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Adress Brings New Brands, Expands its Shop Network

Published: December 3, 2012 | 11:12 am
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Magalashvili

 

The COMMERCIAL TIMES

Georgian multi-brand company will add two brands next year. Rezo Magalashvili, the Chief Operating Officer of Adress, says the company will open new shops both in Tbilisi and outside the capital. During the interview with The COMMERCIAL TIMES Magalashvili spoke about Adress development history, local competition characteristics and future growth plans.

– Adress, founded in 2007, has opened a number of brand shops in Tbilisi during the past five years. What challenges did the company face through its history to establish itself on the local market?

- Since 2007 we’ve been actively developing the network every year. First, we started the business with three stores only and due to the hard work and a huge effort put in the company’s growth strategy Adress today operates ten brand shops. In 2013 we’re planning further expansion and will bring new brands. This growth success came with experience. When the company was newly-launched the local market was also less saturated while the competition today is intense, around ten times bigger than it was five years ago. Despite the growth competition, the company manages to improve its results annually, including sales statistics, number of customers, etc. I believe, we’ll maintain this success in the coming years.

- Do you plan to increase the brand portfolio?

- Currently, Adress operates ten stores, including two outlets in Telavi and Akhaltsikhe. The company’s portfolio consists of well-know international brands: Celio, Etam, Tom Tailor, 123, Gerry Weber, Promod and DPAM for kids. Soon we’ll add to new brands, one of which is a women apparel and accessory retailer. In addition, several new stores will be opened for the brands that are already in our portfolio.

- How wide is the choice offered by Adress? What options do you provide for different segments of people, including sex and age range?

- Each of our brands has its own target segment. We do not operate on premium market, what we sell is for mass consumption mainly: our brand for kids is DPAM; for men we have Celio, which also offers women apparel and sports and casual outfit; Tom Tailor is a casual dress brand both for men and women; Etam sells lingerie; at 1,2,3 you can buy classic clothes for women; Gerry Weber’s customers are both for youth and middle-age people; Promod is favored by youth, however elder customers also shop here.

Soon we’ll have a separate brand store for accessories as well. At Promod and 123 we already sell accessories, but the new one will be a solely accessories-sales store.

- Is the name of the brand confidential?

- I’d better keep it secret. The new brand store will not be opened till February-March, 2013. We’ll reveal the name later.

- What is the price range of the production sold at Adress brand stores? Are your prices affordable for middle income population?

- It depends on the product group, on average prices range from GEL 50 to GEL 250. The most affordable brand shops are: Promod, Tom Tailor, Celio and DPAM. Prices go upper at Gerry Weber and 123. However, all the brand shops mainly remain within the middle-income market segment.

- Which is the most demanded brand on the local market?

- Promod is the most popular brand among womenwhile Celio is a same big success among men. Women also shop actively at Celio, buying clothes for men. Compared to the last year, prices within Adress network are significantly lower. For instance, at Tom Tailor today you will pay 20-30% less, even bigger 40% discounted prices are offered at DPAM. We managed to decrease prices after holding negotiations with the brand producers. Lower prices resulted in doubled sales.

- Was the price decrease caused by the intensified competition?

- Certainly, one of the main factors was the intense competition. We convinced our international partners that by offering lower prices sales would rise and this would work well both for the profits and the customers. As a result, the number of shoppers has increased by 30-70%, which stimulated us to open new shops.

- New era begins for Tom Tailor- Fibre2fashion.com publishes an article with this headline. According to the publication, in the third quarter, the holding increased its sales by 60.8% to EUR 190.7 million in the third quarter. Bonita officially becoming the part of the group has contributed much to this success. How impressive are Tom Tailor sales at Adress?

- Tom Tailor shows better performance this year compared to the previous year. The brand’s success is much due to the new price policy and its faithful customers, including both men and women. This is a brand that does not necessarily follow trends but has its own unique style. Along with the international growth, Tom Tailor grows locally as well. According to the research, this is the brand with the highest awareness within our network. We plan to add a new store of Tom Tailor. The brand has two directions: Tom Tailor Denim, which is focused at youth mainly and Tom Tailor Casual, suited for the people of all age-range.

- Do you plan to bring Bonita to Georgia?

- We’re not having talks about it yet. Tom Tailor has other directions as well, which are not represented in Georgia. For instance, kids and sports line and both can be very interesting. We’ve not discussed cooperation with any other Tom Tailor group brand so far.

- How impressive are separate and overall sales of Adress brand shops?

- Adress entire retail network shows 15% growth every year. As for separate brand shop statistics, data differs. During the crisis we had some growth break but since 2010 sales got increased again. Etam and DPAM are among most growing brand stores.

- What are the challenges for bringing international brand to Georgia? What are the main requirements to the partner company and the country in general?

- Demand is quite big. Not every brand agrees to enter Georgia. They have strict requirements about the brand store location and all the good spots are occupied. All the retailers eye preferable locations. Another demand is the meeting of the brand standards, which often requires bunch of renovation activities. For instance, event furniture is sent from the brand producer, which costs much.

Big investments are needed for opening a new brand shop and bringing the first collection. Quality brands soon reach break-even point.

- As for advertisements, are promotional issues managed locally or in agreement with head offices?

- All the brands come with own commercial calendar. However, there are some activities that can be changed. For instance, this may refer to the national public holidays or discount campaigns, which start in Europe a bit earlier than in Georgia.

Also, when we see there’s a necessity to launch a campaign that is not included in the calendar, we contact the brand producers and agree the issue with them.

- Do you make advertising images locally or are they sent directly from abroad?

- We receive advertising images, which are then adapted for the local publications, billboards, etc. If there are some out of standard issues, we contact brand producers and solve the problem together.

- How satisfied are you with the sales of the Etam brand shop in Vake district?

- Etam brand shop at Chavchavadze Str. was opened last September. Initially, it was performing below the level of another store located on Pekini Avenue. Generally Saburtalo district where we have the main hub of brand shops is a better location for retail sales than Vake district. Luckily Etam on Chavchavadze Avenue is distinguished with a good trend though and is growing dynamically at the new location, by 2013 it will catch up with the Pekini shop performance. We’re quite satisfied with the decision to expand Etam brand to Vake.

- Has Adress completed negotiations with a German brand the company was planning to bring in Georgia?

- This is the women’s brand as I mentioned above, which will be opened in February-March, 2013. It’s a Promod style Polish-German affordable brand, very popular in Europe. The contract is signed already, location is chosen and we’ll announce the news by the beginning or the end of January. The reason why we’re not in haste is that it’s not cost-effective to bring a new brand during the New Year’s sales period. I believe this and the other brand, which will join Adress network in February-March, 2013, both will be a success.

- How popular is Adress Card among your consumers?

- Around 1/3 of our customers use Adress Cards, which is a quite big percentage. Moreover, for instance, at Etam brand shop the indicator goes as high as 70%. We have information on each customer and get in direct touch with them as well.

- Has the opening of new shopping malls influenced on your business?

- Tbilisi Mall, for instance, is a different business. We’re focused at street shopping and not at trade centers. Tbilisi Mall meets shopping mall standards, compared to other trade centers that we’ve seen in Georgia thus far. Shopping malls and street shopping businesses exist in all parts of the world and everywhere these two are considered as different directions.

Tbilisi Mall opening did influence on our sales initially, as when something new opens everyone is focused at the ‘new thing’. However, in 1-2 months the situation stabilized and we’re moving forward with same success.

A number of new brands have entered Georgia lately, but it does not affect our sales as the brands we sell are the ones that appeared to be the best suitable for the local market.

-  Which brand do you regard the competitor on the local market?

- There are only a few brands as far as the kids clothing is concerned. Again, our new price policy makes it possible to purchase beautiful models of French DPAM for the same price customers would pay for a casual dressing. Kids grow soon and customers expect reasonable prices to pay for the cloths that are worn only for several months.

There’s an obviously big competition in men’s line. NEXT and ZARA are the competitors for Celio in terms of middle income segment. However, I would say our brands offers superior quality for the price. Despite the entrance of famous brands, our customers remain faithful to Adress as we have the quality/price advantage. Also, new upper-middle brands have entered the market, but in this regards I don’t see much threat.

- Will you confirm the information that Adress was planning to enter Tbilisi Mall this autumn?

- Yes, we were discussing this alternative, but no concrete intensions were set. We’re more looking at the network expansion at Pekini and Chavchavadze streets, Agmashenebeli Avenue looks also promising. Perhaps at some point in time we will expand to Tbilisi Mall or any other mall , but for now it’s not on our team’s agenda.

- Do you plan network expansion in Georgia’s other big cities?

- We plan to open outlet shops in big cities. According to the strategic plan, in 2013-2014 several brands shops will be launched in Batumi and probably in Kutaisi, as for other cities, we’ll be opening outlet shops there.

- When will Adress launch the New Year campaign discount campaign?

- Very soon Adress will start pre-New Year special discount offers, which will be followed by the New Year campaign and will last during the entire January. Adress will bring new collections along with sales campaign, just like we did last year. All the brand stores will offer discounts on autumn-winter collections till the end of January.

It should be stressed that our customers do not wait for discount campaigns; we sell 70-80% of the production during the non-sales period. When sale is announced the number of shoppers increases and the item you wish to buy might be sold out. This year we expect heavy traffic during the New Year sales period and preparations at ADress are underway.

 

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