A building is a durable structure whose cost does not make up a significant portion of a retailer's business plan, Rohtla said. While Rohtla granted that in some more densely populated centers, where several outlets at a single intersection might be seen, this number could be cut back somewhat, since there are around 700 grocery stores nationwide in Estonia, closing a few wouldn't change the overall picture in any case.

"I can state here that this glut of retail space does not relate to grocery stores," he went on, putting the figure of surplus outlets at barely a dozen across the country.

Estonia's population is fairly dispersed, and once Tallinn and Tartu, and a handful of other more populous areas are excluded, it is notably sparsely populated: For instance, Lääneranna municipality has a population density of just 3.7 people per square kilometer and even Viljandi municipality is only at around 10 per square kilometer.

At the same time, people in more rural, outlying or sparsely populated parts of the country require supermarket services too.

Coop is building a new 500-square-meter store in Värska, Võru County, the main center of the Setomaa municipality, with 2,756 inhabitants (six per square kilometer), which will replace the current 147-square-meter outlet.

"Should we then say this shouldn't be done? That there's so much retail space in Estonia and from a regional policy perspective, we will tell Värska residents to keep doing their shopping in a tiny store where their needs aren't getting adequately met, where they can't find sufficient goods?" Rohtla asked rhetorically. "I think we can't do that – we must ensure a normal living environment for people outside attraction centers too. That is one part of retail."

At the opposite end of the scale, Keila municipality, just outside Tallinn, has a density of nearly a thousand per square kilometer, and, consequently, more stores, he noted. The prime minister specifically referenced Keila as having too much existing retail space, with more on the way.

In Finland, Rohtla went on, two major chains have 80 percent of the market divided between them at a profitability margin of 5–6 percent, compared with a figure of less than 2 percent for local Estonian chains. This means the argument that there is competition in the Estonian sector holds, he argued.

The prime minister had said on Thursday, in the context of a petition calling for a cutting of the VAT rate on food passing 80,000 signatures, that while price rises are an understandable concern, the problem lies in the retail square meterage in Estonia, which per capita is higher than elsewhere.

Rohtla said however this was comparing apples and oranges. Going back to the Keila example, the population in that town has remained relatively static at around 10,000 people over the past six or seven years, but surrounding municipalities have seen population growth rates of 30–40 percent over the same time frame, meaning it still attracts shoppers, though some of the supermarkets there including those operated by Coop's competitors are quite modest in size.

"Rimi was mentioned," in the context of Keila, Rohtla said. "There is a mini-Rimi there today, meaning a very small store, a convenience store. If we consider Maxima – yes, it's a single-X Maxima, which is the smallest type of store," he went on. "Selver has a larger space there, while the same Rõõmu department store that the Prime Minister highlighted is a historical building, a department store which has always been there – and it is outside of Keila."

This makes the new Maksimarket Coop is building in cooperation with a developer in the new Keila center the first of its kind coming to Keila, Rohtla said, adding it will also have a cinema and other stores and service providers at the one location.

Another claim which has been made, that retailer markups are ahead of the VAT hike curve, is untrue, Rohtla went on, adding the reverse is the case.

A rise in purchase of discounted, often nearing expiry date products, "means the overall margin drops. So the narrative being pushed that retailer margins have grown is false," he said.

As for the claim that in some countries which put a lower VAT rate on food still have higher prices than seen in Estonia, Rohtla suggested looking at those countries' living standards, notably Finland, where food prices are currently similar to those in Estonia but average earnings and standards of living are higher.

"If Finland's food VAT were 24 percent instead of 14 percent, food would be 10 percent more expensive there. That comparison is not appropriate in this context," he said.

Even making comparisons between the more similar Estonia and Latvia is often not appropriate, he argued, as, for instance, in the case of individual fruit and vegetables, there is a wide range of varieties and countries of origin.

He also said a policy of shortening store opening hours as recently made by the CEO of Rimi would not work in Coop's case.

The main cost in a store isn't the cashier, but everything else related to keeping the store operational, he said.

"The largest cost item in the store is actually energy /.../ We can't turn off the deep freezers or chilled meat and dairy display cases," he noted.

Time will tell whether the government will ultimately reduce VAT on food, Rohtla concluded. In the meantime, the sector is constantly trying out solutions to achieve efficiency, such as automatic product ordering and smart programs, which could help to reduce write-offs.

An overall VAT rate of 24 percent, up from 22 percent, came into effect in Estonia a month ago.

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