Shifting shelves: How Kazakhstan’s retailers are innovating to survive

Kazakhstani retailers have identified five major trends that dominated the local fast-moving consumer goods (FMCG) market in 2024. This story by Kursiv.media explores how retail chains are adapting and what they expect in 2025.

Key trends shaping Kazakhstan’s retail market

Price sensitivity

A major trend highlighted by retailers is growing price sensitivity among consumers. Amid ongoing inflation and rising costs, shoppers are focused on price, comparing options across different sales channels and seeking the best deals.

«Recent global economic challenges have re-emphasized the importance of price for Kazakhstani shoppers. Before 2020, service, convenience and one-stop shopping were paramount. Today, price is once again a critical factor, and consumers are reacting strongly to price hikes,» said Demid Samoshkin, CEO of the Toimart chain.

Shoppers are also becoming less brand-loyal, prioritizing discounts instead.

«Consumers used to prefer specific coffee brands, but now they choose whichever coffee is on promotion. The share of promotional sales in our overall turnover has increased by 4% over the past year,» said the press office of the Magnum retail chain.

The proportion of promotional items in customer purchases has risen significantly over the past decade.

«In 2015, promotional items made up about 15% to 20% of total sales. Today, that share has grown to 45%, sometimes even 50%,» Samoshkin added.

According to Magnum, consumers are also shifting to different price segments.

«For example, the sales volume of natural cheese made from whole milk is declining, while sales of a less expensive cheese product containing vegetable fats are increasing,» the retailer’s press office reported.

Stanislav Kim, CFO of Metro Kazakhstan, noted that their customers — primarily businesses in the hospitality and catering industry (HoReCa) as well as small-format convenience stores — are actively seeking ways to cut costs.

«Our buyers want to reduce their expenses, so they are constantly looking for more cost-effective options,» Kim said.

Metro Kazakhstan expects that price sensitivity and cost-saving measures will remain dominant trends in the FMCG market in 2025, especially if economic instability continues.

Growth of online sales

The online retail sector continues to expand rapidly, driven by several factors. First, online shopping offers convenience, i.e. customers can make purchases anytime without leaving their homes. Second, e-commerce platforms allow easy price comparisons, helping shoppers find better deals. Additionally, the rise of fast delivery services has made online shopping even more attractive, saving consumers time. Finally, increased internet access and digitalization are making e-commerce more accessible to a larger consumer segment.

At Magnum, online purchases doubled in 2024, leading to a slight decline in offline sales. Samoshkin of Toimart observed that the shift from physical stores to e-commerce is most prominent in categories like household chemicals, home goods, cosmetics and perfumes.

«Online sales will continue to grow, particularly with the integration of new technologies such as personalized offers powered by artificial intelligence and the development of omnichannel strategies, where consumers seamlessly use both online and offline channels within a single purchase process,» Kim meanwhile predicted.

Shrinking retail space

With the rise of e-commerce, revenue per square meter is becoming an increasingly critical metric for retailers.

«If we look back to 2008, hypermarkets and supermarkets with areas of around 5,000 square meters were in demand. By 2016-2017, the most popular format had shifted to supermarkets of about 700 to 1,000 square meters, and many retail chains adopted this model. Now, the ‘golden ratio’ has shrunk to just 250 square meters,» Samoshkin said.

He attributes this trend to the faster pace of life and changing consumer priorities.

«People are not only saving money but also time. Shopping in a hypermarket takes significantly longer, which is why the convenience store format is now expanding in the market,» he explained.

Samoshkin noted that Toimart Mix, Toimart’s small-format store chain launched a year and a half ago, has been performing very well.

Kim of Metro Kazakhstan also pointed to the rising popularity of convenience stores, highlighting the success of My Mart, Metro’s franchise chain of minimarkets.

«This format is growing rapidly, especially in residential areas and modern apartment complexes, where proximity and quick access to essential goods make it highly convenient,» Kim said.

He reported that My Mart saw significant growth in 2024, with the number of stores increasing from 45 to 96 over the past year. The chain’s turnover more than doubled compared to 2023, driven by store expansion, a larger customer base and an increase in average transaction value due to product assortment expansion.

Magnum also recorded a 5% increase in convenience store sales over the year, while hypermarket sales continued to decline.

Growth in the «fresh» category

Consumers in Kazakhstan are becoming more health-conscious, driving increased demand for fresh goods such as fruits and vegetables, meat and fish, and dairy products.

«In the alcoholic beverages category, we’re seeing a decline in strong alcohol sales not just locally, but globally. This suggests that younger generations are embracing a healthier lifestyle,» Samoshkin noted.

Kim expects the demand for fresh products to keep growing, particularly in the organic and locally sourced segments.

«The growing interest in local producers will likely drive continued growth in fresh categories,» he said.

Growing demand for sustainability

Another trend noted by Metro Kazakhstan is the increasing consumer demand for sustainable and environmentally friendly products.

«A trend is emerging among middle and upper-middle-class customers who, despite economic headwinds, are choosing eco-friendly products, particularly those with recyclable packaging and sustainable brand practices,» Kim stated.

This trend is expected to strengthen, particularly among millennials and Gen Z consumers, who are willing to pay extra for brands that align with their values.

How retailers are adapting

Expanding private label offerings

Retailers see private labels as a key strategy to improve business performance amid declining consumer activity.

«Private labels are an essential part of our strategy because they allow us to offer high-quality products at more affordable prices, which is especially important in today’s price-sensitive market. We see strong potential for private label expansion, particularly in food, household chemicals and home goods. Our strategy is to continue investing in quality and variety, providing customers with competitive pricing while maintaining high standards,» Kim said.

Magnum reported that private-label sales now account for more than 5% of its total turnover and 11% of sales in categories where private-label products are available.

«This year, we expect double-digit growth in private labels. Our customers love them; they appreciate getting the same products as national brands at a lower price or sometimes at the same price but with better quality,» Magnum’s press office stated.

Strengthening logistics and direct imports

Toimart has taken steps to cut costs by handling imports directly.

«By importing goods directly, we maintain control over pricing, implement our own promotional strategies and manage product categories independently. We also establish direct supplier agreements, eliminating distributors. For instance, our direct partnership with the Zewa factory enables us to offer customers more competitive prices,» Samoshkin said.

Toimart saw a substantial increase in direct contracts in 2024, but Samoshkin believes 2025 will be a critical year for the company’s growth.

«In April, we are opening a Category A warehouse near Almaty, spanning 20,000 square meters. All deliveries will be centralized through this facility, and we will implement a cross-dock model, a logistics system where goods are not stored for long but are quickly sent to buyers or stores. This streamlines the supply chain, benefiting both suppliers and us,» he said.

Toimart’s CEO told Kursiv.media the company is evaluating the launch of a hard discounter store, focused on offering the lowest possible prices.

Expanding the online channel

Toimart plans to enter the e-commerce market in 2025 with a targeted delivery service for beverages, alcohol and related snacks, cold cuts and sweets, excluding general groceries.

«Toimart was originally established as a retailer specializing in drinks and alcohol. This is our competitive advantage: these products account for more than 40% of our sales. The e-commerce market is already highly competitive, a so-called ‘red ocean,’ so before expanding, we need a clear positioning and strong differentiation. Therefore, we will focus solely on alcohol and beverages at competitive prices,» Samoshkin explained.

Meanwhile, Metro Kazakhstan is actively expanding its online presence.

«In 2024, we enhanced our website and mobile app functionality. We are also expanding our delivery reach to cover more regions of Kazakhstan,» Kim said.

Promotional strategies: discounts and more

Toimart plans to launch large-scale promotions in 2025 while continuing successful campaigns from the previous year.

Metro Kazakhstan, however, is taking a different approach, opting for fewer aggressive discounts. Instead, it is focusing on two pricing strategies:

• BMPL (buy more, pay less): A tiered pricing model where customers receive discounts for bulk purchases.
• EDLP (everyday low price): A long-term pricing policy that ensures consistently low prices, allowing customers to plan purchases without waiting for promotions.