Estonia’s rising food prices are partly driven by the large number of stores, said Kai Realo, head of the Estonian Employers’ Confederation board and CEO of Ragn-Sells. Production costs in Estonia are also high.
“We need to consider that Estonia is a small market, which means any kind of production here is more expensive per unit. If we think about how much labor and electricity go into it, it’s likely that more money is spent on a single item or package compared to a large German factory,” Realo told “Ringvaade” on Thursday.
“The second factor is the environment we are in. We have endured energy price shocks that have pushed individuals to their limits. What can we say, then, about large-scale production?” she added.
“Thirdly, now that I am no longer in retail, I can share a small secret: when sales volumes decline in terms of units sold, retailers, to cover rents and other expenses, often try to compensate for lost profits by raising their price margins. This is inevitable because people need wages, machines need electricity, and the doors need to open and close,” Realo said.
The chairman of the board also expressed confusion about the large number of stores in Estonia.
More read: ERR.EE