This article was originally published in Russian by
Binya and Sederek markets, commonly referred to as ‘hustle-bustle markets’ in Azerbaijani, already have trouble deserving the name. Not a trace remains of the crowds of local and out-of-town buyers that used to come here. The majority of the sales booths are now closed, and the rare shops selling primarily cheap Chinese goods complain about a drop in purchasing power, a lack of goods, high rent payments, and the unrelenting weight of taxes.
Trade in these centers began to quiet down at the beginning of the first wave of devaluation in December of 2015. The second sharp fall in the manat’s exchange rate hit the markets with new force. The profitability of retail facilities was seriously in question. The reason for this seems obvious: importers purchase goods in dollars, and a surge in the use of foreign, hard currency necessitates price hikes.
Furthermore, a falling national currency led to a decrease in purchasing power; the population’s devaluated incomes hardly sufficed for primary necessities – food and ever-more-expensive utilities. In a word, growing prices and buyers’ tightening purse-strings are not the most advantageous conditions for growth in trade.
At that time, information appeared in the Azerbaijani mass media about high rent payments as the primary cause of the chill to business at Binya and Sederek, the largest commercial trading centers on the city’s outskirts. Time and again on the pages of the Azerbaijani mass media there appeared tearful complaints from businesspeople about monthly rent payments of three thousand or more manat.
And perhaps this is true, but there is another story here: in talks with Radio Azadliq, many owners of sales booths at these commercial centers spoke no less tearfully of extortion and high taxes.
And yet, despite the outpour of protest from dilligent journalists on the situation in the markets of the Qaradagh district, there is a strange silence reigning over the issue:
“Tax-collectors come to the shop, estimate the value of the goods at a glance, and demand that you pay a thousand manat”, said one clothing vendor. The tax-collectors’ appetites have grown recently, and business has come to a halt. Vendors’ tax payments exceed rent payments multiple times over. And what’s more, in many sales points there is not even a hint of a cash register. 90% of the time in these markets a receipt isn’t issued when the good is payed for,
we were told by the head of the
Free Consumers’ Union, Eyub Huseynov
What’s more, nobody questions the reasons for the high cost of rent, which is leading to the liquidation of these sellers – but would it not be more beneficial for the owners of such commercial trading spots to rent out realestate at a lower rate rather than lose a source of income altogether?
When speaking of their heavy burden, vendors have different things to say. Many owners of sales points spoke of ruthless customs fees. An acquaintance who works as a shuttle-trader bringing women’s clothing to Baku from Turkey was forced to make price hikes in goods not only because of the growth of the dollar but because of large customs payments. In the end, the consumer price of a good includes transport, rent, tax, customs and other expenses. The growing bank debts of shuttle-traders is a separate topic. Many are forced to work to pay off debts. The economic crisis in Russia also took its toll on trade indicators for the largest markets.
“Previously we would sell off the lion’s share of goods to wholesalers from the North Caucasus, primarily from Dagestan. Today they have sharply decreased in number, trade has been reduced”, said a home textiles dealer.
“Clearly our regular buyers are practically absent because of the sanctions and the difficult situation in Russia. Locals are also not buying.”
Sellers’ complaints were corroborated by
Chairman of the
Center for Sustainable Growth Research
“The falling exchange rate of the ruble is accompanied by the small businesses of this border republic losing interest in importing goods from Azerbaijan”, he said.
Aghayev explains the low demand among city dwellers by pointing out that the retail price for many goods at Binya and Sederek are almost no different from those in the capital, and it is burdensome to make the long trip there.
“For retail buyers this is economically disadvantageous. Why go to markets on the outskirts of town for things that you can buy at the same price two steps from your home? You can save on wholesale purchases, and because of this the markets are still popular among the owners of shops in the capital”.
And what do the buyers say?
– The prices at these markets are twice as high as in the center of the capital. I wanted to buy shorts there, but couldn’t find anything for less than 25 manat. I bought some at the mall for 15 manat.
– They buy cheap goods from Turkish factories and sell them for the exorbitant prices of brand shops.
– Goods at Binya and Sederek are more expensive than in the shops in the center of town. I’ve verified this myself on multiple occasions.
– Before, things were cheaper there than in the shops in the center. Today it’s the opposite. I prefer to buy things in malls in the city. There every convenience is provided for this.
A short survey of buyers shows that in the unequal face-off for buyers, the shopping and entertainment centers at the center of town are, without a doubt, winning. That said, it would be hard to say that the prices for business concentrated here is reasonable or cost effective.
But how did it come about that the Binya and Sederek markets, which once enjoyed enormous popularity and were the cheapest of the markets outside town, have come up even with the malls of the capital in terms of prices, thereby becoming entirely unprofitable?
According to expert opinion, ‘competition’ is to blame, but to what extent is this competition legal and clean? This is a topic for separate research and discussion.