 Georgian Retail Group is continuing its expansion on the Georgian market and intends to open new stores not only inTbilisiMall but on Pekini and Agmashenebeli Streets as well. The most popular brands Zara and Massimo Dutti will be replicated on Rustaveli Avenue at the end of February as they are seeing extremely good numbers in sales. Global retailers Burberry and Escada are also coming to Georgia in the coming weeks.
“Tbilisi Mall was the first location for our stores in Georgia, but that was not enough to set up business. So we were looking at alternative areas to grow in,” Panagiotis Dimitroulopoulos told The FINANCIAL. “Areas like Pekini have a lot of new brands coming in. We are developing Aghmashenebeli Street into a main retail street. So there is a lot of investment from our side. InTbilisiMall we already have 33 brands spread out over 14,000 sq.m. We have another 3-4 brands coming in, which will be opened at the end of February. The new ones are two children’s brands, one from Portugal, one from France and an Italian brand called Primadonna. As for Aghmashenebeli Street, we will have a second New Look from the UK there. Because of their good indicators in sales, accessories’ stores that are operating in the Mall will be opened on Aghmashenebeli Street as well. As for expanding to Batumi or Kutaisi we are waiting for investors to open small malls there first, not as big as inTbilisinecessarily, but then we will definitely enter there,” he added.
“I have heard that some brands are already arriving. Burberry will be opening here on Freedom Square fairly soon. I know that Escada is coming toTbilisiMall. At this stage it is slightly less expensive brands that are coming generally, which is really good for the market,” Dimitroulopoulos said.
About 15,000 to 20,000 people shop at the Mall during weekdays, according to Georgian Retail Group. That goes up almost three times at the weekend.TbilisiMall has a steady flow of people coming from Russia, Armenia, Azerbaijan and Turkey as Georgia is the cheapest country in the region in terms of prices. “People come to Georgia to shop at the weekends because the prices here are lower. This is a big advantage for Georgia. As Georgia does not have import taxes the prices here are accordingly lower. Azerbaijan, Armenia and Kazakhstan have high import taxes. The prices are set in Spain and we cannot even touch them. The first day of sales inTbilisiMall was one of the highest ever done for our company worldwide. It was a record day for Zara. Some people were queuing for up to an hour at the tills just to pay!” Dimitroulopoulos said.
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LLC Retail Group Georgia was established in Georgia in 2011. The company brought to the Georgian market brands that had never before existed here, among them: Zara, Massimo Dutti, Aldo, Banana Republic, Gap, New Yorker.
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Q. Could you please summarize your experience on the Georgian market as a retail group and discuss the development of the retail segment in the country?
A. Two years ago I would say that the real estate market was in a very, very bad condition. People, and especially individual owners, had no experience of dealing with brands and big companies. Nothing was set and there were no normal European standards on the market. When we first came here even negotiations with partners were difficult for us. Negotiations with owners on opening our first two stores took six months before they understood what we were trying to tell them.
Since we finished the first two contracts it became easier because Georgia is a small marketplace and thereafter people easily started understanding us. Suddenly the market opened up. People came and they were already prepared to discuss twenty years of contracts; to discuss increases in rent after three or four years on European standard rates. They became willing to discuss issues that they had previously not even been able to understand.
Compared to past years there has been so much development in the market. I do not consider our starting activities here to have been risky. It was just difficult, because the mentality was not there, just a lack of understanding of European standards. Retail was not developed at all. We knew that people used to shop online or travel to other countries to shop. Basically we knew that we could attract all these people in Georgia by offering the same product, the same prices, the same quality. We had no concerns whatsoever about the financial situation in the country.
Q. As for the environment for doing business in the country, did you encounter difficulties in this regard as well?
A. This is the easiest country in the CIS to operate in. I would say that it is much easier operating here than even in many European countries. Usually, to set up a company in any other European country it takes more than a month; two months until you get all your paperwork together to get through the process. In contrast, it is possible to establish a company here in just a few hours. The first stage, which is usually difficult in other countries, is extremely easy in this country. The second thing, the tax code, is a little bit difficult, especially when a contract is needed for doing anything. This takes a lot of time and energy. But it is very clear how to operate; there are no hidden things that we do not know about. If you operate properly you know exactly how you will be treated by the tax code.
Creating a company and opening stores quickly and without hassle; moving your stock around from brands into the country is very easy. The customs’ operations are extremely efficient and very fast. Compared to other countries in the region where it takes a week to ten days to import anything, in this country it takes only about five hours. This is amazing for a company like ours. Especially with Inditex brands like Zara, which depend on speed for the constant moving of goods. These points prove that it is easy to operate in Georgia.
Q. After explaining the problems of the Georgian retail market, what do you think is necessary for its further development?
A. Nothing significant. It is a matter of developing and rehabilitating real estate. IfTbilisiMall were not built it would be very difficult for any kind of company to come in. Retail would be very widely spread and would be difficult to keep the image of what other European countries have. These countries have big city centres where people can move around with ease. Here you cannot do that because the real estate simply does not exist here.TbilisiMall was a big break through, which encouraged us to come in and open up. Besides that we are trying to grow in other areas as well, we know that other companies are planning to enter here. A lot of investments are coming for new malls.
A Mall should be a destination. When a customer goes there he/she should have access to everything: supermarket, fashion, food and entertainment.TbilisiMall is still under development. I think in another six months we will see bigger potential. By the end of the summer period, when the cinema will be opened there and kids’ entertainment facilities will be added thenTbilisiMall will become an established destination.
Q. How is Georgia’s image and awareness increasing worldwide? What is the attitude toward the country from your partner investors worldwide?
A. The first concern when we decided to come here was that everybody knew it as a soviet-type economy. Once we started talking to brands to bring them into Georgia we had a lot of resistance. They were saying that Georgia has just surfaced from a period of war. They said that Georgia was invaded four years ago by Russia; that it was a very risky country to enter, because relations with Russia were still not good. Since they started coming to the country to understand the market however, they have changed their opinion 100 percent. Yes, the market was not developed and the retail market especially was very far behind but as a country, as people, they immediately realized that this market has a lot of potential. The permissions from them came very easily after that for us to open. We operate with brands from all developed countries - Italy, France, Spain, the UK, USA. Finally, I can say that the image of Georgia is really improving abroad based on our cooperation with the above-mentioned countries.
Q. You have mentioned three main locations to shop inTbilisi-TbilisiMall, Pekini and Agmashenebeli Streets. Can you compare the popularity of these three places?
A. Our experience in the Mall was that as of September when Carrefour opened and busses started taking passengers there the number of our customers increased. Before then it was a big problem. 60 percent of our sales were done at the weekend. Up to 5-6 o’clock there was no traffic at all. After 6:00 there was some traffic. Now the new developments in the Mall have led to increased numbers of shoppers there. Their number has actually tripled.
At the beginning whenTbilisiMall was first opened it attracted customers who really wanted to see what the Mall looked like in reality, because we were offering brands that had not ever been in Georgia. When they realised the difficulty in access to, and lack of stores at, the Mall their number decreased.
Pekini and Agmashenebeli Streets are different locations. There is real traffic there as people walk there or work at offices near these streets. Basically stores there are able to catch passersby. We opened the first store, Clarks, on Agmashenebeli Street two weeks ago and immediately saw a difference in daily trading. During the weekdays this store does better than the Mall. At the weekend we are opening another store, Aldo, followed by Blanco at the end of December.
Source: www.Finchanel.com |
December 03, 2012
