a great deal of it was borrowed money.. Where there’s demand there will be supply and the shopping centres sprung up at an increadible pace.. But then the party was over and punters stopped buying stuff almost completely.. Some retailers went bust but the remaining ones keep operating to survive so the retail space is still there but the purchasing power is much lower than it used to be and also there are less people as many have emigrated.. And also the lesson has been learnt and most people will think twice before they buy.. Now the economy is picking up but I think we’ll be able to enjoy comfortable shopping for quite a long time to come yet.. Anyhow that’s my theory – I might be wrong (or half-wrong)..

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  6. andrisbb says:

    If this question would appear in QI then answer would be “Nobody knows” 🙂

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  7. rigaenglish says:

    “If wages are low, who shops there.”

    There are lots of fairly rich people living in places like Baltezers and Jurmala who have sufficient resources to shop there.

    “If rents are low, who would want to invest there.”

    Obviously, people who don’t want to be paying high rental costs for offices and the like will want to invest. It’s surely more of a positive than a negative?

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  8. Spock says:

    I think there are a number of reasons for some of what you mention.

    Number 1, as martins0ex0londoner already pointed out, the recession has resulted in a decrease in disposable incomes but also in population. The Shopping centres started developing in the 90’s onward in different demographic and economic conditions.

    As someone else pointed out, it at least used to be that most shopping was done weekends. (quality time? Yuk!) I’ve been living near Cesis for 10 years so don’t know if this is still true.

    In the 90’s, rents were high but salaries low. Still difficult to make ends meet, so many stores had very high margins on the goods they sold. I did a lot of shopping abroad, including in the U.K., because prices were much cheaper. Margins still seem to be much higher than in many other European countries.

    During the recession many stores did go under and I am sure they and the shopping centres are still struggling. While I am sure many would love to get out of their investments, as long as that would result in greater losses than continuing to operate, they keep going as best they can. Like other development, the financing of the shopping centres would have been heavily leveraged so the lenders as well are interested in the centres continuing to work unless/till they can be sold on profitably.

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  9. eNVee says:

    Ha, you’ve “hit the nail!” I don’t get it too. Why do we need so many useless shopping centers. And I seriosly mean useless. Take any of them… Alfa, Spice, RigaPlaza. Hundreds of empty shops inside. Empty because 90% of them sell the same s*it – clothes and footwear. Shop owner has to pay the rent, wages, keep some stock. Selling goes very slow, each peace has to be sold with at a huge price, nobody wants it for that price – empty shop. But they just keep doing it somehow. Do you need a tyre pump, maybe a piece of stone for sharpening a knife (damn, another word in english I have forgotten) or something more usual? Nope, not gonna happen, you will have to look for a special shop!

    Can you imagine, 10 years ago it was a total nightmare to get a size 45+ shoes in Latvia? Now its much better. But it took them 15 years to realise this need…

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  10. Evita says:

    I’m surprised no one mentioned money laundering or other illegal activities. That’s how some shops stay afloat despite having very few customers. Not all of them, of course, but at least Elkor has a bad reputation regarding this.

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