According to Geostat, the national statistics service of Georgia, as of December 1, 2019, there are about 2000 stores for home appliances in Georgia, including 1,954 small trading outlets. As for major networks, Elite Electronics is reported to be the major trading network with major importers, and the widest network of branches. Elite Electronics has been operating in the Georgian consumer market since 1996. At this stage, the network has 26 branches.
TechnoBoom is ranked second. It was founded in 2010 by the former founder and personnel of Elite Electronics. At this stage, the network has 15 branches. Following the merger of Alta and Okay, they have a total of 11 branches. Aray Smile has 10 branches, and MegaTechnics owns 10 branches, which appeared on the Georgian market in 1997. Beco owns 8 branches, like Zoomer, which launched operation in Georgia in 2009.
Starting on May 7, 2018, after the enforcement of the National Bank regulations, commercial banks cannot issue loans without income references. Starting on January 1, 2019 a Responsible Crediting component was enforced for the Georgian financial market. As a result, sales have almost halved. The installment payment schemes do not work in practice. Therefore, stores of home appliances plan to develop new schemes. It was not ruled out that several networks introduce internal installment payment schemes for sales of their home appliances.
Part of these networks have begun consultations with microfinance organizations. According to their information, the details of these negotiations will be divulged in about 2 weeks.
Representatives of the Elektronika network explain that regulations have halved their sales, because the ratio of installment payment schemes was about 60%-70% of total sales.
Negotiations are underway with several microfinance organizations on new installment payment schemes. “We believe there are more chances to arrange new installment payment schemes together with them. Details will be unveiled in two weeks”, the company representatives noted.
In response to the question of whether national bank regulations may not be respected, Electronika representatives noted that they do not expect regulations will be violated because everybody follows the legislation.
TechnoBoom founder Anzor Kokoladze has also suffered from the new regulations. Insolvency proceedings are underway against LLC TechnoBoom.
“We delayed paying the bill of one of the suppliers. As reported, one of our stores was burnt down, and this debt arose after this fact. Moreover, new regulations have essentially cut our sales.”
And now, negotiations are underway with the company to pay debts on a new schedule. “The company will have no failures, and it will continue to operate regularly”, Anor Kokoladze said.
The new regulations have significantly decreased network sales. The ratio of installment payment schemes in total sales was 70%, but now the figure has declined to 20%, Anzor Kokoladze noted.
“If the current situation is not improved, various sectors will be damaged, including furniture stores, apartments, development sector. We expect the situation to improve in about 6 months”, Anzor Kokoladze noted.
Mehmed Meleq, founder of the Beco network of home appliances, explains that company sales proceed in a normal regime, but at the expense of declining prices. Installment payment schemes had a significant role in total sales, but the new regulations have reduced this ratio, and the company preferred to follow a new strategy, Mehmed Meleq noted.
“We have reduced prices by 10-15%. Therefore, consumers buy our products without installment payment schemes. We have lowered our profits margin, but this situation cannot be maintained endlessly”, Meleq noted.
The company has not revised the investment plan. Namely, in Kutaisi and in Rustavi additional stores will open, he added.