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Artashes Shaboyan: Reduction in consumer demand has a negative effect
on supermarkets
ArmInfo's Interview with Artashes Shaboyan, Senior Research Specialist
at Ameria Group
by Gayane Isahakyan
Sunday, July 27, 14:22
Retail trade has always been one of the most dynamic sectors of world
business. Retail trade operators are developing intensively. This
trend does not pass by Armenia, where retail chains are also
developing dynamically. There are already over 10 retail chains in the
country and their number keeps growing. The process of development is
accompanied by mergers, acquisitions, entry of new players and
withdrawal of old ones, which eventually determines the dynamics of
the retail trade market. Ameria Advisory Company has conducted the
second research in the retail trade sector in Armenia, with main focus
on fast moving consumer goods market (FMCG). According to the findings
of the research, in 2012-2013 the large retail chains reduced the
coverage of Yerevan's FMCG market by 5 pct points. Now supermarkets
and hypermarkets occupy only 47% of the FMCG market in Yerevan versus
52% in 2012. The research explains this by the fact that the residents
of Yerevan considerably reduced their FMCG expenses and started doing
more shopping at minimarkets and food stores. Furthermore, two years
ago STAR, a major trade chain in Armenia, quitted. This toughened the
competition among the market participants, which should keep placing
their stake on the customer perception and innovation management to
enhance the customer loyalty and engagement. Below is ArmInfo's
interview with Artashes Shaboyan, Senior Research Specialist at Ameria
Group, who shares his opinion on possible problems, trends in the
retail trade sector, as well as the steps that can help retailers to
their boost sales.
Mr. Shaboyan, according to Ameria Advisory Company's research, the
fast moving consumer goods (FMCG) market of Yerevan has shrunk over
the past 2 years due to the changes in consumer behavior. How and why
has the consumer behavior of the Yerevan residents changed?
Ameria conducted the first research in the retail trade sector in 2012
and the second one in 2014. In both cases we studied the households'
FMCG expenses in Yerevan. In nominal terms, over the past two years
the Yerevan residents' monthly FMCG expenses have dropped by 4% in AMD
terms and by 6% in USD terms, having averaged 143.9 thsd AMD. In fact,
the dynamics is not so tangible but given the two-year rise in the
consumer price index, the Yerevan residents' FMCG expenses dropped by
16% in real terms, and this is a rather big figure. In fact, this is
how much the residents have reduced physical consumption of FMCG over
the past two years. If the FMCG prices in 2014 were the same as two
years ago, the residents' monthly expenses on FMCG with the current
physical consumption would be 126.1 thsd AMD instead of 143.9 thsd
AMD. Our research has revealed two reasons why the residents of
Yerevan have started spending less. The first reason is that over the
past two years the household incomes have not grown, to put it mildly.
The income of some social groups has not changed, and the income of
others has declined to some extent. The second reason is that the
expenses on other goods and services (including gas and electric power
supply) have considerably grown. People had to spend less on their
food, detergents, personal hygiene means, alcohol and cigarettes.
Your research has found out that the residents of Yerevan have started
spending less on FMCG. In case of overall price boost, people
certainly have to tighten the purse strings. What goods do people save
on and what goods enjoy little demand?
In nominal terms, the monthly expenses on food and soft drinks per
household in Yerevan have dropped by 1%. In 2012 those expenses made
up 109.3 thsd AMD monthly versus 108.5 thsd AMD in 2014. The
difference between these amounts is not big. But as I have already
mentioned, the situation becomes absolutely different given the
two-year tangible inflation - the population spends the same amount
but buys fewer goods, i.e. people save on food. Over the past two
years, food and soft drinks have risen in price by 16.3%. So, the
Yerevan residents' expenses on food and soft drinks have fallen by
15%. By the price calculation of 2012, the physical consumption of
these goods in 2014 would be 93.3 thsd AMD monthly (instead of 108.5
thsd AMD). As regards alcohol and cigarettes, their consumption would
decline by 8% to 17.9 thsd AMD in nominal terms and by 18% in real
terms given the 12.1 inflation (to 16 thsd AMD by the price
calculation of 2012). The biggest decline fell on the households'
expenses on detergents and personal hygiene products. In nominal
terms, the expenses on the specified goods per household have fallen
by 17% to 17.4 thsd AMD monthly. In real terms, the expenses have
fallen by 20% given the 4.2% inflation and totaled 16.7 thsd AMD by
the price calculation of 2012. So, people have mostly saved on
household goods, alcohol and cigarettes.
How have FMCG expenses changed for low-income and high-income
households? How have the households ensured the cost optimization?
We have classified the households into 5 groups by their monthly
incomes. The first four groups feature families whose monthly income
per family member is no more than 124.9 thsd AMD. Over the past two
years, the expenses of these groups have not changed so much as the
expenses of the fifth group, whose monthly income per family member is
125 thsd AMD and more. In nominal terms, this group's FMCG expenses
have risen by 11% to 210.2 thsd AMD per month. The first group
(families with no more than 30 thsd AMD monthly income per member) has
increased the FMCG expenses by 4% to 105.2 thsd AMD per month. The
second group (families with 30.1-45 thsd AMD monthly income per
member) has increased the monthly FMCG expenses by 3% to 128 thsd AMD.
The third group (families with 45.1-62.5 thsd AMD monthly income per
member) has decreased the expenses by 4% to 131.4 thsd AMD per month.
The fourth group (families with 62.6-124.9 thsd AMD monthly income per
member) has increased the expenses by 1% to 155.8 thsd AMD per month.
The figures demonstrate that in the first four groups the monthly
expenses have undergone almost no changes given the 5% deviations,
which are admitted in statistical surveys. These families had to
reduce the FMCG expenses in order to pay for the electric power and
gas supply services. To ensure some cost optimization, people have
started buying cheaper goods, which have lower quality and lower brand
popularity than their expensive analogues. The fifth group also had to
spend less, but not on the FMCG but on trips or meals at the
restaurants, for instance. It is much easier for this group to scrape
through, because in their case to optimize costs does not mean to make
two ends meet.
You say that over the past two years the residents of Yerevan have
started buying the FMCG at minimarkets and big food stores rather than
supermarkets and hypermarkets. Why have the residents' buying
preferences changed so much? Are they displeased with the prices
offered by the large retailers or... ?
This is the most noteworthy fact revealed by our research. The share
of supermarkets and hypermarkets in the world retail sector was
prevailing and steadily growing before the crisis, but over the
post-crisis period the share of retail chains ceased growing and even
dropped worldwide, especially in the countries of Central and Eastern
Europe. These countries experience growth in the consumer demand for
stores. In Armenia's case the reasons are more mundane. One of the
reasons of shopping reduction at supermarkets is their inconvenient
location. As you know, in 2012 the STAR retail chain withdrew from the
market by closing all its supermarkets (over 30). STAR had
supermarkets in all the administrative districts of Yerevan. The
geography of the current retail chains is not so wide and people visit
the nearby stores instead of going to a remote supermarket. The second
reason is that it takes people more time and money to do shopping at
supermarkets than at small stores. As a rule, goods are cheaper at the
small stores, because the assortment consists of cheaper items.
How do you think the situation will change in the future? Won't the
large retail chains be driven out of the market by small stores?
I think the given market participants will shortly recover their
pre-crisis positions, because the current decline is not permanent and
it is only the consequence of the economic downturn. As soon as the
global financial crisis is over and new supermarkets are opened, the
share of the large retail chains in Armenia will go up again. The
current retail chains are making attempts to extend their geography.
Furthermore, with the entry of the new player Carrefour, especially if
the latter ensures a wide geography in the local market, the share of
retailers in the aggregate public demand for purchases will skyrocket.
On the other hand, the wide chain of Carrefour will aggravate the
competition among the leading players.
What measures should the current retailers in Armenia take to
withstand the upcoming stiffer competition?
According to the research findings, the residents of Yerevan give high
priority to the wide assortment of goods when choosing a supermarket.
The second important thing is the service quality, and the third one
is the adequacy of the prices to the quality of the goods.
Each of the current retail chains has its own niche. Some of them
focus on wide assortment and raise the prices. Consequently, these
supermarkets offer their services to the category of the customers who
have specific requirements to the assortment. Other supermarkets make
the service quality their main trump card. Over the past 2 years some
supermarkets have boosted their sales due to low prices, because amid
the declining personal revenues they enjoyed big demand among the
customers. These supermarkets lacked a wide assortment of goods and
the quality of their services was not that high.
Amid the toughening competition, supermarkets should strengthen the
three abovementioned factors and decide more precisely what group of
customers they should work for, what buying preferences the customers
have, what age group prevails in their customer base, etc. Our
research has demonstrated that youth prefer doing shopping at
supermarkets rather than small stores and stalls. The choice of the
supermarket also depends on what exactly the customer wants to buy.
For instance, alcohol is usually bought at the supermarkets and
cigarettes are bought at the stalls. Elderly people buy fruit and
vegetables at the agrarian markets more often than at the
supermarkets. To withstand the competition, the large retail chains
should find out what for the customers visit their sales outlets. In
addition, they had better speed up efforts to maintain the customer
loyalty and to attract new customers, because a new player will soon
launch activities in Yerevan.
I should mention that the research features the portraits of the
customers of each of the leading chains. The location of the
supermarket is of certain importance, as I have already said. Many
communities of Yerevan have lacked supermarkets since the withdrawal
of STAR from the market, and the residents have to do their shopping
at the minimarkets and food stores adjacent to their houses. So, the
large retailers should pay attention to the correct location of their
supermarkets when expanding their chains. Our research also includes
data on how many supermarkets there are in the administrative
districts of Yerevan and whether they are in demand. Other factors
such as discount systems, advertising, brands, possible noncash sales
and online purchases are of no much significance yet. It should be
noted that the price level is a priority for the customers, who choose
specific stores and minimarkets.
You have mentioned that the price level is the third important factor
for the respondents. Won't this approach change in the future, since
the customers start paying more and more attention to the cheapness of
goods?
According to the previous research conducted by Ameria, 2 year ago the
price level was the fifth important factor in the choice of the
supermarket. In 2012-2013 the given factor became more crucial,
because as I have already mentioned, the revenues of the major part of
the population dropped, whereas the prices went up. The future changes
in the customers' approach directly depend on the changes in the
socio-economic condition of the population. If it changes for the
better, the price factor in the choice of the supermarkets will become
the fourth or the fifth important factor.
By our classification, for the first three groups of households with
relatively low incomes the price level is almost as important as the
wide assortment and the customer quality and the importance ratios of
the three factors in these groups do not differ very much, unlike
those for the households with relatively high incomes. It should be
noted that the importance of the factors in the choice of the
supermarkets depends not only on the incomes but also on the age and
sex. For instance, middle-aged and elderly people pay more attention
to the prices than youth. To female customers prices also matter more
than to male ones.
Your research has revealed one more interesting fact: the residents of
Yerevan have reduced the expenses at agrarian markets and especially
fairs. Though the service quality here is lower than at stores, the
agrarian markets and fairs have a very important advantage for
Armenians - one can abate the price here. Given that the needy people
have reduced their expenses most of all, what's the dynamics of the
needy people's expenses at the agrarian markets and fairs? Why have
the needy people sharply changed their approach to the agrarian
markets and fairs and where do they prefer doing shopping now?
Our research demonstrates that the agrarian markets are mostly the
preference of the older generation. 45-55-aged women constitute the
major part of the customers. The youth do not visit the agrarian
markets and, as a rule, do not change their buying preferences in the
future. In other words, the agrarian markets are becoming irrelevant
due to the alternation of generation. A similar trend is being
observed in other countries as well. Furthermore, the attendance is
seasonal here. In summertime the agrarian markets have more customers
than in other seasons, because in summer the preference is given to
fresh fruit and vegetables. I think if the current tendency goes on,
the role of the agrarian markets as trade outlets will diminish or
they will become an attraction for travelers. As regards fairs, the
residents have reduced their expenses here because the number of such
outlets has sharply decreased over the past two years rather than
because people are reluctant to visit these outlets. In addition, the
fairs cannot withstand the competition with the stores where the
prices are much lower and various discount campaigns are launched from
time to time. Besides, it takes people too much time to attend fairs.
People are doing less shopping at the stalls and hardware shops. Why?
The range of goods is too narrow here. In addition, the stalls have
sharply decreased in number due to the regulatory standards and
toughened requirements to them. As regards the hardware shops, I can
say that here the shopping is declining because the assortment is
restricted to detergents and personal hygiene means, whereas people
are inclined to purchase everything at single shopping. So, the
problem is the narrow assortment again and the need to save time. It
is noteworthy that though the share of supermarkets in the Yerevan
residents' FMCG expenses has dropped, nevertheless, on a single visit
to a supermarket customers spend more money and buy more goods than
they did a few years ago. In other words, people seek to spend less
time on shopping.
How popular and applicable are the loyalty cards provided to the
customers by the supermarkets in Yerevan?
During the public opinion poll, we asked the respondents what for they
need these cards most of all. Some of them need these cards to
accumulate bonus points, some respondents need them to make use of the
discounts, for others the loyalty cards raise their image, but most of
the respondents failed to answer this question. They did not know how
to use the cards or they did not know what mattered more to them -
discounts, bonus points or the image. This means that the customers
are not well aware of the idea of loyalty cards. To note, more people
made use of such cards in 2012 than now not least because of STAR's
withdrawal from the market. It should also be noted that the loyalty
cards are more popular with women than men.
So, what major problems can endanger the development of the retail
trade sector and what trends may hinder the regular business course in
the future?
The key problem is the demographic condition of Armenia. The given
segment is population-oriented and the retail sector suffers a
quantitative and qualitative shortage of customers. The continuous
reduction in the country's population has a direct negative impact on
the retail trade sector. The major risks in the given segment are the
steadily shrinking number of the customers and and/or the insufficient
growth of revenues of the remaining customers. No matter how well the
retail chains work and no matter how much they enhance their
competitiveness, the shortage of customers remains an urgent problem.
In the course of time, this problem will become even more topical
given the high migration rates.
Thank you for the interesting and informative interview.
http://www.arminfo.am/index.cfm?objectidò9EEA70-1577-11E4-818D0EB7C0D21663
on supermarkets
ArmInfo's Interview with Artashes Shaboyan, Senior Research Specialist
at Ameria Group
by Gayane Isahakyan
Sunday, July 27, 14:22
Retail trade has always been one of the most dynamic sectors of world
business. Retail trade operators are developing intensively. This
trend does not pass by Armenia, where retail chains are also
developing dynamically. There are already over 10 retail chains in the
country and their number keeps growing. The process of development is
accompanied by mergers, acquisitions, entry of new players and
withdrawal of old ones, which eventually determines the dynamics of
the retail trade market. Ameria Advisory Company has conducted the
second research in the retail trade sector in Armenia, with main focus
on fast moving consumer goods market (FMCG). According to the findings
of the research, in 2012-2013 the large retail chains reduced the
coverage of Yerevan's FMCG market by 5 pct points. Now supermarkets
and hypermarkets occupy only 47% of the FMCG market in Yerevan versus
52% in 2012. The research explains this by the fact that the residents
of Yerevan considerably reduced their FMCG expenses and started doing
more shopping at minimarkets and food stores. Furthermore, two years
ago STAR, a major trade chain in Armenia, quitted. This toughened the
competition among the market participants, which should keep placing
their stake on the customer perception and innovation management to
enhance the customer loyalty and engagement. Below is ArmInfo's
interview with Artashes Shaboyan, Senior Research Specialist at Ameria
Group, who shares his opinion on possible problems, trends in the
retail trade sector, as well as the steps that can help retailers to
their boost sales.
Mr. Shaboyan, according to Ameria Advisory Company's research, the
fast moving consumer goods (FMCG) market of Yerevan has shrunk over
the past 2 years due to the changes in consumer behavior. How and why
has the consumer behavior of the Yerevan residents changed?
Ameria conducted the first research in the retail trade sector in 2012
and the second one in 2014. In both cases we studied the households'
FMCG expenses in Yerevan. In nominal terms, over the past two years
the Yerevan residents' monthly FMCG expenses have dropped by 4% in AMD
terms and by 6% in USD terms, having averaged 143.9 thsd AMD. In fact,
the dynamics is not so tangible but given the two-year rise in the
consumer price index, the Yerevan residents' FMCG expenses dropped by
16% in real terms, and this is a rather big figure. In fact, this is
how much the residents have reduced physical consumption of FMCG over
the past two years. If the FMCG prices in 2014 were the same as two
years ago, the residents' monthly expenses on FMCG with the current
physical consumption would be 126.1 thsd AMD instead of 143.9 thsd
AMD. Our research has revealed two reasons why the residents of
Yerevan have started spending less. The first reason is that over the
past two years the household incomes have not grown, to put it mildly.
The income of some social groups has not changed, and the income of
others has declined to some extent. The second reason is that the
expenses on other goods and services (including gas and electric power
supply) have considerably grown. People had to spend less on their
food, detergents, personal hygiene means, alcohol and cigarettes.
Your research has found out that the residents of Yerevan have started
spending less on FMCG. In case of overall price boost, people
certainly have to tighten the purse strings. What goods do people save
on and what goods enjoy little demand?
In nominal terms, the monthly expenses on food and soft drinks per
household in Yerevan have dropped by 1%. In 2012 those expenses made
up 109.3 thsd AMD monthly versus 108.5 thsd AMD in 2014. The
difference between these amounts is not big. But as I have already
mentioned, the situation becomes absolutely different given the
two-year tangible inflation - the population spends the same amount
but buys fewer goods, i.e. people save on food. Over the past two
years, food and soft drinks have risen in price by 16.3%. So, the
Yerevan residents' expenses on food and soft drinks have fallen by
15%. By the price calculation of 2012, the physical consumption of
these goods in 2014 would be 93.3 thsd AMD monthly (instead of 108.5
thsd AMD). As regards alcohol and cigarettes, their consumption would
decline by 8% to 17.9 thsd AMD in nominal terms and by 18% in real
terms given the 12.1 inflation (to 16 thsd AMD by the price
calculation of 2012). The biggest decline fell on the households'
expenses on detergents and personal hygiene products. In nominal
terms, the expenses on the specified goods per household have fallen
by 17% to 17.4 thsd AMD monthly. In real terms, the expenses have
fallen by 20% given the 4.2% inflation and totaled 16.7 thsd AMD by
the price calculation of 2012. So, people have mostly saved on
household goods, alcohol and cigarettes.
How have FMCG expenses changed for low-income and high-income
households? How have the households ensured the cost optimization?
We have classified the households into 5 groups by their monthly
incomes. The first four groups feature families whose monthly income
per family member is no more than 124.9 thsd AMD. Over the past two
years, the expenses of these groups have not changed so much as the
expenses of the fifth group, whose monthly income per family member is
125 thsd AMD and more. In nominal terms, this group's FMCG expenses
have risen by 11% to 210.2 thsd AMD per month. The first group
(families with no more than 30 thsd AMD monthly income per member) has
increased the FMCG expenses by 4% to 105.2 thsd AMD per month. The
second group (families with 30.1-45 thsd AMD monthly income per
member) has increased the monthly FMCG expenses by 3% to 128 thsd AMD.
The third group (families with 45.1-62.5 thsd AMD monthly income per
member) has decreased the expenses by 4% to 131.4 thsd AMD per month.
The fourth group (families with 62.6-124.9 thsd AMD monthly income per
member) has increased the expenses by 1% to 155.8 thsd AMD per month.
The figures demonstrate that in the first four groups the monthly
expenses have undergone almost no changes given the 5% deviations,
which are admitted in statistical surveys. These families had to
reduce the FMCG expenses in order to pay for the electric power and
gas supply services. To ensure some cost optimization, people have
started buying cheaper goods, which have lower quality and lower brand
popularity than their expensive analogues. The fifth group also had to
spend less, but not on the FMCG but on trips or meals at the
restaurants, for instance. It is much easier for this group to scrape
through, because in their case to optimize costs does not mean to make
two ends meet.
You say that over the past two years the residents of Yerevan have
started buying the FMCG at minimarkets and big food stores rather than
supermarkets and hypermarkets. Why have the residents' buying
preferences changed so much? Are they displeased with the prices
offered by the large retailers or... ?
This is the most noteworthy fact revealed by our research. The share
of supermarkets and hypermarkets in the world retail sector was
prevailing and steadily growing before the crisis, but over the
post-crisis period the share of retail chains ceased growing and even
dropped worldwide, especially in the countries of Central and Eastern
Europe. These countries experience growth in the consumer demand for
stores. In Armenia's case the reasons are more mundane. One of the
reasons of shopping reduction at supermarkets is their inconvenient
location. As you know, in 2012 the STAR retail chain withdrew from the
market by closing all its supermarkets (over 30). STAR had
supermarkets in all the administrative districts of Yerevan. The
geography of the current retail chains is not so wide and people visit
the nearby stores instead of going to a remote supermarket. The second
reason is that it takes people more time and money to do shopping at
supermarkets than at small stores. As a rule, goods are cheaper at the
small stores, because the assortment consists of cheaper items.
How do you think the situation will change in the future? Won't the
large retail chains be driven out of the market by small stores?
I think the given market participants will shortly recover their
pre-crisis positions, because the current decline is not permanent and
it is only the consequence of the economic downturn. As soon as the
global financial crisis is over and new supermarkets are opened, the
share of the large retail chains in Armenia will go up again. The
current retail chains are making attempts to extend their geography.
Furthermore, with the entry of the new player Carrefour, especially if
the latter ensures a wide geography in the local market, the share of
retailers in the aggregate public demand for purchases will skyrocket.
On the other hand, the wide chain of Carrefour will aggravate the
competition among the leading players.
What measures should the current retailers in Armenia take to
withstand the upcoming stiffer competition?
According to the research findings, the residents of Yerevan give high
priority to the wide assortment of goods when choosing a supermarket.
The second important thing is the service quality, and the third one
is the adequacy of the prices to the quality of the goods.
Each of the current retail chains has its own niche. Some of them
focus on wide assortment and raise the prices. Consequently, these
supermarkets offer their services to the category of the customers who
have specific requirements to the assortment. Other supermarkets make
the service quality their main trump card. Over the past 2 years some
supermarkets have boosted their sales due to low prices, because amid
the declining personal revenues they enjoyed big demand among the
customers. These supermarkets lacked a wide assortment of goods and
the quality of their services was not that high.
Amid the toughening competition, supermarkets should strengthen the
three abovementioned factors and decide more precisely what group of
customers they should work for, what buying preferences the customers
have, what age group prevails in their customer base, etc. Our
research has demonstrated that youth prefer doing shopping at
supermarkets rather than small stores and stalls. The choice of the
supermarket also depends on what exactly the customer wants to buy.
For instance, alcohol is usually bought at the supermarkets and
cigarettes are bought at the stalls. Elderly people buy fruit and
vegetables at the agrarian markets more often than at the
supermarkets. To withstand the competition, the large retail chains
should find out what for the customers visit their sales outlets. In
addition, they had better speed up efforts to maintain the customer
loyalty and to attract new customers, because a new player will soon
launch activities in Yerevan.
I should mention that the research features the portraits of the
customers of each of the leading chains. The location of the
supermarket is of certain importance, as I have already said. Many
communities of Yerevan have lacked supermarkets since the withdrawal
of STAR from the market, and the residents have to do their shopping
at the minimarkets and food stores adjacent to their houses. So, the
large retailers should pay attention to the correct location of their
supermarkets when expanding their chains. Our research also includes
data on how many supermarkets there are in the administrative
districts of Yerevan and whether they are in demand. Other factors
such as discount systems, advertising, brands, possible noncash sales
and online purchases are of no much significance yet. It should be
noted that the price level is a priority for the customers, who choose
specific stores and minimarkets.
You have mentioned that the price level is the third important factor
for the respondents. Won't this approach change in the future, since
the customers start paying more and more attention to the cheapness of
goods?
According to the previous research conducted by Ameria, 2 year ago the
price level was the fifth important factor in the choice of the
supermarket. In 2012-2013 the given factor became more crucial,
because as I have already mentioned, the revenues of the major part of
the population dropped, whereas the prices went up. The future changes
in the customers' approach directly depend on the changes in the
socio-economic condition of the population. If it changes for the
better, the price factor in the choice of the supermarkets will become
the fourth or the fifth important factor.
By our classification, for the first three groups of households with
relatively low incomes the price level is almost as important as the
wide assortment and the customer quality and the importance ratios of
the three factors in these groups do not differ very much, unlike
those for the households with relatively high incomes. It should be
noted that the importance of the factors in the choice of the
supermarkets depends not only on the incomes but also on the age and
sex. For instance, middle-aged and elderly people pay more attention
to the prices than youth. To female customers prices also matter more
than to male ones.
Your research has revealed one more interesting fact: the residents of
Yerevan have reduced the expenses at agrarian markets and especially
fairs. Though the service quality here is lower than at stores, the
agrarian markets and fairs have a very important advantage for
Armenians - one can abate the price here. Given that the needy people
have reduced their expenses most of all, what's the dynamics of the
needy people's expenses at the agrarian markets and fairs? Why have
the needy people sharply changed their approach to the agrarian
markets and fairs and where do they prefer doing shopping now?
Our research demonstrates that the agrarian markets are mostly the
preference of the older generation. 45-55-aged women constitute the
major part of the customers. The youth do not visit the agrarian
markets and, as a rule, do not change their buying preferences in the
future. In other words, the agrarian markets are becoming irrelevant
due to the alternation of generation. A similar trend is being
observed in other countries as well. Furthermore, the attendance is
seasonal here. In summertime the agrarian markets have more customers
than in other seasons, because in summer the preference is given to
fresh fruit and vegetables. I think if the current tendency goes on,
the role of the agrarian markets as trade outlets will diminish or
they will become an attraction for travelers. As regards fairs, the
residents have reduced their expenses here because the number of such
outlets has sharply decreased over the past two years rather than
because people are reluctant to visit these outlets. In addition, the
fairs cannot withstand the competition with the stores where the
prices are much lower and various discount campaigns are launched from
time to time. Besides, it takes people too much time to attend fairs.
People are doing less shopping at the stalls and hardware shops. Why?
The range of goods is too narrow here. In addition, the stalls have
sharply decreased in number due to the regulatory standards and
toughened requirements to them. As regards the hardware shops, I can
say that here the shopping is declining because the assortment is
restricted to detergents and personal hygiene means, whereas people
are inclined to purchase everything at single shopping. So, the
problem is the narrow assortment again and the need to save time. It
is noteworthy that though the share of supermarkets in the Yerevan
residents' FMCG expenses has dropped, nevertheless, on a single visit
to a supermarket customers spend more money and buy more goods than
they did a few years ago. In other words, people seek to spend less
time on shopping.
How popular and applicable are the loyalty cards provided to the
customers by the supermarkets in Yerevan?
During the public opinion poll, we asked the respondents what for they
need these cards most of all. Some of them need these cards to
accumulate bonus points, some respondents need them to make use of the
discounts, for others the loyalty cards raise their image, but most of
the respondents failed to answer this question. They did not know how
to use the cards or they did not know what mattered more to them -
discounts, bonus points or the image. This means that the customers
are not well aware of the idea of loyalty cards. To note, more people
made use of such cards in 2012 than now not least because of STAR's
withdrawal from the market. It should also be noted that the loyalty
cards are more popular with women than men.
So, what major problems can endanger the development of the retail
trade sector and what trends may hinder the regular business course in
the future?
The key problem is the demographic condition of Armenia. The given
segment is population-oriented and the retail sector suffers a
quantitative and qualitative shortage of customers. The continuous
reduction in the country's population has a direct negative impact on
the retail trade sector. The major risks in the given segment are the
steadily shrinking number of the customers and and/or the insufficient
growth of revenues of the remaining customers. No matter how well the
retail chains work and no matter how much they enhance their
competitiveness, the shortage of customers remains an urgent problem.
In the course of time, this problem will become even more topical
given the high migration rates.
Thank you for the interesting and informative interview.
http://www.arminfo.am/index.cfm?objectidò9EEA70-1577-11E4-818D0EB7C0D21663