Viru Centre head: Estonian retail has hit bottom

Enn Parel, the new head of Viru Centre, believes that the worst of Estonia's retail downturn is behind us, even though consumer confidence remains low. Statistics Estonia has noted a curious gap: shoppers remain pessimistic, but retailers are viewing the future much more optimistically.

Estonian retail sentiment is contradictory: two years of sluggish consumer activity has left its mark on both shopping mall revenues and business expectations. Yet Enn Parel, the new head of Viru Centre in central Tallinn, believes the worst is over.

Consumers and retailers on different pages

A fresh confidence survey from Statistics Estonia reveals a striking gap. Consumers are still keeping their wallets closed and assessing economic prospects cautiously, while retailers view the situation considerably more optimistically. Parel explains this divergence by noting that retailers come into contact with actual foot traffic daily and sense shifts in the market faster than surveys can capture.

Viru Centre is Estonia's most-visited shopping mall and thus serves as a kind of barometer for measuring the health of the entire sector. According to Parel, turnover has begun to stabilise and customer numbers are showing early signs of recovery, which is why it's fair to speak of a turning point.

What Viru Centre's experience shows

The new head acknowledges that the past couple of years have been difficult, with high inflation and rising interest rates eroding purchasing power, and many retailers having to adapt to much tighter margins. However, he stresses that Viru Centre has weathered these trials and the tenant transition process has brought in new brands and services that make the centre more attractive.

If inflation continues to cool and wage growth continues, consumer spending should pick up in the coming months, in his view. "Things can't get any worse, and that in itself is already good news," Parel noted.