The FINANCIAL - Georgian Supermarkets Focus on Retail Market

Georgian Supermarkets Focus on Retail Market

Georgian Supermarkets Focus on Retail Market

The FINANCIAL -- Goodwill, the first hyper market in Tbilisi, is launching the production of its own sausages. Branded products will be put into sales in December 2007, company representatives said. The hyper market plans to expand in the retail market and to open new shops in Tbilisi which will be united under the Goodwill brand. By the beginning of 2008, the Goodwill market will open a new retail supermarket at Pixel 34, the occupied area is 2, 200 sq/m.

goodwill-2.jpgOn September 26, 2007, the first Populi retail network of grocery and household products in Georgia extended an XL shop in the Gldani district with 1, 000 sq/m. By the end of October an additional market will be opened in Gori and the market will occupy 1, 400 sq/m. “The major purpose of the multi-format service is to efficiently satisfy the diverse customer preferences,” Lika Mikautadze, Populi PR manager declared to The FINANCIAL.


Last week Populi announced that the average figure of monthly turnover of JSC Populi in the first half of 2007 reached GEL 2 353 000 which is 2,5 times more compared to the previous year. Total income in the first half of 2007 equals GEL 14 654 000. The increase compared to 2006 is 145%. Fixed assets from the 2006, December figures - GEL 9 160 000, reached GEL 11 682 000 by July 1, 2007. The number of 400 employees doubled from December 2006 till July 2007, reaching 880.


According to Nugzar Magularia, General Director of Goodwill Hyper Market, retail network markets are not direct competitors of Goodwill Hyper Market, situated in the Digomi district. “We are oriented mostly on Sunday trading, what’s more the system of the hyper market is far more attractive compared to supermarkets, as this type of market can offer a wide choice of products to customers, and is profitable for the clients as well as for the market,” Magularia told The FINANCIAL.


According to Lado Gurgenidze, Director of Supermarket Continental, the market was opened in 2002 but the problems were less than they are today, as the market was not overloaded by these types of shops.


“In 2002, Supermarket Continental did not have many competitors on the market. The only competitor was Big Ben. The company is trying to preserve low prices at the market, as competition has grown. Today Continental’s rivals are not only retail shop nets, but each and every small market. The company always studies current prices in the district and therefore the market has suitable values similar to the other markets. Populi is not Continental’s competitor as competition means being in the same position. Populi supermarkets are spread throughout the town and this means that these markets are not in the same position,” Gurgenidze declared.

According to Magularia, the attractiveness of Goodwill is its price politics.


“Goodwill is a hyper market which is oriented on average as well as above-average income customers. The prices are acceptable for everyone, as the company only trades with quality products, as well as brand exclusive products. The prices of famous brand products are high, while the company offers less exclusive products at lower prices. For instance Goodwill trades with 45 sorts of coffee, the prices ranging from GEL 2 to 45. The company is trying to preserve low prices on mass-requested goods,” Magularia declared.


According to Mikautadze, Populi is the only market to have the lowest prices on one product, which is specially chosen by the market.


“It is a special project of Populi market to attract customers’ attention, besides, the market has a wide choice of products and therefore the client will always be content by visiting a Populi shop,” Mikautadze said.


“Goodwill is able to offer 250 ready-made sorts of dishes to its customers. It must be mentioned that confectionary is developing in a European direction and Goodwill’s bakers use Puratos technology in baking, traditional Georgian foods are also prepared in the market’s kitchen. Goodwill has its own confectionary with high class backers and cooks. Goodwill is equipped with excellent baking apparatus imported directly from Germany,” Magularia said.

“Continental has a wide choice of ready-made dishes, however the market does not produce its own confectionary as we do not yet have the suitable technology and therefore receive excellent already-made products from producers,” Gurgenidze declared. 


According to Magularia, to launch a hyper market business great investments are needed. Besides the founders capital additional sources are also required.


“Goodwill cooperates with TBC Bank and EBRD (European Bank for Reconstruction and Development). USD 15 million has been invested in new Goodwill construction and USD 10 million was invested in the existing Goodwill hyper market,” Magularia said.


“Solid investments are necessary for launching this business and the starting amount of money for this business is GEL 500 thousand. For bigger projects a businessman has to find Georgian or foreign partners. Commercial areas are very expensive today. Continental occupies a 300 sq/m area. This space is absolutely sufficient for our supermarket,” Gurgenidze declared. 

“Goodwill Company has a strategic scheme of expanding, the first local expanding has already begun. 17, 300 sq/m will be added - with the total area reaching 24, 000 sq/m, while 13, 000 sq/m will be occupied by the treading part and the number of assortments will be increased - reaching 60 thousand,” Magularia declared.


“Home appliances, products for multiple repairs, will soon be widely represented in Goodwill.  The company plans to open 40 boutiques with different brands. In Goodwill besides the trading centres, service objects will be represented as well, for instance: drycleaners, banking services. These additional services will create more comfort for the customers. So the company plans to gather entertainment, trading and service centres under one object,” Magularia added.

According to Lika Mikautadze, Populi operates 22 stories in two formats: the Populi Neighbourhood store and Populi XL. “At present all of them are located in Tbilisi, 8 stores are under construction in different regions of Georgia: Kutaisi, Telavi, Gori, Kobuleti, Signagi and Tsinandali,” Mikautadze added.


According to Magularia, Goodwill plans to expand in the regions as well. The company is to open a 1 200 sq/m market in Batumi next year.    


“In previous years 80% of Goodwill’s products were imported from abroad, but today only 50% are imported, as the distribution net has grown in Georgia and we prefer to purchase products from local distributors. The supplying of Goodwill is made with exclusive prices, as for the products being presented in this market, they are part of a promotional campaign. Some companies are already producing products with the Goodwill logotype: Bagrationi, Coca Cola Bottlers Georgia. The franchising process will be continued and soon the Goodwill logotype will be used on the Georgian dairy products: Soplis Nobati and Eko Food. These products with the Goodwill logotype will be sold in Goodwill market exclusively for our customers,” Magularia declared.

“Goodwill has its own discount card for loyal customers. According to the company’s statistics the portfolio of Goodwill customers has increased by 15 % compared to previous years,” Magularia added.

According to Lika Mikautadze, Populi’s stores have a different number of customers and it depends on the district where the Populi store is located, the Gldani Populi store has a lower index of customers for example.

“Totally Goodwill’s business is stable, the highest sales indexes are in December and lower sales indexes are in the summer months, however the situation has changed by the importing of seasonal products. Goodwill hyper market’s index of monthly circulation reaches more than GEL 3 million. The company’s annual net profit has increased by 70 % compared to the previous year,” Magularia told The FINANCIAL.


According to Gurgenidze, Continental has the highest sales index in December and in January. These months are profitable not only for markets but in business generally.

“Supermarket Continental’s monthly sales index consists of approximately GEL 170 thousand, while the net profit of Continental has increased by 40% compared to the previous year,” Gurgenidze added.


According to Mikautadze, Populi’s average figure of monthly turnover in the first half of 2007 reached GEL 2 353 000, which is 2, 5 times more compared to the previous year. Total income in the first half of 2007 equals GEL 14 654 000, increased 145% compared to 2006. Fixed assets from 2006, December figures - GEL 9 160 000, reached GEL 11 682 000 by July 1, 2007.

“The number of 400 employees doubled from 2006 till July 2007 - reaching 880,” Mikautadze added.


According to Magularia, Goodwill has 300 employees at this time, but the number will be increased twice by the opening of the new Goodwill and will reach 600.

“Supermarket Continental has 70 employees today, most of them are specialized in our market as the company holds its own trainings for staff,” Gurgenidze said. 





Watch the video