NEWS.am interviewed Gagik Makaryan, Executive Director, Republican Union of Employers of Armenia (RUEA.

By Samvel Avagyan

Q.: Yerevan has recently seen enlargement of supermarket chains. Some experts think it will cause small shops to go bankrupt. What is you opinion?

My approach to supermarket chains is different – in their favor. Of course, small shops’ trade will not be as brisk and it was before, as supermarkets pull customers in like bees to a honeypot. Supermarkets attract people for the following reasons: they are better lighted up, render high-quality services and trade in goods with guarantees (supermarkets obtain accreditation from the supplier companies). Small shops have goods preservation problems. Supermarkets set competitive prices as well.

Q.: So you do not see any threats to small business…

A threat does exist. They are really unable to endure competition. Some shops may be closed, others will have their turnover go down. It is common knowledge that a newly opened supermarket attracts customers living in the area. In the context of quality and prices, however, supermarkets play a much more positive role in the retail market.

Q.: Supermarkets seem to be engaged in unhealthy competition.

It is a type of business, and competition in natural. I have no facts to qualify the competition as “unhealthy”. I know supermarkets trade in everything. In case of unhealthy competition they would share the market.

Q.: I mean they are not too far from one another.

It depends on purchasing capacity. Shops trading in building materials and furniture are located besides each other. That is they form trade areas. Supermarkets do the same. If calculations show sufficient demand in a particular area, why not open a supermarket? Supermarket owners have huge sums at their disposal - they can calculate the number of cars running along particular highways, the number of people, holidaymakers or local residents, traveling there. They have good and well-paid expert teams. Be sure they will not make inadequate investments.

Q.: Is there a threat of monopolization?

Just imagine supermarkets launch a policy of dictating prices to producers. That is, with their numerous customers, supermarkets may determine the best price for particular products, considering the purchasing capacity, supermarkets can dictate prices. Producers are interested in selling their products to a supermarket because hundreds of trade outlets “give way” to one major and reliable partner. It pays in time and can sell products much better. It is especially so in the case of supermarket chains. That is, a supermarket may, in a positive sense, become a price-dictating infrastructure, as it acts as kind of bridge between buyers and sellers.