The FINANCIAL -- “The Georgian policy on liberalization of the law, reducing corruption
and the great openness toward foreign investors encourages investors to
enter the Georgian retail market,” believes Jean Louis Clary, General
Manager at MAF Carrefour Georgia.
The latest most prominent foreign investment in the Georgian retail market is Carrefour’s decision to open up in Georgia. This retail chain, the world’s second largest, is justifying the decision, by referring to a reformed market with low levels of corruption which provides good opportunities for foreign investors. Carrefour will already in early summer this year establish themselves in one of the big new shopping centres in the capital.
“Georgia provides a broad range of good opportunities for foreign investors - including small and medium enterprises,” said Clary. “The start-up costs in a de-bureaucratized society and ultra-liberal economy are low and so is the level of corruption. This may also benefit smaller and medium sized businesses. Georgia’s domestic production is still at too low a level, and most goods are imported. It provides a number of good opportunities for producers. Logistics and transport are also an option. The many new retailers need to be serviced with for example storage facilities. Here Georgia is lacking both when it comes to dry facilities but also for chilled and frozen products. Importers themselves have little capacity and as the economy develops the need for specialization increases,” he added.
Q. Could you please tell us about the development of the retail market based on your own experience?
A. They have studied the structure of the Georgian market. A big part of the market is street bazaars. It was the same in some other countries years ago; 80 percent of the market was street bazaars in other countries as well. Carrefour aims to replace the average street market. We are developing and growing but of course the street market will remain.
International suppliers are coming here. We have local suppliers in Georgia so we cooperate with both of them successfully. We have 20-50 Georgian suppliers so far. When we came there was not any international retailer here. It was something important for us that we could be the first company on the market. For us it was very appreciated that Georgia had solved the problem of corruption so successfully. We knew that a lot of things had been done in this regard. Nowadays real estate is improving and developing in Georgia and we try to contribute to this process from our side. We realize that as the first international company on the real estate market we have a responsibility to contribute to the market’s development.
Q. What are the opportunities for real estate investors in Georgia?
A. Considering that Georgia is a small marketplace I think it is quiet profitable and promising in terms of financial results to invest in Georgia. The fact that we are planning to open three new hypermarkets and supermarkets in Tbilisi , Batumi, Rustavi, Kutaisi and Telavi proves that we have really gauged the profitability of the Georgian market.
Carrefour’s entrance has brought additional customers to Tbilisi Mall. We have about 20,000 people at Carrefour on weekdays and much more at weekends. Providing low prices, good service and high quality products is the strategy that Carrefour has brought here and sees a big profit in it. As representatives of other brands say, Carrefour helped them to join more customers and from our side we also expect them to contribute to increasing our customers as well.
Q. Lower prices are the main attraction for customers. But some weeks ago prices started rising at Carrefour. What are the company’s price policies and what should customers expect from Carrefour?
A. We hold negotiations with our suppliers. If a supplier agrees to give us a product at cheaper prices of course we bring this product to the counters at lower prices. But when the terms of the negotiation finish then the prices go up and reach the market price. At the same time, when we obtain an extra discount we immediately give it to our customers through extra price decreases for one week, or one month, depending on the negotiated quantity. When it is finished we return to normal prices which must in any case be the cheapest on the market. Carrefour is continuing negotiations with suppliers over discounted prices.