“Consumers’ willingness to buy has not disappeared, but we increasingly see that purchasing decisions are no longer made so lightly. People are more price-sensitive and are looking for ways to afford consumer electronics,” said Kaire Koik, Member of the Management Board at Klick Eesti.
According to her, laptops, mobile phones, and their accessories are the most purchased products. “These are essential everyday tools, not luxury goods. When a previous device stops working, buying a new one cannot be postponed for long,” Koik added. At the same time, she noted that the electronics sector has not been able to implement the same level of price increases as some other industries.
Koik is also concerned about cross-border trade, which inevitably affects the purchasing behaviour of Estonian consumers. “As people become increasingly price-sensitive, they are more likely to look for similar products abroad. The downside of retail in a small country is that not all products can be brought here, because the volumes are too small to make it worthwhile,” she explained.
Although the economic situation and consumer uncertainty are causing concern for retailers, Koik said they are still trying to remain optimistic. “We trust our consumers and try to find ways to support them so they can make necessary purchases. For example, we offer a wider range of payment solutions that help spread out purchases over time,” Koik explained.
Repayment periods are getting shorter
According to the head of Klick Eesti, financing is used fairly often when purchasing consumer electronics. “Consumers increasingly prefer financing solutions with shorter repayment periods. We see that the use of traditional instalment plans has declined over time. At the same time, banks have introduced various credit cards with interest rates often comparable to instalment payments, as well as ‘buy now, pay later’ solutions,” said Koik.
Hanno Ladvas, Head of Inbank Estonia, confirmed that consumers are showing greater interest in shorter-term payment options. “Estonian consumers are rather conservative and carefully consider every purchase. This is also confirmed by our latest consumer survey, which showed that 85% of respondents consider financing already at the purchase planning stage, while only 10% decide in favour of instalment payments at the checkout,” said Ladvas.
According to him, managing the family budget and maintaining balanced monthly expenses have also become increasingly important. “The spread of financial literacy has made people more aware; more people are investing and saving. It is logical that this also affects everyday consumption, and people increasingly think about whether unexpected expenses should be covered from savings or with the help of a smart payment solution,” Ladvas explained. He added that financial service providers are also contributing by bringing new solutions to the market that support more conscious budgeting.
For example, one of the fastest-growing consumer financing solutions is “buy now, pay later”, the use of which has increased by nearly 50% over the past year according to Inbank data. “For example, it allows consumers to split a purchase into several equal payments without additional fees. If someone buys a phone costing €700, the consumer faces the question of whether to pay the full amount immediately or divide it over three months, meaning either paying €700 at once or about €233 per month. If desired, the purchase can also be split over six months without additional fees, making the monthly payment even smaller,” Ladvas explained.
The market demands a diverse range of options
The Member of the Management Board of Klick Eesti added that they have also introduced this payment solution to their offering in order to provide consumers with more options and meet market demand. “Retailers who do not offer modern solutions today risk losing customers. In the current already difficult situation, this is a very significant risk. If there are opportunities to reduce that risk, they should be used,” said Koik.
Ladvas agreed. “The overall economic situation and low consumer confidence are forcing people to consider financial obligations more carefully and also think about how to protect themselves against unexpected situations,” he said. For example, there is growing interest in payment protection insurance, which helps in situations where a financial obligation has been taken on but income is temporarily or permanently interrupted. Inbank’s experience shows that nearly half of payment protection insurance contracts are concluded for consumer loans and the other half for instalment financing.
