Consumers in Latvia
In general, Latvian consumers are typical consumers of a developed country: used to having a choice, especially concerning everyday and household goods, actively make use of international stores, have a somewhat negative attitude towards low-end products even though they are cheap (with some exceptions), are used to international brands.
Pricing
Although Latvia is a developed economy, it is still somewhat behind other EU member-states in terms of wages, and the prices reflect that. Latvian consumers are used to approximately the following prices:
- 5 - 15 EUR/kg for food items
- 200 EUR + around 100 for utilities/month for renting out a middle-class apartment
- 50 - 200 EUR for smaller electronic appliances (microwaves, clothes irons)
- 300 - 2000 EUR for bigger electronic appliances (TVs, computers)
- 10 - 70 EUR per article for non-elite clothes
- 15 - 70 EUR for entertainment such as restaurants, theatres and bigger concerts
It should be noted that the data are shown for the capital city of Riga. Prices in other cities may be significantly lower (up to 50% - 60%), especially in the real estate sector. Also, the prices indicated mainly depict the situation in major shops and shopping malls. Smaller stores and markets, especially in smaller cities, can provide a significant competition in terms of prices. If you require a complete and detailed analysis of a certain city for the purposes of market entry, please, do not hesitate to contact us.
Customer behaviour
Latvian customer behaviour or the culture of purchasing is distinguished by the following characteristics. Using the information provided by 'Euromonitor International', it can be said that Latvian customers can be roughly divided into the following segments, based on their consumption habits:
- Children
- Teenagers
- Young adults
- Middle youth
- Mid-lifers
- Seniors
Children
While children as a customer group are not a real target audience (their parents are), they define a separate group of purchasing behaviour trends. The main vector of development is that parents, seeking a healthier nutrition choices for their kids, switch to home cooking, as they deem school meals and baby food sold in shops not healthy or qualitative enough. This opens up possibilities for the marketing of 'kid-friendly' food that can be used to make both baby food and home-prepared meals for children to take to school.
However, this trend has also been noticed by schools themselves, and a number of improvements have taken place since 2014. Right now (2016), local municipalities strive to make school meals even better, which is why the trend of preparing lunches at home is not a stable tendency, and it is difficult to predict, whether it will stay for long. The tendency for home-prepared baby food, though, seems to be stable, and the number of food articles that promote themselves as 'kid-friendly' has also increased in recent years.
Teenagers
As is the case in other developed countries, Latvian teenagers as a customer group are active users of mobile devices such as smartphones. Moreover, smartphones are the main entertainment platform for this group, which makes Latvian teenagers the priority target audience for mobile gaming industry. This trend is also valid for the search of information and business management, but, understandably, for borderline teenagers (age 17-18, almost in the category of young adults), of whom many already try to engage in business and working in general. Again, this tendency is also present in many other EU member-states, where the use of mobile devices is booming.
Another notable event is that starting from June 1st 2016 the sale of energy drinks to persons under the age of 18 is prohibited. Until then, energy drinks have been popular with teenagers, but now, because of the ban, the popularity is decreasing. Aside from the fact that now it is prohibited to sell the drinks to the underaged, it is possible that the ban will also affect young adults, who will not develop a taste for energy drinks. The advertisement possibilities are now also regulated heavily, and the marketing of energy drinks is limited in media, whose target audience are teenagers. It could be said, that the sale of energy drinks in Latvia is now a less lucrative business, especially in the long term.
Young adults
Latvian young adults (approx. 18 to 25 years old) as a customer group have increased their attention to online shopping in the recent years. For many, online shopping has become a primary choice, i.e. before searching for products in local shops young adults search for them in foreign online stores, such as Amazon, eBay and specialised online retailers. Even if it is domestic products they seek, young adults tend to use sites rather than physical shops to make purchases. This makes online presence a vital part of any business in Latvia.
Middle youth
Latvian middle youth (approx. 25 to 35 years old) is a customer group that is prone to changing their lifestyle in search for better job opportunities. By this age, a typical Latvian middle youth representative has already acquired a number of different professional skills (often in different industries), and they wish to use them to increase their earnings. This is caused by the fact that many already start thinking about retiring someday in the future, which motivates these customers to either increase savings or invest in voluntary pension plans. This is further facilitated by the fact that many have their own children by this age.
These factors make the customer group interested in long term investments, including purchasing products that last a long time. This includes electronic appliances, cars, consumer electronics and digital products. They are also likely to invest in start-ups and similar projects, but only if they truly deem it worthy, as Latvian audience in general is less familiar with the concept of 'start-up' than in the USA or in the other EU member-states.
Mid-lifers
A recent trend among the Latvian mid-lifers as a customer group is active traveling, both domestic and foreign. Accumulated savings allow these customers to invest in tourism, making them a major target audience for the industry. This is further facilitated by the fact that their children are already old enough to not require constant care. This tendency includes not only personal travels, but also family tourism, which is why family-oriented travel offers are also in demand.
Another trend (which is also present in seniors, although to a lesser extent) is an increased online presence of mid-lifers. While still limited comparing to a younger audience, concepts like social media, online shopping and online entertainment are not alien to Latvian mid-lifers. It should be noted that in many cases the young adults and middle youth act as mediators between the mid-lifers and the internet, providing advice and guiding online purchases. This involvement should be taken into consideration for the purposes of marketing.
Seniors
Seniors as a customer group are probably the least likely buyers in the majority of industries in Latvia. Due to the fact that Latvian seniors' active years were in the time of the Soviet Union, many of them were unable to adapt to the economic changes brought by the dissolution of the country. This, in turn, negatively influenced their current economic capabilities.
There still are, however, industries, where seniors are valid potential customers and a major target audience. Mostly these are healthcare-related industries, such as pharmacies or opticians. Another tendency is an increased presence in the internet, mainly in social media. This is still a rare occurrence, but the tendency is steadily increasing, so it might be expected that in 10 - 15 years Latvian seniors could be viewed as mildly-potential customers for digital products (mainly due to the shift of generations). As of now (2016), seniors are still passive users of the internet, if users at all.
General behaviour
The general behaviour of Latvian customers is somewhat bipolar. On the one hand, consumers express optimistic thoughts about their financial future. Although not in all the industries, but wages are generally rising. There are also plenty of opportunities to earn well, particularly in highly-demanded industries, such as
On the other hand, many Latvian customers are unsure about their ability to save for the future, especially concerning their senior years. State pensions are currently (2016) an unreliable source of income and are not viewed as as something to rely upon. Meanwhile, personal savings are difficult to invest into, particularly for young adults, middle youth and mid-lifers, who, as discussed earlier, are interested in spending money on devices, traveling and other personal entertainment.
As for the demand for products, the situation is somewhat clearer. Latvian customers are increasingly interested in online shopping, both from domestic and foreign stores, including international platforms such as eBay and Amazon. Internet is a primary method of searching for a desired product, and a qualified local digital support company is a must-have partner for any business who seeks to enter Latvian market.
Another tendency is an increased demand for locally produced goods, especially those that somehow reflect Latvian traditional culture. This concerns all sorts of products, from food to decorative items, which local manufacturers often stylize as handmade goods and/or goods produced from natural materials. Notably, it is not necessary that these products are actually handmade or made out of natural materials (unless they are advertised as such, false advertising is, obviously, prohibited), it is important that they feel and look like they are.
Customer analysis
It should be noted, the the information provided here is a generalization of observable trends, which may change across specific industries and local communities. If your business requires a detailed analysis in a particular market segment for the purposes of market entry, please do not hesitate to contact us.
