First of all, consumers during pandemics got used to visiting grocery outlets less often, which in turn will impact the traffic in pharmacies. This, however, does not necessarily mean lower total turnover, but rather an increase in average basket size. With each customer interaction becoming more valuable, pharmacists' commercial skills and ability to offer high-quality consultation is a key. We already working on improving the quality of consultations in BENU pharmacies. During the coming year, we would like to focus even more on the collaboration with Suppliers on enhancing pharmacist’s products knowledge via Tamro E-learning platform.
Secondly, e-commerce and omni-channel experience has become a standard in the Baltics well-developed retail market. Over 30% of grocery customers in Baltics have ordered their groceries online. At that, consumer of drug categories prefers mostly food supplements, cosmetics and hygiene products as online purchase. Most critical factors of online purchase are the ease of navigation and speed and quality of delivery.
In 2022, due to recent pandemics, high inflation and war in Ukraine, consumers have become more restricted in their spending. Lithuania- 73%, Latvia - 63%, Estonia – 71% of consumers are changing their shopping habits with the aim to save. Most often consumers are buying campaign items to save (Estonia 79%, Latvia 86% and Lithuania 84% of consumers). Furthermore, on average 74% of consumers buy only the most necessary products and 52% Estonia, 66% Latvia and 58% Lithuania consumers are switching to cheaper brands. The facts prove the ever-increasing importance of campaigns during 2023 and an opportunity for retailers to expand white and private label alternatives as more affordable options.
According to the estimates of research and financial institutions, an even greater focus on consumer activation (campaigns, secondary placements, communication etc.) and competition is expected in 2023, which applies to both online and brick-and-mortar channels (physical stores and pharmacies). While inflation is continuously increasing prices of both media buying and pharmacy costs per m2, consumer activation will become more expensive. For services, where the input prices have increased significantly, the pressure of price increase is considerable, leaving retailers no chance of keeping the prices at the current level. BENU chain is not an exception in this case – prices of marketing services, where costs have grown, will need to be revised for the upcoming year. On average, depending on the market situation, a 5-10% increase is expected.
Last but not least, in FMCG novelties are the biggest contributor of growth in front of price increases. People in the Baltics tend to like new products and new launches are always welcomed by Tamro Baltics.