OREANDA-NEWS. August 19, 2014. Ending a year-long deterioration trend, entrepreneurs' mood has improved in June reaching 52.11 points, suggests the recent Citadele Index study conducted by Citadele Bank the market and public opinion research centre SKDS.

In comparison with the first quarter of this year, optimism increased most rapidly during the second quarter (by 2.2 points) reaching the total index value of 51.95 points. Citadele Bank's observations suggest that online retail business may have growth prospects in store for Latvian businessmen thus boosting optimism in the longer run.

The Latvian entrepreneurs' mood index witnessed moderate growth, increasing by 1.46 points during the last quarter, concludes Arnis Kaktins, Head of the market and public opinion research centre SKDS. According to the recent data of the Citadele Index, the present index value (50.06 points; increased by 1.24 points compared to the previous quarter) indicates that businessmen have a generally neutral attitude towards the developments that have taken place during the last six months whereas they are rather optimistic regarding the future and they anticipate that the situation will improve – the future index value is as high as 54.16 points (it has increased by 1.68 points compared to the previous quarter). The index value shows that businessmen are optimistic when it exceeds 50 points, and indicates pessimism when it is lower than 50.

"One must consider that gradual deterioration of the entrepreneurs' mood took place during the previous four quarters which serves as a fairly positive backdrop for the current 52.11 point level," points out Mr. Kaktins. "It will be interesting to observe the indices of the upcoming quarters and to see how they are influenced by the global political events."

"In accordance with the data of the Citadele Index study, Latgalian businessmen are still in the pessimistic zone whereas the exporting companies tend to be most optimistic," explains Kaktins. As for the sectors, manufacturers (52.59 points), service providers (52.31 points) and trade companies (51.95 points) are optimistic as opposed to the mood among construction enterprises which has slid down to 49.11 points and can be characterized as rather pessimistic.

Online stores witness steady growth in retail business

Retail businesses via mail delivery and internet stores are witnessing steady growth. Turnover of Latvian online stores has tripled during the previous 10 years. Besides, online retail businesses present growth trends that are 2-3 times faster than the general retail turnover in Latvia. Save for changes in prices of goods, the annual growth of retail turnover via mail delivery or online stores has exceeded 10% during the first half of this year; meanwhile the total retail turnover registered growth of less than 4%. According to the data of the Central Statistics Bureau, it exceeded 100 million euros in 2013 presenting stable development.

"Development of e-commerce is one of the opportunities for Latvian businesses to grow and increase their sales worldwide. This may also be one of the reasons which will have a positive influence on the mood of retailers, manufacturers and service providers in the future," concludes Kaspars Cikmacs, Member of the Board of Citadele Bank.

Statistics of the Bank's e-commerce transactions indicate the same trends: Latvian residents increasingly shop online. For example, the number of online purchases made by Citadele's clients has increased by 40% during the first half of this year compared to the same period last year. The number of Latvian residents’ online purchases abroad currently is growing more rapidly than the number of purchases in local online stores. Compared to the first half of 2013, the number of purchases made in foreign online stores has increased by 50%, and only by 4% in local online stores, during the first six months of this year. The average sum spent for purchases in foreign online stores is 47 euros as opposed to the average of 36 euros in local ones.

"The average purchase sum in Latvian online stores increased by 30% during the first half of this year compared to the last year whereas it was smaller by 5% in foreign online stores. This is a positive development," recognizes Mr. Cikmacs. "However Latvian businessmen have a great growth potential in e-commerce if they continue developing online sales."

The right time to launch online business

""You do not exist if you are not online" - this is a statement that can be made regarding websites and other online recognition tools as well as online sales," comments Viesturs Selmanovs-Pless, Executive Director of the Latvian Internet Association.

"Unfortunately, online store penetration in Latvia is still small compared to other European countries. Nevertheless the fact that 32% of the population shop online marks a positive trend. While residents of Latvia actively shop in foreign online stores, the Internet has also great potential for local businessmen who wish to develop and reach out to a larger target audience. This also refers to manufacturers, not only retailers. The question of how to use the web for selling online more efficiently is a more complex one.

According to the data at Citadele Bank's disposal, people wish to purchase public transport tickets or tickets to events, pay for insurance, participation in lotteries and sweepstakes, shop collectively as well as purchase clothing, small items, etc.

Online store Gandrs: a successful example of a store's development

"Launching an online store version of Gandrs was a logical step in the company's development four years ago in order for us to keep up with the modern world and make shopping with us more convenient and faster. This proved to be a wise decision fairly soon, and currently wholesale clients (other online stores) also use our online store as a system for placing orders. The market is still growing, and Gandrs' online business turnover has increased 20% this year compared to the previous year. We are continuously improving our service. Launching, maintenance and development of our online store is still in progress for us, and this is a globally emerging sector therefore one must bear in mind local and foreign competitors.

For example, countries with a larger number of inhabitants are capable of agreeing on better prices with manufacturers whereas the residents of Latvia can shop in Germany-based online stores just like Germans. However we hope that manufacturers will change this policy in the future. The advice that I would like to give to the entrepreneurs who wish to invest in developing their e-businesses is assessing how original their offer is first and to find new market niches. Small online retailers who simply buy a couple of goods from wholesalers do not stand out among a hundred identical online shops and they will not grow into big businesses. You need your unique selling point!" Ansis Klavins, Chairman of the Board of Gandrs, is convinced.