What determines which grocery store people choose for their shopping? Studies confirm what retailers have observed: the most important factor is a store's convenient location. If a shop on one side of a busy intersection performs well, the one across the street often does not. As the head of Rimi put it, people are unlikely to turn left into a grocery store [if they can turn right] on their way home.

"It's already quite common for customers to buy the items in their shopping basket from three or four different chains. There are fewer and fewer consumers who are loyal to just one chain," said Rimi CEO Kristel Mets.

Large retail chains must highlight their strengths to attract customers. Selver, for example, says it offers the widest product selection. Rimi considers its strength to be its affordable private-label products. Meanwhile, Meie Toidukaubad stores are small community shops where customers can quickly pick up daily essentials without having to walk through aisles stretching for kilometers.

"We sell the most Estonian food among retail chains in Estonia. Products from local producers worth more than €1.5 million are sold every day at Coop Estonia — local flavors and products from local kitchens alike," said chairman of the management board Rainer Rohtla.

"In addition, private-label products are exceptionally strong at Rimi and make up a large share compared to competitors. More than 20 percent of our assortment consists of our own brands," Mets added.

"We, too, primarily focus on customers who want a broad range of choices and for whom price is not the main criterion when selecting a store," said Selver's head of business accounting, Kristjan Anderson.

"The defining feature of a community store is that it is not just a place to shop, but also a place where people meet, exchange news, chat with neighbors and socialize. The advantage is that everything is close at hand," said Tarmu Kurm, adviser to Meie Toidukaubad.

All chains strive daily to attract customers and offer competitive prices while still remaining profitable.

"We have a very lean administrative structure. We don't have complicated processes and, for example, don't use a customer loyalty card system. All our customers are 'gold customers.' We also operate on premises we own, which means we don't have to pay high rents," Kurm said.

"We aim to make all operations more efficient — from getting goods from suppliers to stores, to minimizing waste and optimizing inventory levels. This includes digital solutions and automated ordering systems," Coop's Rohtla said.

But if efficiency becomes the priority, might Estonia actually need fewer grocery stores?

"I think there could perhaps be one fewer retail chain. As for the number of stores, I don't think there are too many. I've said before that at some intersections in some cities there might be one too many, but reducing the total number by, say, ten stores would not be decisive nationwide," Rohtla said.

Other retailers echo the same sentiment, noting that the public may have a somewhat skewed impression that the number of stores is constantly growing, since new openings are reported in the news while closures are not. In reality, Selver closed a store in Maardu last year, as well as Punane Selver in Tallinn two years ago and WOW Selver on Saaremaa. Rimi closed a mini-store on Akadeemia tee in Tallinn and another in Võru last year. Coop will close its Koluvere store and the Saikla shop on Saaremaa starting May 1.

Retailers do not expect any chains — aside from Prisma — to exit the Estonian market in the near future, although smaller shifts are taking place.

"At the moment, there are no signs that any retail company or grocery chain is preparing to pack up and leave. Instead, we see growth and development across the sector," Mets said.

"Prisma has indeed been operating at a small loss in recent years. Another major loss-maker is Lidl. How Lidl will manage to turn tens of millions in annual losses into profit — I can't say where they'll find that magic solution, but I wish them well in that effort," Rohtla said.

"In reality, everyone is evaluating the performance of their stores and I believe that within the next five to ten years, a significant number of stores will be closed. A double-digit number of stores will certainly be shut down already in the coming years," Anderson said.

"At the same time, in other places, people feel a strong lack of stores. As representatives of a small retail chain, we can say that we are constantly approached by small, charming places across Estonia, asking us to come and open a store," Kurm added.

Retailers also see that the era of very large stores is coming to an end.

"Hypermarkets are becoming increasingly difficult to maintain and operate, mainly because customers now prefer to buy industrial goods elsewhere. A large share is ordered online. Hypermarkets no longer fulfill their former role," Mets said.

"Looking at the market as a whole, the era of very large stores may be over. For customers, stores of about 1,500 to 2,500 square meters are likely the most convenient," Anderson said.

The most profitable stores continue to be located in the capital, in Harju County and in other major hubs where there may even seem to be too many. However, retailers warn that when closures are decided based on financial performance, rural areas tend to lose out, as lower population density makes stores there less profitable.

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