The FINANCIAL — Despite the economic difficulties in the country, the Nikora supermarket chain is continuing its development and plans to open 24 additional stores in 2015. The company will expand its chain in the regions as well. The number of employees is set to reach over 2,000. High quality and standards will remain the ‘calling card’ of the company, its management has promised.
The sales volume of Nikora was GEL 117 million in 2014. The company ended the year 2014 with a 23% increase of realization in comparison with the previous year. The number of consumers jumped by 20%. In addition, 16 new and 11 renovated supermarkets were added to its chain. Furthermore, the company created 400 new jobs.
“Our rate of development is not small. If we compare the first quarters of 2015 and of 2014, we will see over 27% growth in income. Constant development of our network is the main contributor to our growth. We predict having the same level of growth by the end of 2015. 27% increase will be our minimum growth. We are optimistic that the summer season will boost income to the country, mostly due to the entrance of tourists,” David Urushadze, Director General of Nikora Supermarket Chain, told The FINANCIAL.
In 2015, the Nikora supermarket chain has been following the development plan which was formulated at the end of 2014. According to Urushadze, despite the economic difficulties in the country, the company has not revised it. “The GEL’s devaluation is reducing the income of the population. Accordingly, the volume of income is not equal to what we expected. However, we are still following our original plan of development,” Urushadze said.
The first supermarket chain of Nikora was established in 1500. To start with, the company was only offering its own products for sale. Step-by-step Nikora started adding new assortments to its stores. The intensive development of Nikora’s supermarket chain in the way which consumers see it today, started from 2010. Currently Nikora represents fully-equipped supermarkets with a variety of products. The local production of the Nikora meat company is no longer dominating in its supermarket stores. Whereas previously the realization share of our products in total sales was over 90%, currently it measures less than 40%. The Nikora supermarket chain has been transformed into a store offering a wide assortment of products.
Nikora supermarkets have over 8,000 sorts of products currently in circulation. The company is importing products from Turkey. It is the exclusive representative of Pinar, the dairy and juice producer company.
“We are constantly renewing the assortment available in our network. We are trying to offer different products in order to offer an alternative to our customers. Nikora is working hard to develop its service on a daily basis. Our main goal has always been to offer qualified service from our consultants. We are fully responsible for all the products purchased at our stores; that they are of high quality and meeting their shelf life. Besides the variety of products, we have the ambition to be associated with high quality service. We work hard to keep this niche,” Urushadze said.
“Despite the development of modern supermarkets in Georgia, there are still cases when consumers have to look at shelf life when purchasing a product. We are proud that at our stores consumers are free from having to worry about that, in both dairy and meat aisles,” Urushadze said.
Consumers’ appreciation of the Nikora supermarket chain has been underlined with the winning of a Golden Brand 2014 Award.
Q. From the current outlook can we conclude that unorganized retail will eventually be wiped out from the market?
A. I think that we are moving in this direction. Several years ago the share of convenience stores on the market was more than 90%. Currently the number is decreasing and now makes up less than 50%. It is obvious that organized retail is developing at the expense of corner shops. There are several reasons behind it. The quality of products and conditions of storage are much better at organized retail stores, than at convenience stores. You never hear of refrigerators being switched off at supermarkets in order to save on utility costs. The third factor is the aesthetic side. Merchandisers are actively working in order to provide a good atmosphere inside the stores. It is an additional benefit of supermarkets which is highly appreciated by modern-day shoppers. Georgian consumers are becoming more demanding and their expectations of service and standards are rising.
Q. What is more important for Georgians, quality or price?
A. Overall, the social condition in the country is not at the level which we would like it to be. Unfortunately there is still a share of the population which tries to focus on prices, due to their low income. This is our sad reality. However, it is important to note that low-priced products are most frequently of low quality. So, people are saving some money but at the expense of their health. It is an axiom that quality equates to price. These two concepts are linked to each other. Those who can afford to pay a bit more, pay big attention to quality. No one wants to consume harmful products, however not everyone can afford to pay for quality.
Q. During recent years the food safety agency has started active control of the quality of products, as well as shelf life. Can we say that the situation in this regard has been improved in the country?
A. From our example, I will say that we are regularly monitored. In general, I can say that in terms of feeling, the attitude has been raised. Consumers have the feeling that the control of food has been heightened. Even in markets, we now rarely see refrigerators being turned off. However, if the food safety controlling agency would start implementing all its rules, unorganized retail would simply disappear. They only require the meeting of all their demands from organized retailers. Although quality standards have always been our main focus, we appreciate additional control as it enhances trust in our chain. You cannot find convenience stores that will keep an indoor temperature of 18 degrees Celsius on hot summer days, due to the huge utility cost. Nikora’s supermarket chain is meeting this standard however.
Q. Nikora’s supermarket chain is actively represented in the regions of Georgia. How would you evaluate your business there?
A. The solvency ability of the population is higher in Tbilisi than in the regions. However, I would not say that our business in the regions is not profitable. We are quite motivated to distribute the service and quality of our chain’s stores for the population of the regions. We have 30 stores in Western Georgia and 5 in the Kakheti region, in the east of the country. We plan to acquire other regional centres, like Gori, Khashuri and Mtskheta. We plan to develop both sides of the country equally. The largest number of stores in Western Georgia is found in Zugdidi and Batumi.
Q. What are your plans for entering the hypermarket niche?
A. We do not plan to enter this segment for the next two years. From the current outlook, the biggest perspective belongs to the format of stores in which we are operating.
Q. How has the GEL’s devaluation impacted on your company?
A. The GEL’s devaluation had a negative impact on the whole population. The current situation is limiting consumers’ ability to buy more. They have become more focused on buying only essential products. From our example I can tell you that the sales volume has decreased in such categories where high-cost products, like caviar, are sold. In general, businesses like ours are experiencing impacts later than other sectors. What we are witnessing now is that the average number of cheques has been reduced, rather than the average expenditure per cheque.
Q. What are the main advantages of Nikora’s supermarket chain?
A. Nikora is actively training its staff. We are making big investments in maintaining service quality. The number of employees exceeds 1,500. 24 new stores will be opened additionally, which means more investments and more employees.
Reduced solvency caused by devaluation of the national currency will be the main problem for us as we will have to continue to work under these conditions. Our focus will be maintaining standards despite the fast development of the chain.
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