Merchants do not sing the same tune during the World Choir Games
The retail turnover in the second quarter retained its fluctuating trend on account of the expenditure stimulated by the warm Easter in April and the following drop in May and June. Total sales in the second quarter were slightly (2.2%) greater than in the first quarter and notably greater (5.1%) than in the second quarter of 2013.
Confidence indicators whose dynamic may help to analyze the existing activity of consumers and guess at it for the coming months, now demonstrate a slightly different perspective for consumers and merchants. After a rapid improvement in confidence in December, consumers have retained a relatively stable outlook on life (their net worth and economic development of the country) with gradually rising optimism. Merchants, on the other hand, became more hesitant in recent months, and a more rapid improvement is apparent only in the July data published today by the European Commission. The worries are probably related to the hard-to-predict changes in client flows.
For instance, a very rapid rise in the number of tourists is observed, particularly in relation to Riga's status as a European capital of culture, but the time of their visits is shorter and their willingness to spend is lesser. Media report that the number of visitors from Russia has shrunk, but there is no official confirmation to this as only data from the first quarter are available (and they indicate no decrease).
There is no doubt that different tourist flows have different impacts on different segments of trade. If Russian guests were good customers for jewellery, wearing apparel, furniture and even automobile merchants, then participants of the World Choir Games and other cultural events might be more active buyers of souvenirs and snacks with sales slips worth less but more numerous. The occupancy rates of hotel beds and rooms have reached record high this year. It is difficult to predict what the added value of these customer flows and profits of merchants will be, but there is no doubt that they as well as other service providers do not lack for excitement and anxiety, and demand is hard to forecast.
The bulk of retail turnover, however, is determined by expenditures of the local population, and in this area, the behaviour of customers is easier to predict. After the impact of euro introduction on expenditure that involved an initially active spending of accruals in lats and drop in trade in the first months of the year, the demand for goods and services on the part of the population is entering a more stable dynamic of gradual growth, primarily determined by the increase in average salary and fostered by an improvement in consumer confidence, which allows them to moderate their caution and open their wallets for purchases. Month-on-month, fluctuations remain as usual, influenced by the weather, the number of holidays and other factors.