Even if Britain’s exit from the European Union has not brought any benefits to businesses, the market remains attractive. Currently, woodworking companies have been at their best for a long time, but experts also see potential for companies in the IT and defense sectors in the future.
“Great Britain is an important market for Latvia, especially for woodworking companies. Our companies consider it their home market and all British buyers also know Latvia. The turnover of Latvian companies in this sector in Great Britain Brittany amounts to several hundred million euros per year,” says the Latvian Investment and Development Agency. The head of the representative office in Great Britain Ivars Zhukovskis.
In the third quarter of 2023, the value of exports of Latvian wood and its products to Great Britain was 425 million euros. “I think that by the end of the year the value of exports of wood products will reach half a billion euros,” he says on the website liaa.gov.lv.
A large country requires large volumes
The experience of the owner and director of the interior salon, Aigaras Zelmenis, shows that the consumer in the British market can afford to pay more for a special experience, good service and a unique product.
On the other hand, I. Zhukovskis points out that in Great Britain the most important thing is often a competitive price and not a unique offer. “Britain is large and many Latvian companies simply cannot produce what this market requires. We are a relatively small economy and our large companies are often like small and medium-sized foreign companies. Therefore, one must understand that Often, for example, it can be simply impossible to supply specific products to the Tesco chain,” he said.
While the UK may seem like an attractive market for food manufacturers, it should also be borne in mind that large retail chains would like to order really large volumes, which not all companies can afford. “I saw Lyma products in the Sainsbury’s chain: for companies of this level it is possible, but for smaller operators it would be a very big challenge,” says I. Zhukovskis.
He points out that each region of Great Britain is a separate market: London, Wales, Northern Ireland, etc. “They are all geographical and cultural regions. Furthermore, Britain is not just British or English. For example, there are many Eastern Europeans in London, including Latvians, Balts, Poles, etc., and there are special shops selling products intended for this target audience. The products of the Canelle pastry shop, for example, have already been available in these stores for a long time, this year Milzu flakes have also been added!,” explains I. Žukovskis.
Commercially mature market
A. Zelmenis recalls that Great Britain is an expensive country in every sense. “When I remember how much we paid to rent the showroom, it makes me feel nauseous. We have done well in terms of sales, but all the profits are eaten up by high salaries, rent and property taxes,” he says.
Furthermore, the UK is a very mature market from a commercial point of view. This affects what goods and services are available on the market.
“Everything there has its own specialization. For example, in Latvia, we install carpets in the factory with our own assembly team, but in Great Britain there is a team that can only transport carpets, and there is another that can move the furniture – each of them has its own insurance coverage, i.e. the company whose representatives transport and lay the carpet does not have to cover in the insurance coverage the costs of the scratched floor, which can occur when moving the furniture,” explains A. Zelmenis.
It deliberately chooses smaller cooperation partners
Great Britain accounts for around 10% of the Latvian garden shed manufacturer’s turnover. The company has previously worked with France, collaborating with large local chain stores.
“Supermarket chains always determine which product and at what price to buy. Therefore, at a certain point we realized that we wanted to work a little differently: with smaller partners whose orders are not so large that the demand exceeds ours ability to satisfy them. it”, says board member Ivars Dričs.
In Great Britain the company works with several smaller clients. Such an approach helps to negotiate more favorable conditions, even just for exchange rate fluctuations. “Even in the UK all our contracts are in euros, so exchange rate fluctuations are at the client’s risk, not ours. It would be impossible to work this way with large partners, because they don’t engage in unnecessary discussions,” he says I. Drić.
The company has been working on this model for more than five years and does not yet see the need to return to collaboration with large wholesalers or chain stores.
“There is a very important nuance in working with large retail chains that makes cooperation quite tense. Namely, they announce a tender. If the company wins, it will deliver the goods even during the tender period. But you don’t never know if you will win “The next supply. Of course, fluctuations also occur when working with small traders, but they are more predictable. Likewise, when we produce for large customers, we can produce specific goods only for them,” explains I. Dričs.
2024-01-13 09:08:00
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