Georgian consumers have recently observed a clear trend of big international brands, such as the Spanish retail giant Mango, and the British multi-national franchise store Debenhams leaving the local market.
Emerging markets have long proved attractive to big international brands. These companies have in many cases exhausted the opportunities available in the developed world and are seeking for expanding their business and facing new challenges. Developing economies, such as Georgia have a lot of untapped potential for such internationally renown brands as Benetton, Zara, Debenhams and Lacoste.
However, every potential gain in revenue or market share has a corresponding
Risk of failed product launches or underestimation of the competition. CBW decided to ask marketing specialists what prompts big international companies to leave the Georgian market as swiftly as they enter them.
Marketing and PR specialist Eldar Pirmisashvili thinks big brands are clearly missing something when assessing the Georgian market. In his view, the companies leave the market because of misjudgment in marketing analysis they perform. In his interview with newspaper Banking and Finances, Mr Pirmisashvili names failure to undertake consistent marketing research as one of the main reasons big brands often end up packing up their belongings and returning home:
“These companies usually conduct research and evaluate the market before starting their business in Georgia, however, they often fail to make this research consistent.”
A one-time evaluation is not nearly enough for seeing the big picture. Mr Pirmisashvili’s point leads to the need of establishing a culture of Research and Development in the Georgian retail business.
Mr Pirmisashvili also names shortcomings of marketing strategy by international brands in Georgia: “Marketing tools that brands use here are not sophisticated enough. Most of the brands only limit themselves to mere advertising and sales system of marketing, which is often not systematic and also not in accordance with the way the sales are set up in the developed European economies.”
“What I have in mind is the type of marketing sophistication that sells, so to speak, “emotions” and status together with its brand. This type of marketing is much more persuasive and powerful. Unfortunately, international brands in Georgia fail to undergo this type of marketing here.”
Associate professor of marketing at Tbilisi State University, Nana Okruashvili thinks that one of the reasons that large international brands can’t make it in Georgia is the instability of the national currency. “The country becomes unattractive for large investors, as they cannot predict the course their business will take. The volatility is too high,” Ms Okruashvili commented to CBW. This comes as no surprise to anyone who follows the news in the country and is aware of the most pressing economic matter — the quick depreciation of lari over the past couple of months.
One may think that in the country where unemployment rate is as high as 14% and the average wage does not exceed 780 laris, middle class clothing brands often fall into as an upper-class good, turning into a luxury item. However, some experts disagree with this proposition and think that companies like Mango have justified their international status in Georgia and were marketed to the right consumers.
PR and marketing specialist Otar Kiria comments on Mango’s decision to leave the Georgian market: “It would be unfair at best and wrong at worst to say that Mango’s marketing strategy in Georgia has failed. The brand operated successfully since 2008 and even opened a second store in the city, which only indicates that the business was doing very well.”
Mr Kiria names a big fine that Mango was charged with by the Revenue Service of Georgia as the reason behind the company’s decision to leave the market. PR specialist commented to CBW that this has been a long-circulating news in the retail business in Georgia.
Indeed, after Novo Group, the company that operated Mango in Georgia, announced the store’s exit from the local market it became known through grapevine that Mango will re-enter, but now “officially,” selling women’s, men’s and children’s clothes.Perhaps, one can only hope that this is a sign for the better future of the brand, since it will present itself to the Georgian consumers in its full colors.