| Populi Changes its Strategy |
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24/11/2009 11:23 (77 Day 07:57 minutes ago) | |||||
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The FINANCIAL -- Populi, leading food retail chain plans to change its strategy. “If previously the main priority for our company was the immediate increase of our branch numbers, now we will focus on improving service and increasing customer satisfaction,” told The FINANCIAL Evgeni Pichkhaia, shareholder and General Director of JSC Populi. Company last week introduced new product the Pop-Art cards.
“Annually we have been increasing our number of shops by 100%. This caused an increase of our income. Solving operational problems, focusing on customer demand and improving service have always been our priorities, but were put in second place whilst we rapidly expanded the chain. Presently we are completely ready to start improving service and fully satisfying all the demands of our customers,” Pichkhaia says.
Pichkhaia says that the company was facing some problems but that now they have solved all problems and are ready to make improvements. “The first step of our new initiation is our newly launched product the Pop-Art card. The Pop-Art was created to increase the loyalty of our customers and attract new customers. Against the background of the current economical difficulties, we are now offering our customers additional benefit from the money they spend in our chain.”
“Customers will be able to receive presents after a month, when they have collected sufficient points. Despite the new offer Populi will not stop offering special sales on different types of products,” notes Sandro Lomtadze, Marketing Director of JSC Populi.
Populi is the chain that operates with the largest number of branches on the Georgian market. Currently we have 40 shops and the 41st will be opened next week. Currently Populi has 1,500 employees.
Pichkhaia mentions that the company does not plan to stop increasing the number of their shops but whereas before the company was increasing by 100% every year. Now they will just open around one branch a month.
“Compared with 2008 we have reached a 3% increase of profit, but we should take into account that we enlarged certain branches, so 2009 will end with the same results as 2008,” Pichkhaia says.
The sharp increase of street bargains has affected the businesses of supermarkets. As Archil Melikidze, General Director of JSC Populi, told The FINANCIAL, currently they see some activities in sales but think that it is too early to make any conclusions as the period around New Year is always active. “I cannot tell you when we will return to our pre recession position. I think that we will manage to make more accurate prognoses of the future in February.”
“Compared with other businesses the food industry is more stable during a recession, but still the global economical downturn has sharply affected our company. If before we were doubling and tripling our incomes, this year we will finish with the same results as we had last year,” Melikidze states.
“The company has not lost any customers though. About 30,000 people buy products in Populi every day, but they have started spending less. The average income of customers has reduced and so they have switched to buying some products in the streets or market (bazaar). In Populi most customers tend to buy the cheaper products on offer,” Melikidze notes.
As Melikidze declares, from September they saw an increase in activity but it is too early to make any conclusions or estimations regarding future expectations as the New Year is often a successful time for the retail sector.
Populi is partnering with 3 of the largest international finance corporations: OPIC, EBRD and IFC.
“We are already cooperating with EBRD. We have signed a loan agreement but have not used it yet, as we do not need short term loans. We just want to feel secure that in the future if needs be we will have easy access to credit,” Melikidze says.
25% of JSC Populi is occupied by Evgeni Pichkhaia. Other shares are divided by companies: Liberty Consumer, American Investment Company - Firebird Aurora Fund, German investment group – Ostinvestor, and Swedish financial institute - East Capital.
Melikidze notes that the main priority for the company in 2010 will be revising its salary budget.
“As soon as our financial indexes improve we will raise our staff members’ salaries,” he says.
“After the beginning of the global recession we reduced the salary of our team management members. For example my salary has been reduced by 30%. We did not decrease the salary of our consultants though, on the contrary we increased them and also doubled the salary of our managers,” Melikidze declares.
Melikidze says that as the demand of customers increases the main challenges for them in 2010 will be to supply their demands: to offer a better assortment for less.
From 2010 JSC Populi plans to close productions in small and middle sized chains and create centralized production. “With the investments of 2.5 million EUR we created a specific place where all sorts of fast food will be prepared. This means that we will have the fast food of similar taste and quality in all of our branches. The production, which occurs on 5,500 sq. meters, will include the producing of vegetables, meat, fish, milk and bakery products,” Pichkhaia says.
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