Finland’s shopping tourism hit as Russians stay at home

The average Russian tourist now spends about €150 (£118), representing a fall of about 40%

Click to follow
The Independent Online

Nestled in the south-east corner of Finland is a pristine region dotted with lakes and pines that is the eurozone’s first point of call for many Russian shoppers.

It is here in the town of Lappeenranta, 200km from St Petersburg, where the weaker rouble and a sanctions dispute between the European Union and Russia is taking an especially big bite out of the local economy.

The town of 70,000 has been booming with tourists from the east in the two decades since the iron curtain came down but now it is struggling. Purveyors of luxury goods such as handbags and designer shoes are closing their doors; business is down even for the fishmongers and shops selling inexpensive fashion.

“People used to come from Russia to buy fur coats, now they buy food,” said Ville Maunula, who runs Safar, a company specialising in processing tax-free refunds and foreign exchange for tourists. He’s cut the hours for some of his staff because of a revenue drop that he says is “clearly connected to the collapse of the rouble”.

 

The average Russian tourist now spends about €150 (£118) when visiting the area, representing a fall of about 40 per cent from the peak of the economic boom, said Mika Peltonen, head of the local chamber of commerce.

A slowdown in Russia, with the rouble down 16 per cent this year, is hurting purchasing power for the middle class and hampering tourism. The economic impact has worsened since Russia’s annexation of Crimea in March and the ensuing crisis in eastern Ukraine and trade sanctions. No euro nation is more reliant on trade with Russia than Finland, which has the longest border with the country of any of the 27 EU members.

“One of the things that companies in this area follow daily is the rouble rate,” said Mr Peltonen. The current exchange rate of 52 roubles to the euro has passed what he calls the 50-rouble “pain threshold for Russians”.

At the Galleria shopping centre in the heart of the city, a resounding male voice on the loudspeaker touts winter fashions in Russian while a few shoppers roam the aisles. Two clothing shops are closing this year, said Sari Mustapaeae, who runs the centre. That’s a first for the seven-year-old mall, where customer numbers are down about 10 per cent. “Russians buy less,” she said. And when they do “they consider purchases more carefully”.

The border areas between the two nations have a trading history going back hundreds of years, with products such as animal pelts, textiles, wood products and butter helping build an economic relationship. St Petersburg residents started flocking west in the 1990s, passing a million annually in 2000. Lappeenranta decided then to make a conscious effort to lure the five million inhabitants of Russia’s second-biggest city.

Most cars parked outside Disas Fish near the border have Russian number plates. Alex Zezulin, 27, said he drives across the border twice a month to buy fish, taking as much as 3kg back to St Petersburg. “I’m not talking about huge containers,” he said, while looking at displays of smoked salmon, halibut, roe and caviar. “The prices for fish are good.”

It is consumers like Mr Zezulin the town is banking on to get through the downturn, while hoping that the hordes of big spenders start coming back at some point.

Kimmo Jarva, the town’s mayor, was optimistic. “The potential purchasing power in Russia is vast,” he said. “Growth is inevitable for us. There’s always a recovery.”

©Bloomberg

Comments