The Challenge of Working in Emerging Markets; Example: Tbilisi Outlet Village, Georgia

May 19, 2021

By Barbara Horatz, Partner Marketing & Retail, TORG Europe
19 May, 2021

Many of you have been tempted to do it, others have done it or are doing it – taking on projects in emerging markets. We currently are busy working on one of our latest developments, TBILISI OUTLET VILLAGE, in a country that not everybody is familiar with – Georgia, at the crossroads of  East and West. So, I wanted to share some of our experiences with you. I must say, me and my team have leased a lot of schemes over the years, but we have rarely seen a more overwhelmingly positive and enthusiastic response within such a short period of time as for this scheme. We are 50% leased eight months after having gone to market and that in times of Covid-19. Even more satisfying as our project has not even started construction – it is planned to do so next month with anopening in Spring 2022.

So, what is it that has made TBILISI OUTLET VILLAGE such a promising development, from the moment we tookit to market? We believe there are a number of reasons:

The country’s stability

Whilst not part of Europe, Georgia is considered as the next logical extension of Europe and Asia and one of the top emerging countries in and around Europe. When entering new markets, brands are always eager to assess risk and they want to be reassured about its economy, government and consumption level. For Georgia, all signals are pointing in the right direction: 5% economic growth for the 3 years preceding Covid-19, trade agreements with many countries worldwide, no import duties with the EU, low tax rates – the 8th least worldwide – and a general ease of doing business.

The quality of the offer

The times where “pile it high, sell it cheap” worked in emerging countries are long over. Our industry – outlets – has been around for long enough, brands and consumers have been coming of age, expectations are high today. For TBILISI OUTLET VILLAGE we brought on board an international best-in-class team. This includes L35, the Barcelona based architects who designed many award- winning schemes including La Roca and Las Rozas as well as London based Innesco, a 360 degree communications agency that helped to create a unique branding, brochure, website and video and communicated it accordingly. We are aiming high to hit high – we want TBILISI OUTLET VILLAGE to become the future #1 outlet in the greater CIS region.

The local support

When entering new markets, it is important to have a team on the ground that is locally knowledgeable, well connected, eager to succeed and in ongoing contact with you. In the case of TBILISI OUTLET VILLAGE, the brainchild and driver behind the project is a reputed Georgian businessman, a Standford business school graduate, Guram Tsanava, who had the vision and drive to realize a project of this magnitude. Especially in times of Covid-19, this local presence has turned out to be irreplaceable and invaluable, despite or in addition to all the zoom and teams meetings that one can have.

On top of that we benefit from the building and construction expertise of one of Georgia’s leading construction firms, Domus, who is also partner in this venture and who has helped to spot the ideal site 30minutes East of thecapital and achieved building consent in a record time.

The seamless collaboration between European brand head offices and local distributors

Distributors in emerging markets are not able to make decisions to join an outlet on their own, or let’s say, they can, as long as head offices give their blessings to the project and can guarantee that they will provide them with sufficient and appropriate stock. That will either be the leftover from the local partner’s full price stores but often, it will need to be complemented by centrally organized further outlet stock. In the case of Georgia, this can come from neighboring countries such as Russia, Ukraine or Turkey or directly from head office or a central warehouse. The 50% leasing result has been the fruit of a relentless approach and negotiation at the distributor level as well as ongoing networking at head office level in Europe.

Not only is it rare that we have seen such a high percentage leased at such an early stage, but also that the mix of brands is so high. It is too early to reveal any of them, but, be assured, we already have some of those highly desirable anchors, be it designer labels or main international high street names. Add to that brands that are not yetpresent in the country, but that see TBILISI OUTLET VILLAGE as an opportunity to enter the market directly and to offload some of the stock accumulated in times of Covid-19.

It is encouraging to see that brands recognize the project’s unrivalled potential. If you now think, hey, why did I nothear about TBILISI OUTLET VILLAGE yet, feel free to contact us.

We are always happy to talk about Georgia or any other emerging country!