The Silk Road: How the Ukrainian Retail Works in Kazakhstan

Many Ukrainian companies, including the retail sector representatives, have successfully entered other countries markets. One of the countries where Ukrainian retail trade is expected and loved is Kazakhstan.

Who and why goes to the market of Kazakhstan

If Ukraine in the world ranking Doing Business for doing business ease takes the 80th place, then Kazakhstan is much higher — on the 35th. Although there are many retailers in the country, but the business is not structured, and the large chain operators are practically absent. At the same time, the consumer is becoming more and more fastidious and wants to receive a quality service.

The main player among Ukrainian retailers on the Kazakhstan market is the MTI Group, which has been successfully developing the Intertop shoe store chain for ten years already. Recently, MTI also brought the jewelry chain Pandora there. According to the MTI ex-general director Andreas Kornberger, the company’s focus in Kazakhstan is on the brand Intertop development. But high hopes are also placed on the monobrand stores — Clarks, Geox, Lee/Wrangler, Armani Jeans, Napajpiri and Timberland.

MD Group in Kazakhstan is represented by the Tommy Hilfiger brand. Ultragroup came out here in 2015 with the brands Levi’s and Guess. Antonio Biaggi also works here. The Wings chain announced recently its intention to domesticate the Kazakhstan market.

However, Andreas Kornberger notes that the retail in Kazakhstan is well developed only in the major cities — Astana and Almaty. In the regions, in comparison with Ukraine, the situation is worse. The Ukrainian Retail Association Board Member Andrey Zhuk notes that in this country, on the one hand, there are the famous world brands that are not in Ukraine. But on the other — many brands that already work for us, have not yet entered the Kazakhstan market: “There is Starbucks, Burger King, although these are all franchises. But McDonald’s opened recently. It had already H&M, but had no, for example, LPP. ”

The market features

The mass market popularity growing is among the recent years tendencies in Kazakhstan. “The reorientation from the luxury segment to fast-fashion is a global trend. In Kazakhstan there was, and probably still is, a crisis. The devaluation took place in two stages. And it is palpable. Although the country has money, there are good projects, quite professional developers”, — says Andrey Zhuk.

Sergey Badriddinov notes that Kazakhstan is more attractive by the  effective demand level than Ukraine. “Of course, it does not reach the European countries level, such as Poland, but the population incomes there are three or four times higher than the Ukrainian ones. Kazakhs treat entertainment and shopping differently — they are easier to spend money, because they are simply more”, — says Badriddinov. In his opinion, the main condition for success in Kazakhstan is to constantly attract the buyers attention with various promotions, special offers and  sales: “People need to constantly show that we offer some discounts. The earlier the promotional offers start, the better the reaction of consumers”.

In turn, Andreas Kornberger notes that Kazakh consumers are more quality oriented than Ukrainians.

Course to the East

The entry to the Kazakhstan market was recently announced by the Ukrainian fast food chain Wings. In 2017, the company plans to open ten restaurants in the country by franchise, and it will work under the Wings brand.

According to the chain development director Andrey Zalunitsin, the company is negotiating with a potential partner from Uralsk, which will open restaurants in the northwest Kazakhstan region, namely in Uralsk, Atyrau, Aktau and Aktobe.

“There are plans to develop the chain in Kazakhstan, and it are very serious, but we restrain ourselves, because we want to enter the market fully prepared”, — said Andrei Zalunitsin. “And before that, we must work out raw materials local suppliers and equipment, analyze locations and sign the agreements with the strategic partners.”

The Ukrainian retailers, according to Andrey Zhuk, are respected in Kazakhstan, and this country market is very interesting, although not so many cities in which it is possible to expand.

The Ukrainian retailers interest in the Kazakhstan market is evidenced by the Kazakhstani developers visit to RDBExpo-2017 — an event organized by the Ukrainian Retail Association. In particular, RDBExpo-2017 was attended by the Veritas brown representatives, which is the global chain Cushman&Wakefield part and is one of the largest independent companies in Central Asia, provides a services full range in the real estate.

Sergey Badriddinov from MTI believes that in the comparison with the work conditions in Ukraine, in Kazakhstan there are no difficulties at all. And you need to enter this market now, due to the crisis, inefficient players will leave the market, SEC will reduce the rental rates. And this will give the additional opportunities for the development.