Can you tell us about our operations in Georgia? How do you evaluate the duty free market in the region and ATU Duty Free's position and potential in this market?
Our Georgia operation, which we opened in 2007, is ATÜ's first overseas operation. We are the sole duty free operator of Tbilisi, Batumi and Kutaisi International Airports. In Tbilisi, our renovated main store is 430 square meters, our wine store is approximately 400 square meters and our bus gate store is 50 square meters. Batumi and Kutaisi serve with 252 square meters, 420 square meters main store and 150 square meters local store, respectively. We are the largest duty-free operator in the country and the region. Since the day we won the Kutaisi Airport tender for the second time, we have been operating it in the best way possible. During the season, we serve with a staff of approximately 180-200 people.
The adventure that started in 2007 with a total of 51.500 departing passengers has now reached 4.110.234 departing passengers together with Kutaisi. We have reached annual sales of over 40 million Euros. I would like to thank Mete Vural, Tamer Ciğeroğlu and Murat Demirağ, the previous operation managers, who have contributed a great deal to the operation in this challenging process. We continue to work hard to carry the flag we received from them further. I believe that Georgia will maintain its popularity for many more years by adding many different destinations after opening its tourism doors. In this respect, it is located in a very important region.
How do you carry out your collaboration processes with local and international stakeholders? How do these processes contribute to the success of your operations?
In Georgia, Tbilisi and Batumi Airports are operated by TAV, while Kutaisi Airport is operated by UAG. We work in close coordination with TAV Airports executives under one umbrella. Since our communication with TAV is at the highest level, we have a significant advantage in taking quick action on new developments. In addition, we always receive their support in taking quick action and expanding stores, warehouses and all other issues in this region where the number of passengers is growing rapidly. Kutaisi Airport has different dynamics, and we are in constant communication with UAG there as well. We come together with the Customs, Police and Administrative Supervisors many times a year and create joint projects for the development of the airport.
One of Georgia's most important production sources is wine. As ATU, we attach importance to Georgia's local market and support the promotion of Georgian local products to the world. We sell the products of around 70 local companies in our Tbilisi, Batumi and Kutaisi stores. We offer access to Georgian local products such as wine, brandy, vodka, cheese, walnut sausage, all kinds of sauces, dried fruit rollup, souvenirs, caviar, spices, ... etc. in a single store. In addition, we are also doing things that will produce social benefits in terms of social responsibility by featuring the products of housewives who earn economic income by making souvenirs at home in our local stores. In the meantime, we have started to list Georgian local products in our other operations. In our new store to be opened in Antalya, Georgian wine and brandy will also take its place.
Can you tell us about customer shopping habits in Georgia? What are the most preferred products by product-category?
Our customer profile in Georgia varies according to the dynamics of the region and the world. Before the pandemic, it was a country mostly visited by Russian and Soviet countries, but now it attracts tourists from different destinations.
Tbilisi: Destination-based passenger data for 2024: Turkey (transit European passengers) 22%, Former Soviet countries 17%, Gulf countries 18%, European Union (EU) countries 15% and Russia 14% are at the top of the list. The list continues with Israel, Iran, India and China.
Batumi: Israel 35%, Russia 18%, Turkey 18%, former Soviet countries 14%, Gulf countries 8%, Iran 5% and others. Kutaisi: European Union Countries (EU - Georgian travelers to Europe) 71%, Former Soviet 15%, Gulf countries 9%, Turkey 3%, Russia 2%
On a category basis, Perfumes and cosmetics ranked first with 36% of the total in our Georgia operation, followed by Georgian local products with 27%, Tobacco products with 13%, Confectionary with 12%, Spirits with 7% and the remainder of the share of toy accessories. When we look at the product basis, world brands such as Chanel and Dior constitute the first place.
Which countries do the customers who shop the most in your operation come from?
In Tbilisi, Russian customers and customers from Eastern Europe, the Caucasus and Central Asia (former Soviet Union) are in the first place. In Batumi, Israeli and in Kutaisi, Georgian customers come first.
In 2022, after the opening of the new duty free store with the 'walkthrough' concept at Kutaisi Airport, what kind of developments have taken place in customer experience and sales performance? Did it meet your expectations?
At Kutaisi Airport, the fact that Georgian citizens have cheaper flights to Europe via Wizz Air had a direct impact on the 43% sales performance of mainly Georgian local products at the airport. With the opening of our newly renovated store with the Walkthrough concept, we welcome every passenger passing through passport control in our store. Furthermore, thanks to the vision of our CEO Ersan Arcan, Executive Board Member in charge of Operations Ali Öztekin and our Executive Board, we are the strongest duty-free operator in the region, with ATU operating Kutaisi Airport and all airports in Georgia. The service we offer, new type of Heinemann store concepts, wide range of products, quality of service, customer and employee satisfaction have made us one of the most important companies in Georgia.
Have you faced any unusual operational challenges in recent years? How did you approach it and how did this experience add value?
Due to regional dynamics, we are constantly faced with new challenges. The pandemic is one of them. We closed our airports in the first quarter and we managed to minimize our losses by taking the right actions amidst many uncertainties. Then there was the Russia-Ukraine war, which closely concerns the region. We immediately recovered our loss by replacing our most important customer group with customers from the Gulf countries. The direct impact of the Israeli war on Batumi also posed a challenge. However, with the advantage of the developments taking place at the end of the season, we entered the busy season with a high performance. The increase in more diverse destinations also played a role in helping us overcome the challenge. At the end of 2024, we faced challenges due to the prolonged election protests. We managed to overcome all of these processes without any damage thanks to our predictions from our experience and the actions we took with the guidance of the head office management teams. I believe that the experience of doing business at airports for many years and the operational structure of the stores, which are open 24/7 and operate at a constant dynamic pace, have strengthened our muscles in terms of producing fast and practical solutions to problems with a proactive approach. These experiences enable us to overcome problems during busy and stressful periods.
How do you use technology to improve your operational processes and enhance customer experience?
Communication is one of the most important issues in our 24/7 operation. Although we communicate via e-mail in our business processes, we instantly communicate up-to-date information to each other via smartphone applications. We renewed all of the cash register systems in our stores and accelerated the evacuation from the cash register areas with fast receipt cutting. We added LED screens inside and outside the stores, allowing passengers to see promotional activities more clearly. We are working to introduce self-cash payment areas for Georgia, which were previously tested in other operations.
Can you tell us about your operations team and your team structure? How do you strengthen collaboration within the team?
Our team is around 180-200 people in total, including our company representatives and seasonal changes. Of this, 20 people constitute our administrative staff. I would like to share with you the pride of leading a great team that has proven itself in Georgia. Most of our administrative staff comes from inside the operation. This provides a very important added value by bringing an approach focused on sales and good service. The most important thing is that all my teammates in our Georgia operation speak the same language. Our team speaks the ATU language and everyone understands each other very well. This provides synergy in operational terms and makes us successful and makes us a big family. When I look at it today, every member of our Georgia team is in a position to be a key player in any ATU store that opens anywhere in the world. We saw this most recently at the opening of the Kazakhstan operation. Our support team members from here were a very important part of the opening. The company belonging and loyalty of the administrative staff is at a high level. Everyone supports each other. The fact that I and my teammates are very much involved in the operation and in constant communication and the close coordination we have established strengthens our cooperation.
What professional and personal experiences have you gained from working in different cultures and being part of an international team?
Since 2011, I have been working in ATU's international operations. I see myself as a citizen of the world. In Oman, I work with a mixed team of very different nationalities, while in Georgia I work with a completely Georgian local team. It is an incredible experience that every nation, every region has its own different culture and that you adapt yourself to the region you live in, internalize the culture and become a part of it. The biggest teaching here is to be open to innovation and differences. To be flexible enough to break the resistance to change and open the door to new approaches with tolerance. I feel very lucky to have the opportunity to work in different geographies and to be part of a big family like ATU.
