By Albert Khachatryan

Market relations and privatization of state-owned trade outlets in Armenia after the USSR’s collapse formed a new retail trade system in the country. The system comprises both shops and markets trading in agricultural produce and consumer markets or trade fairs.

The number of shops is currently much higher than in the Soviet times. Thus, shops’ share in Armenia’s retail trade turnover constitutes almost 2/3. Specifically, this January-March, shops’ share in the total retail trade turnover reached 60%.

On the other hand, changes in both quality and quantity have been observed in the trade system over recent years. They can bring about radical changes in this sector and related industries.

Big businesses, which formed in the wholesale trade sector (due to the import of consumer goods), started “invading” the retail trade sector. Besides, successful retail traders expanded their activities later. In the course of time relatively small trade outlets evolved into large firms able to import goods for their store chains.

Thus, there occurred a merger of wholesale and retail, with predictable result. Large firms gained an overwhelming advantage.

It should be noted that the share of large retail shops (with more than 30 employees) hardly changed in 2009 as compared with 2005 – 1.1% against 1%. The point is that along with the increasing number of stores (from 72 up to 136 or a 1.9% increase) micro-shops were springing up all over.

The share of micro-shops (with fewer than five employees) in the total number of retail outlets increased from 85.3% up to 90.8%.

However, as regards the scope of activities, the share of micro-shops in the total turnover was only 22.8%.

Quite a number of factors account for this paradox. One of them is: no total control over the thousands of micro-shops is possible with the present level of document circulation considered. So one can only guess at the accuracy of reports.

The fact is, however, that small traders can by no means compete with large ones. With an insignificant share in the total number of shops, the large stores’ share in the trade turnover is quite large.

Specifically, according to the 2009 data, 136 large retail enterprises ensured 52% of the total turnover of all the shops in Armenia. That is the rest 48% were ensured by the 13,042 micro- small- and medium-sized enterprises. In 2005, a somewhat different situation was observed: the largest enterprises ensured 37%, and micro-shops less than 31%.

This information proves the triumphant procession of big business in the country’s economy. The Government’s statements on its support to small and medium-sized businesses hardly produce any results. On the contrary! In the retail trade sector, the number of shops decreased from 13,178 down to 11,438 this January-March.

Transition to civilized trade – development and enlargement of store chains – is a necessary and irreversible process. However, high concentration in the retail sector, as well as in others, may, besides economic, social consequences. With a permanently grave situation in the labor market, the services sector, including the retail sector, offers employment opportunities to dozens of thousands of people.