AROMA OF ARMENIA

Cosmetics in Russia, Russia
Oct 2 2007

Armenia, a small country located between Black and Caspian seas, has
3mln population and two specialized perfumery and cosmetics retail
chains organized according to international standards of beauty
business. Burmunk and Rouge, two retailers dealing with premium
brands are the main rivals in class A trade. Besides them, about 10
stores of class B and numerous no-class points of sales dealing with
massmarket work in Yerevan, the Armenia capital. Competition between
Burmunk and Rouge is set on the field of assortment policy. Each of
the retailers has exclusive contracts with a range of premium brands,
thus their offer almost does no cross.

Burmunk specialized retail chain (the name is translated as "aroma"
from Armenian language) is incorporated in Nushikian Association
and locates in Armenia. The company was established in 1992. It is a
family business owned by Nushikian family with Mr Garegin Nushikian
as the president.

The association covers a wide variety of activities, including
perfumery distribution and retailing, advertising (about 200 billboards
in Yerevan and surroundings), restaurant business.

The first Burmunk store was opened in 1997. It was shop-in-shop
format located in Edelweiss, a premium fashion store and one of
numerous parts of Nushikian empire. Nina Ricci, Gucci, Rochas, YSL
and some other premium brands were for the first time officially sold
in Armenia. A standalone Burmunk was opened two years later in the
center of Erevan. At present five stores work under Burmunk banner
and the retailer’s turnover adds 10-15% annually. Average bill is
$50. In 2007 two more stores are to be opened in Erevan and Gumri,
a large Armenia city.

The assortment comprises a wide variety of premium perfumery,
colour cosmetics, skin care and hair care. Chanel (perfumery,
colour cosmetics, skin care), YSL Group (YSL, Zegna, Boucheron),
Antonio Puig Group (Nina Ricci, Paco Rabanne, Carolina Herrera),
Coty Prestige (Calvin Klein, Cerruti, Davidoff, J-Lo, Jil Sander),
P&G (Gucci, Escada, Montblanc, Dunhill, Rochas), Selective Beuty
(Chopard, MaxMara, Trussardi), InterParfum (S.T.Dupont, Burberry),
SalvatoreFerragamo, Emanuel Ungaro are among the premium brands. In
a recently opened store the assortment was widened with massmarket
brands – L’Oreal, Garnier, Maybelline, Pupa, Adidas. Massmarket
assortment is to be enlarged in the nearest time.

The company aims at middle class people, which rapid growth is
indicated in the Armenia capital. The main part of Burmunk sales
falls to perfumery, followed by colour cosmetics. Premium skin care
products are the least popular, however their sales increase.

All the Burmunk stores, except one, are trading over the counter.

There are no promoting stands in the stores. Shelf merchandizing
is made by brands. Each brands has four-six shelves depending on a
store. Merchandizing presupposes shelf-testers.

Premium brands are supplied to the Armenian retailer directly from
international manufacturers. The goods are supplied from Europe as
Nushikian Association is exclusive distributor of many premium brands
in Armenia. Massmarket products are supplied by local distributors,
though the company strives to cut down distributor unit on the way
from manufacturer to retail shelf. For example, Coty is already bought
from Adidas directly.

A present for a purchase is a constantly active program aiming
at strengthening client loyalty. Twice a year visagistes and
cosmetologists accredited by Chanel company consult women on make-up
tendencies and skin care novelties free of charge. Discount cards
for loyal clients are to be issued this year.

The company representative admitted the Erevan market of premium
perfumery and cosmetics is still not very large and each Burmunk
store has its circle of constant visitors. That is why personnel is
trained to show individual approach to each client.