SHOP TILL YOU DROP

Kazakhstan 2015 | TOURISM & RETAIL | FOCUS: NEW RETAILERS

As more young professionals and students take up residence in major cities, high-end retailers are re-evaluating the market's potential, and the first movers are already reaping the benefits of this savvy and affluent demographic.

Kazakhstan is the largest country in the Central Asian region by area, but at the same time its low population makes it one of the most sparsely populated countries in the world. In years past, this factor, compounded by an outdated and poorly maintained infrastructure network, made Kazakhstan a logistically challenging country in terms of transporting goods and providing services on a nationwide basis. One consequence of this situation was reluctance by international retailers and high-end brands to be represented in the market.

But the times are changing. Starting in 2010, Kazakhstan's retail market began to attract international retailers in ever increasing numbers. Several large internationally known chains and brands are exploring ways to enter the market, either independently or through local partners. The active development and construction of shopping and entertainment centers—both in Almaty and Astana—is catalysing growth throughout the retail sector. In recent years, more than 30 shopping and entertainment centers have been erected. Almaty, due to its larger retail volume, remains the preferred destination for investment in the retail industry, but other cities are heating up as well. According to a report published by Scott Holland, in 2013, the total retail stock in Almaty reached approximately 577,000sqm.

Today, Mega Alma-Ata, Dostyk Plaza, Sputnik, and ADK are regarded as the most conceptually distinct and professionally managed shopping and entertainment facilities in Almaty. The opening of Esentai Mall and Villa Boutiques & Restaurants has raised the bar even further for luxury shopping destinations in the Almaty and further solidified the city's status as a destination for luxury shopping in the CIS. The two new shopping venues are located in Al-Farabi Avenue in Almaty (one of the 40 most expensive streets in the world according to Cushman & Wakefield), and both have gathered international luxury brands under their roof such as Louis Vuitton, Armani, Gucci, Ralph Lauren, Dolce & Gabbana, Fendi, Prada, Etro, Bottega Veneta, and Tom Ford. These brands are likely to succeed in Kazakhstan thanks to a high level of brand awareness and appreciation of fashion, jewelry, and premium brand boutiques among Kazakh consumers. It also helps that there are 12,000 millionaires in the country—one millionaire for every 1,383 people—and five billionaires living in Almaty alone. These are the kinds of statistics that have luxury industry execs salivating. A full 45% of sales in Kazakhstan's luxury segment are of clothes and accessories. Makeup and perfume constitute about 15-20%, about 15% is watches and jewelry, and 10% is high class dining and drinks.

Most modern retail facilities in Astana are located on the Left River Bank of the city. Currently, Khan Shatyr, Mega Astana, and Keruen are regarded as the most successful shopping and entertainment facilities in Astana. In an interview with TBY, Engin Asralan, the General Manager of the iconic Khan Shatyr elaborated on the trends characterizing the retail sector in the capital, pointing out that “Khan Shatyr changed the retail landscape in Astana. Astana has a young population with 22% being young children. Another significant chunk of the population are young people who are in the city for work or to pursue a university education. To meet demand from this demographic, we are choosing brands that cater to youth fashion and young adult fashion. Khan Shatyr was the platform that has allowed international brands to start their operation in Kazakhstan."