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Vasar: Tallinn quickly becoming a battleground for shopping centres

THIS PUBLICATION HAS 5 COMMENTS
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~knut albers [06.11.2012, 17:16]
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Shopping centers meaning sex tourists. Reply to the comment answer
~more treat [06.11.2012, 19:34]
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"Since the annual volume of one large shopping centre is about 100 million euros, it shows that in one year Tallinn retail market will grow by more than one mall worth of volume. At least for the next few years, there should be plenty of customers and tenants for one to two new shopping centres."

This is totally the wrong way of thinking, and this explains why products in Estonia pretty much always cost more than abroad.

Overall retail revenue is a very poor indicator of the need for a new shopping center. Does anyone in Tallinn complain about a lack of shopping centers? Are there ever long lines to purchase products? Other than a grocery store at the end of the workday, I've never seen lines at any of the shops.

Let's think about what he's saying: if retail trade goes up 100mln/year, then that justifies building a new shopping center.

Here are some reasons why that's wrong:

1. Inflation. Prices go up, and we all know inflation have gone up a lot in the last year. This doesn't increase the number of customers in a mall, so why build a new one?

2. Retail sales doesn't reflect number of customers in a mall. For example, cars are an expensive purchase. At one of the malls mentioned in the article (Tahesaju City), they have two car dealerships as part of the shopping center: http://www.tahesaju.ee/et/kauplused

so.. by that logic, just get a car dealer as a tenant in your shopping center, and that boosts retail revenue by a huge number, and now it's time to open a new mall!

3. The retail trade numbers are up slightly this year, but this is not accounting for the big decline in the previous years. So when retail sales went down by more than 100mln, did they start closing down shopping centers? I don't think so. Based on official statistics on retail trade (TA0201: RETAIL SALES by Economic activity (EMTAK 2008), Year and Month), there were higher retail sales in 2008 than in most months of 2012, despite all the inflation. So retail sales are more or less back to where they were in 2008, so why build more shopping centers than there were in 2008? Those centers seemed to be able to handle the volume of customers, with the same amount of retail sales.


So the result of building too many shopping centers is the shops have too many overhead (fixed) costs, and not enough revenue to cover it. As a result, they raise prices, and the Estonian consumer loses. Reply to the comment answer
~ameeriklane [06.11.2012, 22:39]
Well, big mouthed Vasa can still invest into Dongguan's the New South China Mall:

http://en.wikipedia.org/wiki/New_South_China_Mall

If he is able to fill 2303 empty stores there, then he's welcomed back to Estonia selling new fairy tales to us :)
~knut albers [07.11.2012, 18:04]
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Competition is good, but a battle of shopping centers with over-building will result in a lot of large, empty buildings that have difficulty finding tenants. My home country is full of such places. Reply to the comment answer
~Chuck [28.01.2013, 08:51]
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