Aram Khachatryan is the co-founder and CEO of Galaxy Group of Companies. ARKA News Agency and News-Armenia News Agency spoke to him within the scope of the project #SaveBusiness in order to find out the experience and response to the “coronacrisis” of one of the largest companies in Armenia:
News-Armenia: – The businesses acting within Galaxy Group of Companies were of the first in Armenia that, not waiting for the compulsory limitations in relation to the prevention of the spread of COVID-19, terminated business activities in all sectors assuming accumulations of people. How has this crisis situation affected your businesses in general?
A․ Khachatryan: – As you know, Galaxy Group — with its goods and services — enters every third household in Armenia, hence, the situation has a direct and significant effect on our activities. Today, we have already recorded a 20-40% fall in specific business areas, and there have been sectors where we had no economic activeness at all.
I find it important to highlight that the Board of Directors of Galaxy Group adopted a systemic approach to the crisis from the beginning. We saw that this crisis would not be short-term and, taking into account the circumstances, we suggested to our teams adapting to the new situation instead of medium-termed solutions. The first and important step was ensuring the safety of our employees and clients in observation of the public health rules prescribed. Then we developed a new mechanism for management of financial functions to keep resilience towards reduction of volumes of turnover. Besides, we offered new innovative solutions both for the effectiveness of work and organising the service opportunity.
Although the crisis inevitably brought forth new problems, it was a priority for us to ensure the sustainability of the value system of Galaxy Group. It is possible to compromise the business, but never public health. At the same time, a significant part of our employees was in forced idleness, and we could not leave this issue abandoned. We clearly decided that we had to take all possible measures so that no employee of the Group of Companies was left out of the system. And I am glad to note that we summed up the first quarter of limitations of activities of economic entities without damage to the integrity of the teams, by allocating for that purpose around AMD 200 million of additional funds to the salary fund.
News-Armenia: – How would you assess the effect the crisis has had on the overall business environment, and how can its consequences be mitigated?
A․ Khachatryan: – The effect of the crisis is dynamic, and we should always develop our level of adaptability in order to effectively counter the risks arising. In this respect, it should be noted that the crisis is conditioned not only by the limitations or the reduction of income of the population, but also by the sharp change in consumer behaviour. People have started to consume less; our citizens shop only in case of urgent need especially in terms of non-primary consumption goods. And this is exactly where I see the main problem, as consumer behaviour will recover very slowly, and it is even unknown what it will be like after the recovery.
Conditioned by the situation, on the one hand, several organisations had to discover additional sources of revenue, and, on the other hand, redefine their activities by promoting the course of reforms which are mainly aimed at the reduction of fixed expenses. This is a path that all businesses operating in the world pass. And, perhaps, this is an opportunity for Armenian companies to go beyond their comfort zones and initiate necessary reforms.
News-Armenia: – And what path has Galaxy Group of Companies chosen to dispel this uncertainty and ensure the sustainability of the business?
A․ Khachatryan: – Apparently, we have chosen a 3-stage strategy for crisis response.
First: the main job is aimed towards identifying the factors which could form the future market and the operating conditions. The objective is to give an opportunity to the management staff of our companies to build flexible bridges between their present decisions and future ways of thinking. In addition, we were able to form effective adaptability to maintain business and ensure its continuous operation through distant working.
Second: digital transformation was a priority: Since the very beginning of the pandemic, we took active steps to move to online platforms in almost all businesses, so that the inconveniences created for the consumer are mitigated as much as possible, in particular, in conditions of closed shops and cafés. At the same time, we continuously improved the conditions for guaranteeing safety and comfort at points of actual contact with the client. Because, especially for generation Z, going shopping and having physical contact with goods continue to be an important component of their social life. Therefore, besides the anti-pandemic measures, we tried to bring contact with the service staff to the minimum and, on the other hand, to make the process of servicing the client more individual through the pilot e-commerce platform.
Third: we quickly tried to support people and communities that were in various vulnerable sectors and groups due to the “coronacrisis”. I am proud to state that we have ensured distant organisation of education for 50 schoolchildren of SOS Children’s Villages Armenia within the scope of our corporate social responsibility projects. We supported Teach for Armenia Fund in ensuring internet accessibility for hundreds of children. Works have been done for making distant learning accessible in the entire territory of Armenia, giving pupils an opportunity to continue their education process. Needy beneficiaries of WCC Armenia Round Table Foundation were also included in another support programme.
News-Armenia: – How effective are the anti-crisis programmes of the Government for the economy in your opinion?
A․ Khachatryan: – I think that, in essence, the most important function of the state is ensuring fair and logical rules of play, within the scope of which economic entities will be able to plan their actions in the long term, cooperate directly and indirectly for the sake of the overriding public interest. Ensuring stability is also important, which is a necessary precondition for engaging international investments and bringing international capital to the country.
I would abstain from making an assessment as to the extent that the authorities were able to ensure the above-indicated most important functions of the state. I can only mention that the best practice in Eastern European and CIS countries was the direct injection of funds in the economy by the state, and tax holiday.
News-Armenia: – According to your forecast, how soon will the economy of the Republic of Armenia be able to overcome the consequences of coronavirus?
A․ Khachatryan: – The 2020 economic fall will be essential; around 5% according to the forecast of the Ministry of Economy. Unlike the previous economic crisis, the recovery of this crisis is forecast to be very slow. It is mainly conditioned by the alarming coronavirus figures in Armenia, the ongoing fall of the income of the population (purchasing power) and the economic activeness, as well as external factors (reduction of money transfers from abroad, reduction of export and absence of tourism flows). We all need patience, prudence and unity.
News-Armenia: – We are aware from press releases that legal processes have been commenced against the founders of the Company. It has a direct impact on the business, and it can be assumed that the situation is twice hard for Galaxy Group of Companies.
A․ Khachatryan: – Today, Galaxy Group of Companies unites 15 companies with 3000 employees. We bear responsibility for their families and may not allow instability and worry for them. We stand firmly on our basis and are sure that justice will be revealed as a result of the legal processes, and, before then, we give importance to maintaining restraint and correctness. Our teams must continue their activities and be sure that together we will overcome all problems, including the “corona”, economic crises, and unlawful prosecutions. These are all only challenges which test the firmness of human will and values.
News-Armenia: – What will life be like after the “coronavirus” and hardships; how do you imagine it?
A․ Khachatryan: – The human has a fantastic ability to adapt. We gain a certain behavioural habit from each change. For example, during the “corona”, we learned to greet with a closed fist, regulating the majority of goods and services through on-line purchases; perhaps these will stay, but the human essence, the “homo sapience”, will fortunately or unfortunately stay the same. By the way, the book of Jewish historian Yuval Noah Harari “A Brief History of Humanity” was recently translated into Armenia upon our initiative, which, by an interesting coincidence, answers the social questions related to the “corona” as well.
I think that we must be prudent and build our collective actions not by the logic of “today and now”, but from the perspective of long-term and sustainability. We have one country and one nation; social solidarity and mutual assistance have no alternative.
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