DECORADOR’S ‘targeted markets’ are the countries with emerging economies within the Central and Eastern Europe (CEE) and Middle East and North Africa (MENA) regions. A. T. Kearney, www.atkearney.com the renowned international retail consulting and management company identified in their recently published “ 2016 Global Retail Development Index™ “ that thirteen of the top thirty countries selected as a global retail opportunity are in the CEE and MENA regions. In addition, Poland, Iran, Saudi Arabia and Turkey; all targeted markets for DECORADOR were designated as members of the “ten locomotives of the new world economy” in the article “The Coming of the Ten”. Countries in the CEE and MENA regions are also targeted markets of the European Bank of Reconstruction and Development (EBRD) and the United States Overseas Private Investment Company (OPIC). Each organization is eager to support entrepreneurs with equity investments or low-cost long-term loans.
Poland is an ideal launch country for DECORADOR throughout the CEE and MENA regions, having been the only EU country which produced a positive GDP growth during all the years of the global financial crisis. In addition, Poland is one of the largest recipients of funds from the European Union and Foreign Direct Investment. Most importantly, Poland is approximately 2-3 hours by air from its franchisee markets. After the profitability milestone in Poland is attained, the Founder plans the following:
Submit an application to the EBRD for an equity investment of EUR 5,000,000 and a credit facility for EUR 1,000,000. The EBRD funded the first big-box Decorador store through a Polish venture capital firm and has expressed an interest in DECORADOR once it is profitable. The CEE and MENA regions are priority markets for the EBRD.
The Company will complete an initial public offering (IPO) on the Warsaw Stock Exchange (WSE). Baker Tilly International of Poland has been retained to prepare DECORADOR for the IPO and to market and administer the IPO throughout the European Union.
Poland will attain its profitability with e-commerce, a country-wide In-home Sales & Services channel and nine small low-cost stores in Warsaw and its suburbs. DECORADOR will open 159 stores throughout Poland over a five-year period as illustrated in the Comprehensive Brand Development Analysis(CBDA). The CBDA illustrates the number of stores, by city, prototype and year that will open over five years in Poland with the annual sales and cost of opening by year.
2nd, the CEE
As DECORADOR is ramping up its revenues in Poland; Master Franchise Systems will be marketed simultaneously in the CEE. The CEE countries consist of 15 countries as shown in the CBDA flyer “CEE Countries Master Franchise 5-year Store Rollout.” These countries total 133,902,172 in population, Ukraine being the largest with 45 million inhabitants and Estonia being the smallest with 1.2 million. The CEE rollout flyer lists the possible countries, number and type of proto-types and a tentative five-year store rollout for each country within the CEE region.
This analysis facilitates knowing both the short-term and long-term value of each respective Master Franchise System™ in the CEE. The adjacent map for the region illustrates the relative land size of each country as well as the overall adjacency within the region. The Founder resided in and served as the Executive Chairman of the Board of Decorador S.A. in Warsaw, Poland. While in this capacity, he developed a number of relationships with Eastern Europe colleagues, manufacturers and third party service providers. In addition, he served as a consultant to several distributors and retailers located in Eastern Europe.
3rd, jump to TURKEY
Economic growth of 3.9 percent in 2015 was propelled by infrastructure investments and other government initiatives, but rising unemployment and limited disposable income growth pose some challenges. However, 6th place Turkey’s retail market remains attractive, with solid growth and untapped potential for concepts that could upend a market still dominated by traditional retailers. Turkey has been named one of the ten locomotives of the new world economy by AT Kearney in their article, “The Coming of the Ten”.
DECORADOR will open 387 stores throughout Turkey over a five-year period as illustrated in the CBDA. The CBDA shows the number of stores, by city, prototype and year that will open over five years in Turkey with the annual sales and cost of opening by year. With the appropriate financial partner in Turkey, the Founder would launch DECORADOR in Turkey in lieu of the DECORADOR Reboot in Poland.
4th, push hard to MENA
The MENA area consists of 22 countries as shown in the CBDA flyer “MENA Countries Master Franchise 5-year Store Rollout.” The 17 countries in the Middle East have over 300,000,000 inhabitants, Turkey being the largest with 79,000,000 and Qatar being the smallest with less than a million. The five countries in North Africa hold 164,000,000 inhabitants; Egypt being the largest with 80,000,000 and Libya being the smallest with 6,500,000 in population. The MENA Rollout depicts the possible countries, number and type of proto-types and a tentative five-year store rollout plan for each country within the region. This analysis facilitates knowing both the short-term and long-term value of each respective Master Franchise System™.
The map for the region illustrates the relative land size of each country as well as the overall adjacency within the region. The Founder resided in and served as the CEO of Planet Home Centers in Istanbul, Turkey. While in this capacity, he developed a number of relationships with Turkish colleagues, manufacturers and third-party service providers.
Global Retailers has retained the services of Babylon International Solutions of Dubai to represent the DECORADOR Brand in the MENA region. Babylon will be responsible for the marketing, opening and operations of DECORADOR’s Master Franchise System™ and representing the business interest of Global Retailers, Inc. throughout the MENA region. The managing partner of Babylon is an American of Iraqis decent and lives in Dubai. Babylon has offices in Washington D C and in Dubai, UAE. Although not without its unique challenges, according to A. T. Kearney, the MENA region is a significantly larger retail opportunity than the CEE region. In their article, “The Coming of the Ten”, A. T. Kearney identified Saudi Arabia, Iran and Turkey as members of the ten locomotives of the new global economy. Babylon will be Global Retailers’ “feet on the ground” throughout the MENA region.
The CBDA illustrates the number of stores, by country, prototype and year of opening that could open over five years in each country within the MENA region. In addition the annual sales and cost of store openings are estimated by year.
And lastly, RUSSIA
Russia is still weathering its economic storm. Russia with 144 million in population and $448 billion in sales is 22nd in A. T. Kearney’s 2016 Global Retail Development Index, remains in turmoil with no clear signs of near-term recovery. However future years should be favorable for foreign retail chains developing new retail concepts and units since acquiring property with a weak, but more stable ruble, but the sales likely will be middling, at best in the near future. Russia is the 5th largest economy in the world and is a leading exporter of oil and natural gas. Services are the biggest sector of the economy and account for 58% of the GDP.
Russia’s population and disposable income can support 549 DECORADOR stores. In addition there are several countries, like Georgia, Azerbaijan, Kazakhstan represent significant retail opportunities for the DECORADOR Master Franchising System.
Investments in the Series A $5,000,000 Private Placement Memorandum Offering (PPM) funds the DECORADOR Reboot in Poland. This investment may lead to several future IPO’s as an exit strategy for investors as follows: 1) Warsaw Stock Exchange (WSE) in Poland, 2) Istanbul Stock Exchange (ISE) in Turkey and 3) Moscow Stock Exchange (MSE) in Russia. Within five years, the Brand will ‘rollout’ the e-commerce and country-wide In-home Sales & Services™ channel first in Poland, second in Turkey and finally in Russia. Profitability will be attained in each country with e-commerce, the country-wide In-home Sales & Services™ channel and with nine, eleven and fifteen stores in Poland, Turkey and Russia; respectively.
A. T. Kearney’s “2016 Global Retail Development Index™“ identifies that 13 of the top 30 global retail opportunities are in the CEE & MENA regions.