The FINANCIAL — Blocked streets in the centre of Tbilisi and the manifestations of opposition demanding the resignation of President Saakashvili have forced most of the businesses on Rustaveli Avenue to count losses. Global brands Bally, Trussardi and Cacharel could lose their licenses. The loss of Rustaveli Cinema has reached GEL 300,000.
“Our foreign partners are constantly receiving information about the internal political situation of Georgia. They are still being understanding, but we worry that soon they will have had enough with these nonstop rallies,” Tsitsi Iashvili, Sales and Marketing Manager of Georgian Trade Corporation, told The FINANCIAL.
Georgian Trade Corporation includes three international brand shops: Bally, Trussardi and Cacharel.
“We started losing customers a year ago, when Tabidze Street, where our shops are placed, was blocked because of the construction works of development company Redix. This was followed by the August war in Georgia. In September, the municipality started reconstruction works of old Tbilisi. It caused the block of Tabidze Street from both entrances. The culmination has been street rallies and blocked Rustaveli and Freedom square, full of cells,” Iashvili notes.
World brands Bally, Trussardi and Cacharel are targeted at customers with high salaries. As for collections, they are usually counted as the clothes of businessmen. According to the observation of representatives of brand shops, in Georgia men’s clothes are better selling than women’s.
Iashvili does not consider changing location a way to solve the problems they are having, because it is connected with lots of additional problems. “According to the rules of franchise we imported all the goods and accessories for the shops from different countries. Building new shops means spending lots of extra money. From the very beginning, we spent GEL 370,000 for the opening of the shop Bally, GEL 130,000 for Trussardi and GEL 60,000 for Cacharel.”
“From April we have offered 60% discounts to our customers. This offer will last till September. These sales have made our clothes available to customers from the middle classes. This business has been beneficial for us because there are not many brand shops presented in Georgia,” Iashvili says.
Annual turnover of the Georgian Trade Corporation in 2008 was GEL 1,100,000.
According to the rules of franchise, the Georgian Trade Corporation assents estimation of discounts with the central office. The maximal sum of a discount is 50%.
“Taking into account the current destabilization, they permitted us to announce 60% discounts. The maximal amount of mark-up is 35-40%. Even during a period of 50% discounts we are not covering our costs,” Iashvili notes.
During the street demonstrations the sales of the Georgian Trade Corporation were shortened by 60%.
As Iashvili says, they do not plan to receive a new collection for summer. “Usually summer time is the worst season for our business. June is commonly the least active season. In July we announce discounts, but currently taking into account the fact that sales have reached their minimal level, we do not expect anything good to come from this period.”
The Georgian Trade Corporation had its outlet on Kavsadze Street in Tbilisi. Here they replaced clothes from the old season. The outlet did not approve the expectations of the company and they closed it.
“Perhaps our partners will not confiscate our license, but the worst thing about this situation is that it will badly influence future projects for our fellow citizens. Georgia has created an image of itself as a risky zone and now no one will dare cooperate with us,” Iashvili says.
Rustaveli Cinema was closed soon after the opposition started demonstrations. The doors of this previously popular cinema house are still closed. Trip to Karabakh, Slum Dog Millionaire and The Adventure of Despero were the last movies shown by Rustaveli.
“We have not made any complaints against anyone. That would be considered a political viewpoint, and we have tried to avoid that and distance ourselves from anything connected,” Gvakharia declares.
“After the beginning of the global recession we were working according to our previous plan. Only with non important changes, that is characteristic for business. After the block of Rustaveli and Freedom square we started counting losses. For two months while cinema Rustaveli was blocked, the total sum of our losses reached GEL 300,000,” says Devi Gvakharia, Rustaveli and Amirani Cinema Marketing Director.
As Gvakharia says, in cinema Rustaveli we had five viewing halls and accordingly each of the movies was able to compensate itself. We cannot say the same for cinema Amirani. There are only two halls there and it is not able to compensate itself.
“The effect of the recession has been minimal on us. We just had to reject our plan of future development and did not reach the planned increased figures of 10 or 20%. Our last project which we realized was the children’s entertaining centre Madagaskari. The total cost of the project Madagaskari was GEL 150,000. It was opened in March and worked for only a month,” Gvakharia says.
Madagaskari offers customers a wide range of services; it also includes a centre for birthday parties.
Despite the problems with Rustaveli, the management of the cinema Amirani did not see large losses. “We have been offering lots of high scale first night performances. Soon we will offer world famous movies to our customers. We managed to survive the effect of the global recession because of the flexible policy of our prices. Cinema Amirani also participated in the projects of telecommunication mobile company Bali that offered tickets to our cinema for GEL 3,” Gvakharia says.
“We plan to add one more hall to the cinema Amirani. We are also thinking of creating an entertainment centre for children like the one in Rustaveli, but on a smaller scale,” Gvakharia notes.
“Usually the second parts of July and August are less active for our business and we sometimes even close completely. But now, as these seasons have been passive for us, we plan to offer new movies to our customers. July will be maximally saturated. Some of the most anticipated movies will be Ice Age, Harry Potter, and Terminator,” Gvakharia notes.
He says that the decision of dubbing movies in Georgian did not reduce the number of customers. “We take into account the demand of the national minority and do offer some movies dubbed in Russian.”
As a result of the August war, the global economical crunch and local destabilization, the sales of products of eyewear company Safilo have been reduced by 35%.
“In order to stimulate sales we are doing raffle lotteries and offer 10 and 50% discounts on our products. On the latest models of glasses we offer 10% sales and 50% on products from older collections,” Sophio Demetrashvili says.
“From the very beginning of the street demonstrations we made cautionary steps and closed our branch for a week. After finding out that the situation was not so chaotic, we reopened it,” Demetrashvili says.
Safilo is an Italian company, including such brands as Dior, Yves Saint Lauren, Gucci, Pierre Cardin. It has been present on the Georgian market for over one and a half years. Before the August war we were working on hire purchasing. In total, Safilo has seven branches in Georgia. Five branches are in Tbilisi, one in Rustavi and one in Batumi.
“We are looking forward to the stabilization of the situation especially now, when in the summer period the demand for sun glasses sharply increases. About 65% of total sales in our shops are taken by optical spectacles. In summer time the demand for sunglasses increases. The total number of sales of premium brands has been reduced by 60%. That means that in Georgia it’s most beneficial to target the middle classes. Rustaveli remains the main street of Tbilisi,” Demetrashvili notes.
Demetrashvili says that despite the demonstrations they did not think of closing their branch on Rustaveli Avenue. “Having a branch in the commercial centre of Tbilisi is prestigious.”
Prices of eyewear in Safilo start from GEL 140 and go up to GEL 2,000.
“Currently the most popular trend of eyewear remains aviator style glasses. Also, spectacles arranged with stresses, which are commonly made by Valentino,” Demetrashvili says.
Written By Madona Gasanova
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