General News from Armenia‏

Globalization in the Storefront: At least 10 “legitimate” franchises
entered Yerevan in 2008
By Sara Khojoyan
ArmeniaNow reporter
Published: 09 January, 2009

When New Year fever shoppers hit Yerevan streets this recent holiday season
they found that more than 10 “brand name” shops now fill the consumer menu as
internationally-recognized names replace nameless or meaningless storefronts.
Brightly decorated and designed window casings continue to displace the gloomy
and usually unattractive holdovers from a bygone era.

The opening of world known brand outlets in Armenia has increased the confidence
among people about the availability of clothing for consumers with average and high
purchasing capacity. But the increasing appearance of notable names hardly
discourages skepticism over whether the product inside matches the reliability of the
name on the door. That is to say: Still in Yerevan, just because a store appears to be
a franchise, that doesn’t mean it is legitimate.

A few years ago, for example, a shop opened claiming to be “IKEA”. It was later
revealed that the store was not a legitimate franchise and soon the name changed to
“IDEA”. And, more recently, a shop has opened calling itself “The Disney Store” on its
marquee, however, in television promotion more quietly refers to itself as “The ‘D’ Store”.

Legitimate franchises new to the streets, however, include MaxMara, Max&Co, Mexx,
Motivi, Next, Stefano Ricci and others. These companies are represented in Armenia
through franchising that gives a number of advantages to both the shop-owners and the
consumers in Armenia.

“Armenians in Yerevan can get the same clothes, as say, the British in London. And,
then, everything in this shop – the floor, the furniture, the jars, are all the way they are in
any of the Next shop around the world,” says Vahe Gemilyan, the director of the recently
opened Next shop, which moved into space previously held by Slavyanskaya restaurant.

Naira Shahnazaryan, director of the Benetton shop operating by franchise contract in
Armenia says the increase in the number of unibrand shops in Yerevan will result in the
close up of multi-brand ones.

“The franchising makes our work easier, as we get financing for advertisement. They tell
us even the way the shop windows should look. For instance, the New Year window of
Benetton is like any Benetton shop’s around the world,” mentions Shahnazaryan.

The franchising – a novice method of doing business [in Armenia] – implies the owner
of the company allows another business to use his brand on certain conditions passing
on his technologies of running it.

The majority of franchising contracts in Armenia relate to the imports and sells of garments.
The franchiser defines the design of the shop, the size of discounts and the dates [for the
discounts], and also sets the standards of quality for delivering the service. Franchisees
in Armenia are Mango, Stefanel, Orchestra, Cop.Copine, Olsen, Nugat, and other shops.

In November 2008 the American Trade Chamber in Armenia organized a conference on
Franchising in Armenia to propagate franchising ideologies in Armenia.

“We can see movement mostly in franchising for imports and sells of outfit and hotel
businesses. We have quite a serious work to do in the sphere of food products to manage
to present new brands,” mentions the chairman of the American Chamber of Commerce in
Armenia Davit Atanesyan.

Atanesyan says the legislative conditions for organizing franchising activities in Armenia
are perfect, though: “The law protects the brand but there are many problems with
implementation.

Directors of a number of brand shops underline some shops get clothes of previous seasons
for discount prices abroad and sell them for lower prices than in the brand shop.

Gayane Zakaryan, director at the French Orchestra children’s store says they have the
exclusive right to use the brand in the territory of Armenia: “But the nimble traders at out
bazaars manage to get the goods for lower prices at the warehouses in Turkey and sell
at the bazaars.”

Nerses Yeritsyan, RA Minister of Economy says development of franchising is essential
for Armenia.

“Its very important the idea of franchising spreads in our society. If we lack the know-how
internally, then we need to import it from abroad. Franchising is the first serious and important
step in that regard. No less important is spreading the successful business all over the country,
” the minister mentioned at the conference of the American Chamber of Commerce in Armenia.

And while the number of new stores and their branches in Yerevan grows, store managers, like
the majority of businesspeople in the world, worry of the possible consequences of the world
financial crisis on the volume of trades.

The representative of the Sela store that opened a couple of years ago in Yerevan, said they
are concerned with the crisis like anyone else: “But we will try not to lose our customers, we will
do our best – by means of actions or other events, to try to stay within the focus of our clients’
attention.”

Gemilyan, manager of the Next store said they have developed a special strategy to gain
customers and make them loyal to the brand:

“We are very careful about every customer; we have even softened our price policy to have
every shopper find something for himself/herself here.”

Some stores though do not think of the influence the financial crisis may have, yet. Ruzanna
Barseghyan, Basic House store manager, a brand that has recently opened a new branch in
the center of the capital, said they already have their clients and have no worries in this regard.
“What regards the financial crisis, it has not touched upon us yet and we have not thought about
it yet.”

With import of franchises, also comes import of foreign prices. “There are people who go to
Europe and buy goods of past seasons at 70-80 percent discount and say after they return the
prices there are lower,” says procurement manager of the company representing Betty Barclay,
MaxMara and Max&Co, Tatevik Stepanyan. “I can tell for us, the difference in price as compared
to Europe is very small. Everything should be viewed in comparison: there are things that are
10 percent more expensive here and things that are 10 percent more expensive there.”


"CRISIS" IN ARMENIAN SHOPS
A1+
[02:13 pm] 12 January, 2009

Today one can see few people in Armenian shops and supermarkets. Salespeople say trade
"stopped" after the New Year holidays. People mainly buy dairy products, bread, mineral water
and coffee. Shop assistants get delighted whenever someone drops in.

"We don't know how to spend our day as no one comes to our shop," said saleswoman Anahit.
She says after the holiday people still have much to eat at their homes. Besides, they have
spent a lot of money and try to suffice with the least.

"We still have meat in the freezer, and I cook meals with it. We still don't know how the global
financial crisis will affect our budgets and whether we shall be able to buy bread," said housewife
Varduhi.


Cash Still King: Paying bills by machine and without queues remains a novel idea in
Armenia
By Sara Khojoyan
ArmeniaNow reporter
Published: 09 January, 2009

For already a year the streets in Yerevan as well as those in other large towns have blomed with
orange-blue machines a meter and half high inviting passersby to bill-paying convenience.

Sidewalk terminals have brought electronic transactions as Automated Teller Machines made
banking more accessible a few years ago here.

Aram Barseghyan, a resident of Yerevan, has been making his utility services and cell phone
payments through such terminals since they first showed up. Users can pay water, electricity,
gas services, but most use them to pay for cellphone use.

“You don’t need to stand in line, or hear one telling you there is no change, or express discontent.
One other good thing is that you can pay in parts. I do all the payments very quickly, in just
10 minutes, and can do them at any time. The good thing is the terminals provide a number of
services and there is an opportunity to pay for international cell calls and also pay loans,” says
Barseghyan.

Currently, there are five companies operating such kiosks: TellCell, MegaPay, OSMP, MGPay,
and Tandem, and as the representatives of the sphere mention, the first two are on leading
positions. TellCell has 325 of about 600 total devices across the republic.


Aram Azatyan, executive director of the TellCell says despite the company has already
positioned itself in the market and makes about 7,000 deals per day through the terminals,
there are still problems in the sphere: “We have overcome the major difficulty, people have got
used to paying through terminals. But there are still gaps in the legislation in Armenia.”

“There are still many unused opportunities because of the lack of proper legislative norms. For
instance, any internet club could be an outlet to pay for, say, prepaid cell cards. But the present
legislation says a company has to be licensed by the Central Bank to accept payments,” Azatyan
explains.

Azatyan says also the transfers through the terminals are made online and take a few seconds,
whereas the traditional method of payment needs three days to fulfill the transfer.

The fact that people have started to accept this means of payment is witnessed also by the
representative of the Mega Pantera company, the MegaPay terminals’ owner, Georgi Khurshudyan.

Khurshudyan says the general population has had a mistrust of payment-by-machine which is
gradually being overcome in favor of the convenience afforded by electronic payment. About
700,000 transactions were made through Mega Pantera’s 250 terminals in the first year.

Other payment alternatives were offered in Armenia several years ago. Beginning 2004 Edram
system was introduced in Armenia; the system gives internet users opportunity to make online
payments.

E-dram helps pay for gas, water, electricity, wire and cell phones, as well as loan obligations
with banks.

Anna Grigoryan, communications executive of the Edram says there are 18,000 people now
registered with the system making more than the 10 percent of all internet users in Armenia.

Grigoryan mentions two major problems of developing the sphere in Armenia – one, the
accessibility of the internet, and second, internet literacy.

The system has no such problem with Hamlet Kocharyan, a resident of Yerevan, as the latter
has been using it for more than a year already: “Of course, it makes life easier, I buy their card
and make all my payments just from the workplace without standing in queue or losing time.
And the good thing is also that they don’t take money for making the utility service payments.”

ArCa card holders, who have registered their cards in the virtual system, have also had the
opportunity to make online payments since 2004.

Armen Safaryan, head of the business development and international ties unit of the Armenian
Card CJSC says 4,845 virtual cards were registered as of December 25, 2008.

“I think this figure is not enough, but the situation is created by objective reasons – the problem
of accessibility of the internet and the communication lines and lack of internet awareness.
The mass of people to be able to pay through the internet is lacking,” says Safaryan.

The ArCa is starting an active campaign in 2009 to make the system more popular: “We will be
making cooperation offers to companies, who mostly do not know of such opportunity, say, the
disc shops, who do not know they can sell the products online,” adds Safaryan.

At present the ArCa system allows paying for a number of services – telephone (local,
international, mobile, prepaid, Easy and Alo card reloading), electricity, gas, and water, but the
most well-known of the provided opportunities is the one of making transfers to ArCa, Visa and
MasterCard holders, from card to card.

The director of the TellCell company sees no threat of possible decrease in the number of cash
payments in case of the development of the internet.

“First, Armenia is classified among the countries with large volumes of cash circulation, and t
hen only 7-10 percent of the population uses internet, which means we still have chance to
develop for another 3-5 years,” says Azatyan.


CRIME RATE REDUCED IN CIS COUNTRIES, INCREASED IN ARMENIA
Panorama.am
14:48 12/01/2009

In 2008 crime rate in CIS countries reduced by 11% in the average
compared with the previous year, reports the Inter-state statistical
committee of CIS.

In Belarus crime rate reduced by 13%, in Russia-by 11%, in Tajikistan
and Ukraine- by 4%. The committee also reports that the rate has been
increased in Azerbaijan by 14%, in Armenia by 5%, in Kyrgyzstan and
Moldova by 2% and in Kazakhstan by 1%.

The rate of drug crime in the territory of CIS has been 250
thousands. The rate of drug crime in Azerbaijan increased by 16%, in
Ukraine- by 2%, in Armenia- by 22%, in Belarus and Kazakhstan -by 5%
and in Tajikistan- by 3%.
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