Landmark has had trouble attaining suitable real estate for malls and shops in Kurdistan—a major concern for a retailer. What initial challenges did you face?
Finding suitable real estate has been a challenge, and as such our strategies have evolved with what works. When we first entered the market, we drove around the city to scout out potential real estate options. As we started calling landlords, we began to develop a broader network of building owners and managers. Once we had a broad set of options, we studied traffic patterns to get an idea of demand for our businesses in each location. This was clearly a very challenging way of going about selecting real estate, especially with language barriers, no unified building standards, and no access to drawn up floor plans. Oftentimes there is no power or other utilities working in the buildings. Title deeds are another challenge; it is unclear who actually owns much of available property. This initially provided challenges for us.
How have you since been able to adjust your strategy to address these issues?
Our second strategy was to work with the Region's malls. To do this, we looked into possible competitors, traffic volumes, and supermarket base. Much of this work had already been done, because Carrefour was already in Erbil. This gave us more confidence and a larger appetite for risk. Wee worked together with similar international retailers, where a joint strategy was developed for operating within this market.
Rents have also increased in recent years. How does Landmark cope with this higher overhead?
Yes, rent expectations are incredibly high. Landlords have a very short-term view; developers want to see a return on their investments within three years.. We have a long-term view, of at least 10-15 years, and this we are trying and to build a business with a long-term view. As this is a new market for us, we are working on building a reputation in Kurdistan. We are looking forward to better prospects by establishing ourselves as we have in other countries.
In coming years, our growth target is to open and operate in all of Kurdistan. We have entered the market with our core brands, with a plan to roll our entire portfolio, based on market response.
You have, thus far, only opened four of 16 total planned locations in Kurdistan. What is your timeline for reaching full capacity in Kurdistan?
The major factor with this setback was delays in the malls. Malls did not activate on the schedule we had drawn out. Construction delays can range from six months to 1.5 years or more.. The primary factor contributing to these delays is that owners use their own personal money to finance the malls' development, so if they have personal liquidity problems, the whole development comes to a standstill.. We believe formal financing is a challenge currently, and this causes significant delays. Our perception is that this scenario will improve, as several international banks have entered the market.
Internationally, which market segments has Landmark has the most success in targeting? With this in mind, how would you characterize the way that Kurdistan fits into Landmark’s portfolio?
We are in the medium market segment—we cater to the masses. Our prices are very competitive, and offer the best possible value with design in mind. . This strategy is well suited for the Kurdish market, because there seems to be a large gap in those offerings. We have major strength in our home offerings—carpets, decor, cutlery, etc.—which are not widely available here. Then, of course, our fashion lines cover the entire family, from babies and children to adults.
International retail is much newer to the Kurdish market than to most other markets you operate in. How does this affect your operation and strategy?
To establish ourselves initially, we came with two value brands to test the market, and to broadly establish our presence. This is still our main strategy. We want to be in all of the key locations in the country where malls exist. In some cases we would prefer to open independently on a stand-alone basis, but that poses their own set of challenges. Another key to our operations is to employ local staff whenever possible. This is really the only way that our business can operate. A final challenge for us is access to reliable data.. We are currently creating a database, so that once we have a few years of data behind us, we will have benchmarks with which to base future targets.
How do you foresee the evolution of the sector over the next 5-10 years?
In the next 5-10 years, we will see major growth. It isn't just us; we have already seen the entrance of Auchan, Carrefour, and many others. Many brands are entering the market very quickly. I don't think it will even take five years.. I The country has to keep up with the entry of international business houses, particularly in regard to transportation, logistics, basic infrastructure, and improve rules pertaining to visas & housing.. Visa processing is arguably the most important element right now if the country wants to activate foreign investment and develop its own competent work force. Additionally, a free trade zone and open skies policy would be more than enough to establish Kurdistan on the map. However, this must all be done quickly. There is no time to wait and see what happens. The government must now react to direct the market where the state wants it to go.. The risks and concerns are based on what is happening around us; business is moving forward as planned.
How do you address the issue of human capital?
Currently we use newspaper advertisements, and local recruitment services. However referrals form a major portion of our hiring strategy. The group has a very dedicated training program, this is designed to develop the local workforce up to senior levels in the organization. Our major challenge is to provide a long term career vision to our employees so that we become the preferred employer over all existing and future competitors. This is only possible by providing clear growth path with training for higher roles, fair treatment, excellent incentive programs and recognition. At this point, our store staff is 85-90% local, while our higher-level managers are all expats.