Founder of Universam highlights impact of cashback schemes on retail prices

Ioseb Gudushauri, founder of Universam, said that the issue of “cashbacks,” frequently promoted by distribution companies, was currently one of the most debated topics in the retail sector. 

He spoke at a session of the temporary parliamentary commission studying the pricing structure of food products, medicines, and fuel on Wednesday.

Gudushauri stressed that while some cashback offers were substantial, retail networks and companies did not control the market price and remained in intense competition with each other.

“All cashbacks offered by distribution companies are ultimately intended to weaken competitors. Large retail chains then leverage these discounts to their maximum advantage, which in the end drives prices up,” he said.

He explained that distribution companies preferred the cashback model because it kept the commercial terms confidential from other networks.

“In my view, a cashback is essentially a hidden discount. Companies do not want the commercial terms offered by a distributor to be known to other networks, so the cashback scheme ensures these terms remain undisclosed. The customer cannot see this on platforms like rs.ge - the commercial condition is unknown. For me personally, it makes no difference whether I ask for a cashback or a direct discount,” Gudushauri added.