TBY talks to Jan Žák, Offer Management Director of Metro Cash & Carry Kazakhstan, on trends in the domestic retail industry and working with local partners to take advantage of opportunities for growth.
TBY Retail in Kazakhstan is marked by growth, innovation, and competition. How would you list the defining characteristics of the retail industry over the past 12 months?
JAN ŽÁK We are confident that the retail market in Kazakhstan will maintain fast and steady growth, which has been impressive and prompted a number of international players to invest in the country. A recent study released by CBRE suggests that as many as 18 global retail companies have entered the Almaty market, Kazakhstan’s largest city. This proves that modern retail is coming to the country. Of course we are proud that Metro Cash & Carry was one of first international trade companies to decide to invest in Kazakhstan. Since entering the market in 2010, we have expanded into seven cities in Kazakhstan and now operate eight wholesale centers. In the first quarter of 2012, we continued our expansion drive by opening two new wholesale stores in Aktobe and Ust-Kamenogorsk.
Metro Cash & Carry had a strong entry into the Kazakhstani market. How do you see your roll out expanding in the medium term?
We see Kazakhstan as an important growth market. We are now considering an expansion course in the country, and we want to focus on the main cities in the north and south of the country, especially Almaty and Astana.
What specific geographical, economic, and demographic factors are you taking into account while forming your expansion strategy?
Certainly, Kazakhstan is a booming economy that offers great business potential. With a vast territory, it is also a country of great diversity that we need to take into consideration when developing strategies and getting down to implementing our investment plans. For us, one advantage is that we have an established network in Russia, and so we have decided to make the most of the synergy between the two countries in terms of purchasing and supply chain management. For example, joint procurement projects help us secure favorable prices, while logistics infrastructure plays a crucial role in the success of our operations. The Customs Union between Kazakhstan, Russia, and Belarus has opened up additional opportunities for the more efficient flow of goods, which will benefit our operations and ultimately our professional customers.
Metro Cash & Carry is also known as being active in helping local producers enhance the quality of their goods. How would you assess the level of dialogue Metro Cash & Carry has established with local producers?
Metro Cash & Carry operates worldwide, and we are a close and reliable partner for local producers and suppliers in all the countries where Metro is present. Without a doubt, Kazakhstan is no exception. Up to 90% of the goods in our stores are sourced locally, which in turn supports economic growth and upgrades the infrastructure of the local community. In each region we organize regular seminars for our potential suppliers, with the help of international experts invited from Europe, to share and transfer knowledge on a range of topics such as product packaging and the correct marking of cargo. Today, there are over 700 suppliers who cooperate with our company and we always support them through constructive dialogue, which makes it possible to expand our range year by year. As an experienced food wholesaler and retailer, Metro attaches great importance to quality, freshness, and hygiene. To secure a reliable supply chain, Metro makes a lot of effort to train local producers on food safety and quality, including supporting them to reach international standards and become certified. In Kazakhstan, we are engaged in a supplier development program, where local producers aim to get certified by International Food Standards (IFS). In particular, we are working with local manufacturers to produce our own branded goods, which are in demand at all Metro stores. It is a process where suppliers can learn our specific requirements concerning production, quality, and packaging to raise their level of competitiveness. Thus, we are helping SMEs to improve their viability.
What is the level of saturation in the retail industry? In which segments do you see opportunities for growth and investment?
The retail industry in Kazakhstan is far from being saturated. Instead, it offers a great deal of untapped potential. We are a self-service wholesale operator serving professional customers such as hotels, restaurants, small- and medium-sized retailers, institutions, and offices, and stable growth in all of these sectors will bring us continued healthy demand from our customers.
What role do you see for the retail industry in the ongoing efforts to diversify the economy?
The retail/wholesale sector is still enjoying fast growth in Kazakhstan, and modern retail and wholesale can play an important role in developing the distribution sector and upgrading infrastructure. Therefore, we welcome the government’s actions directed toward the support of non-resource sector development.
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