AZERBAIJAN - Finance
Owner, Sinteks MMC
Born in August 1966, Vugar Aliyev entered the Azerbaijan State Economics University in 1986. He left university at the turn of the post-Soviet era in 1990 to start his own business. He spent the years 1990-92 working in the field in a variety of different countries to build his experience in the retail industry. In 1992, he began working as an entrepreneur in the luxury retail segment, and founded Sinteks in 1996.
In 1992 I started a business as an entrepreneur, and by 1996 it had evolved to become Sinteks, a company involved in luxury brands. We had one multi-brand store before we started to represent well-known Western fashion brands through our mono-brand stores. Currently, we have 35 stores in Baku, and since 2008 we have started to move into more mid-market brands. However, our core and main business strategy relies on luxury brands. At the same time, the company has tuned and evolved the luxury brand concept into two larger multi-brand stores called Emporium, one of which is more classic and chic, with renowned brands such as Giorgio Armani and Stella McCarthy. The other is fresh and young, with many young designers from the US, China, Japan, and South Korea.
The most recent crisis started in the US in 2008 and spread out to Europe, Russia, and this part of the world. In general, our economy wasn’t too affected by the crisis and is not directly influenced by what is happening in Europe now. I have heard from our partner in Europe that the luxury market there is not flourishing, and there is in fact stagnation there. In Asia and this part of the world, we do not feel this stagnation. Of course, there were some effects, but overall our experience was not as harsh as that of our colleagues in Europe or Russia. In Azerbaijan, we felt a drop in business of about 10% depending on the brand, though some brands did not see any declines. Since 2011, we have registered stable growth in the luxury retail market in Azerbaijan.
As a luxury company, we face this type of competition. We aim to demonstrate the difference to our clients. When they travel abroad, they are offered a wider variety than what is available here in Baku. Despite this, we are trying to reach the same level and overcome the competition of shops in Europe and even Istanbul. What we strive to offer here in Baku is a personalized VIP service. At our company we have a special customer service-training program that was established by French and US companies. We implemented this at our store and we are working closely with our customers. We know them directly; this is a small country. Clients are very loyal in Baku, showing that the atmosphere is not like London or Milan, where there are streams of tourists. We are able to offer a precise service to our customers, especially in the luxury segment. This is what we have been doing, and it works. Sometimes it is not only what you buy that matters, but also how you buy it. This is how we struggle against our main competitors; we try to differentiate ourselves to provide the best services adapted to local tastes and specific markets.
We are currently not involved with any jewelry brands and we only have one department in our store dedicated to that segment, though we may focus on it in the near future. Our company does not only work in Azerbaijan, but it is also in Georgia, Kazakhstan, and Mongolia. We are planning to increase our business in those countries as well. We are not considering the restaurant or hotel business, however; we want the company to be a specialist in its field. I am a retailer who has been involved with the business for 20 years, and I also seek to be a professional. Nowadays, with globalization throughout the world, it is important to be truly specialized and a professional in your field, on both a local and international scale. That is why we decided to work overseas and bring our activity to neighboring countries. We conducted research into the gourmet food sector, but we have not yet decided to enter the business. We believe that local tastes are an important and essential part of entering a market, and we will continue to value our research process. We have a client base that we are confidently poised to grow with. However, we have not taken any concrete steps to enter new markets at this point.
When this company began, it was at the exact same time that “the contract of the century” was signed by President Haydar Aliyev. At that time, as a young entrepreneur, I saw light at the end of the tunnel. I understood the direction that I could go in for my business activity. My company experienced rapid growth, starting from one small store and growing even during the economic crises. One of the main inputs for us is sourced from the government. The Ilham Aliyev administration and model helped us immensely, and now we are reaching our benchmarks. We have seen how a small country like Azerbaijan can play an important role in the worldwide economy. Some of the main factors behind the development of our country include the efficient and visionary outlook of the President, as well as a very healthy economy.
We have several projects we are looking at. We are always looking to bring in more major brands. I believe that in 2013 almost all of the major famous brands will exist in this market. We are now seeking more special concepts for Baku, such as a department store and multi-brand store, similar to the “Emporium” concept we have now. In Azerbaijan, the tourist stream is in Baku. We see that the majority of department stores are in London or Paris, where there are many tourists. Geographically, we need space as a retail company that specializes in luxury items. We started our activities abroad in Georgia in 2009, and then we expanded to Mongolia and Kazakhstan. The Georgian market is not as strong in terms of luxury brands, but the Mongolian market was surprising for us. Recently, we launched a Burberry store in Kazakhstan in a brand new luxury shopping center alongside all of the major brands. Previously there had been no shopping destination where you could find all the major luxury brands under one roof, but this project brought them together. Our business in Kazakhstan has been successful and we plan to develop it further. Sinteks also plans to target other Central Asian countries such as Turkmenistan and Uzbekistan. It is important to know the market in depth in each country, and we are trying to be more international.
© The Business Year – December 2012
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