Western Balkans citizens legally resident in EU equal to 14% of region’s population
International Ice Hockey Federation (IIHF) has stripped Belarus of the right to hold the World Championship this year
Alexei Navalny arrested on arrival as he returns home
LONG READ: The oligarch problem
Russia's National Welfare Fund accounts for almost 12% of GDP
Police arresting activists ahead of Saturday’s demonstration in support of Navalny
Biden seeking a five-year extension to START II missile treaty
Russian consumer confidence index drops q/q, y/y in 4Q20
Western Balkans and Ukraine urged to scrutinise coal subsidies
Oligarchs trying to derail Ukraine’s privatisation programme, warns the head of Ukraine’s State Property Fund
Private finance mobilised by development banks up 9% to $175bn in 2019
VISEGRAD BLOG: Central Europe's populists need a new strategy for Biden
OUTLOOK 2021 Lithuania
EBRD says loan to Estonia’s controversial Porto Franco project was never disbursed
Czech MPs pass protectionist food law in violation of EU rules
M&A in Central and Eastern Europe fell 16% in value in 2020, says CMS report
Hungarian vehicle makers hit by supply chain shortage
COVID-19 and Trump’s indifference helped human rights abusers in 2020
OUTLOOK 2021 Poland
OUTLOOK 2021 Slovakia
BRICKS & MORTAR: Rosier future beckons for CEE retailers after year of change and disruption
FDI inflows to CEE down 58% in 1H20 but rebound expected
Albania needs reforms for e-commerce to thrive, says World Bank
BALKAN BLOG: US approach to switch from quick-fix dealmaking to experience and cooperation
Corona-induced slump in global clothing sector dragged down Albania’s 2020 exports
Bosnia's exports in 2020 amounted to BAM10.5bn, trade deficit to BAM6.3bn
Bulgaria's Biodit first company to IPO on new BEAM market
Bulgaria’s government considers gradual easing of COVID-related restrictions
Sofia-based LAUNCHub Ventures holds first close of new fund on €44mn
Spring lockdown caused spike in online transactions in Croatia
ING: Growth in the Balkans: from zero to hero again?
Labour demand down 28% y/y in Croatia in 2020
EBRD investments reach record €11bn in pandemic-struck 2020
OUTLOOK 2021 Moldova
Storming parliaments: New Europe's greatest hits
World Bank revises projection for Moldova’s 2020 GDP decline to 7.2%
Montenegrins say state administration is most corrupt institution
North Macedonia plans to cut personal income tax in IT sector to zero in 2023
Romania government to pursue “ambitious” timetable for justice reforms
OUTLOOK 2021 Romania
OUTLOOK 2021 Slovenia
Slovenia’s opposition files no-confidence motion against Jansa cabinet
Slovenia’s government to release funds to news agency STA after EU pressure
UK Moneyhub picks Slovenia for post-Brexit European base
D’S Damat franchise deals ‘show Turkey’s hard-pressed mall operators becoming their own tenants’
Turkey’s benchmark rate held as concerns over faltering recovery come to fore
Turkish lira breaches HSBC’s stop-loss, Turkey ETF signalling outflows
CAUCASUS BLOG : What can Biden offer the Caucasus and Stans, all but forgotten about by Trump?
Armenia ‘to extend life of its 1970s Metsamor nuclear power plant after 2026’
OUTLOOK 2021 Armenia
COMMENT: Record high debt levels will slow post-coronavirus recovery, threaten some countries' financial stability, says IIF
OUTLOOK 2021 Georgia
Iran’s Khamenei menaces private citizen Trump with image of aircraft shadowing blond golfer
Iran’s technology minister indicted for failing to properly implement internet censorship
No US move to rejoin Iran nuclear deal imminent, say Biden national security nominees
TEHRAN BLOG: Will Biden bet on a quick return to the Iran nuclear deal?
Central Asia vaccination plans underwhelm, but governments look unruffled
Fears of authoritarianism as Kyrgyz populist wins landslide and backing for ‘Khanstitution’
Mongolia's PM quits amid protests over treatment of mother with coronavirus and newborn baby
Mongolia's winter dzud set to be one of most extreme on record says Red Cross
Mongolian coal exports to China paralysed as Beijing demands virus testing of truck drivers
Mongolia fears economic damage as country faces up to its first local transmissions of coronavirus
OUTLOOK 2021 Tajikistan
OUTLOOK 2021 Turkmenistan
Turkmenistan: How the Grinch stole New Year
COMMENT: Uzbekistan is being transformed, but where are the democratic reforms?
Download the pdf version
Uzbekistan’s largest grocery retailer Makro marked its 10th anniversary on December 11 wth the opening of 10 new stores in Tashkent, part of a drive to expand across Central Asia’s most populous country in the supermarket, hypermarket and convenience store formats.
Makro’s growth accelerated after the Uzbek government started to open up the economy from 2016, and it also embarked upon a wide-reaching rebranding and development programme that included the launch of Uzbekistan’s first private label.
As of December 11, the retailer had 86 stores in Uzbekistan, covering 24 urban areas across the country, and plans to open 11 more by the end of the year. It has a market share of around 15-20% in Tashkent and 4-5% across the country.
Until recently it faced competition mainly from fellow local retailer Korzinka, and a handful of smaller local chains that have been set up in the last couple of years. Now, however, it is seeing the entry of international retail chains to the market. Russia’s Fix Price set up in Uzbekistan in October and has around a dozen stores open already, and France-based global retailer Carrefour is in the process of entering the market. Kazakh Magnum has announced plans to launch in 2021.
In response to the advent of international competition, Makro CEO Roman Sayfulin tells bne IntelliNews: “We need to be stronger, with stronger locations, a stronger assortment and better prices to be ready to face international and global players.”
Uzbekistan is attractive not just because of its population of 34mn, of which almost 2.4mn are in the capital Tashkent, but because this is a virtually virgin market for grocery retailers. The economy is growing fast too, and the World Bank forecasts it will be one of only two countries in Europe and Central Asia to achieve positive GDP growth this year.
The business environment has changed dramatically since the death of Islam Karimov in 2016. The current president, Shavkat Mirziyoyev, has embarked upon a gradual but steady overhaul of legislation affecting business, opening the country up to international investment and freeing both local companies and foreign investors from many of the constraints that previously stifled their activities. Some of the changes include the lifting of currency controls and reforms to tax legislation that now allow Makro to do all its accounting according to international standards.
Uzbekistan’s retail sector is going through a similar transition to those in Russia and other countries in the former Soviet Union, shifting from traditional open bazaars to formal retail. Uzbekistan is at a relatively early stage in this process, with the majority of food sales still through bazaars, but this is changing.
When Makro launched 10 years ago, Sayfulin says, “only people with higher or average income could afford to shop in supermarkets. Today, people with lower incomes are already our clients, and the assortment has been changed according to the needs and spending power of our customers.
“In big cities especially, supermarkets have already become normalised. Our philosophy is that Makro is a supermarket for everyone. It doesn’t matter if you’re a man or a woman, young or old, what nationality, what religion, whether you’re rich or middle class, a student or a pensioner, everyone can shop in our stores.”
The rebranding of Makro was part of a broader effort to develop the retailer. International experts with experience at worldwide retailers were brought into each department to educate the local teams and help build up the company. Along with the rebranding, Makro also launched the country’s first private label range, which has required the retailer to work closely with local suppliers.
Uzbekistan has a strong agricultural sector so has the potential to supply many of the products required in local supermarkets, as well as for export, but Sayfulin says the retailer has had to help potential suppliers meet the standards required to sell in its shops. Today, local products represent 35% of stock-keeping units (SKU) but 52% of turnover.
“We are quite a patriotic company, and working with local companies is a philosophy for us,” says Sayfulin. “We try to help develop good quality producers who respect all the standards, don’t close their eyes on quality and really love their work. For small and medium-sized producers, we help them meet standards in areas such as product quality, packaging, barcoding and labelling.
“If local companies are ready to work with us they can grow up with us. Today we need products for almost 90 stores, but tomorrow it could be 200 or in a few years 500. To sell through a bazaar is one thing, but in a supermarket it’s another standard.”
The coronavirus (COVID-19) pandemic that hit Uzbekistan as well as countries around the world this year brought with it further changes for the retail sector in terms of the way people shop and what they buy. Uzbekistan locked down in the spring, and this was followed by a second lockdown in July-August as it experienced a renewed surge in cases.
As the coronavirus raised concerns about hygiene and the risk of infection, Sayfulin says, “the pandemic helped us, as people now trust more in hygiene standards in supermarkets than bazaars.” Incomes fell when people were unable to work during lockdown prompting some to look for cheaper options. “People whose incomes dropped as they stayed at home during the pandemic switched from international brands to private label products. They saw they could buy good quality for a cheaper price. This has given wings to our private label range,” says Sayfulin.
Another change he observed was that “people changed their shopping behaviour very quickly. They want to do their shopping fast and not far from their homes. That’s why we are pushing to develop the Makro Express convenience store format. The stores are up to 500 sqm and offer 3,000 SKU covering all people’s daily needs. We see this format is taking over all over the world. Even some of the international companies that are entering or have entered the Uzbek market have announced they are working in the same format.”
The other major change that came with the pandemic was to push Makro to develop online shopping, a service it launched for the first time in spring 2020. At the height of the pandemic Makro received up to 800 orders a day, but Sayfulin says the company struggled to fulfil them because the city was locked down, causing a collapse of logistics. During the strict lockdown earlier this year, the company was only able to cover around 400 orders a day.
However, Sayfulin is convinced online shopping is here to stay and the company is investing into this area. “Today, after the lockdown, online shopping has reduced because people are more free to go shopping in person, but e-commerce has stayed in the culture. We just need more time for people to trust online shopping, to know that they will receive the product that they want with the same quality as in the store,” he says.
“We really believe in the future of online shopping, and as confirmation of our belief in the business, we have started construction of our first dark store. This will be a platform for online shops to work with us.”
Makro’s target is to raise online sales to 5% of its turnover in Tashkent. Online selling across the country is more complicated, but as a next step it plans to launch online in the major cities of Samarkand and Bukhara.
Looking to the future, Makro plans to continue its expansion, and according to Sayfulin, aims to be present in 35 urban areas by the end of 2021. While not all towns and villages are can support supermarkets, Makro is setting up the Express convenience store format in smaller locations. While its main base is in Tashkent, Makro's expansion includes far-flung western cities and towns; its store in Bukhara is almost 300 km from its distribution centre.
Makro hasn’t yet started franchising, but Sayfulin says it is receiving a lot of requests. At present, the company is still working on finalising the processes, including ensuring management quality.
So far, Makro has financed its expansion mainly through reinvestment of profits. It also borrows from local banks, and works with developers under long-term conditions as partners in certain stores. For the last two years, Makro management have been preparing the company to work with international development banks and financial institutions to secure larger loans or possibly equity investments. Bonds are another financing option, made possible after Uzbekistan introduced a new law allowing LLCs to issue bonds.
Commenting on the longer-term plans, Sayfulin says: "Of course an IPO is a dream for us; but realistically it’s a few years off. In the shorter term, we are open to working with strategic investors who can help accelerate our growth. It’s clear that now is the time to seize the huge opportunity that modern Uzbek food retail represents. We expect to be a big winner in this space.”
As it continues to pursue expansion, Sayfulin says the retailer isn’t intimidated by the growing number of competitions including big international brands. He stresses that the retailer’s pursuit of growth in its three formats – Makro City hypermarkets, Makro supermarkets and Makro Express convenience stores – and its new foray into online shopping, “allows us to compete with everyone”.
here to continue reading this article
and 5 more for free or purchase
12 months full website access including
the bne Magazine for just $250/year.
Register to read the bne monthly magazine for
Password could contain only
and have 8-20 symbols length.
Please complete your registration by confirming your
A confirmation email has been sent to the email
address you provided.
can't be empty.
No user with
this email address.
Access recovery request has expired, or you are using
the wrong recovery token. Please, try again.
Access recover request has expired.
Please, try again.
To continue viewing our content you need to complete
the registration process.
Please look for an email that was sent to
with the subject line
"Confirmation bne IntelliNews access". This email will have
instructions on how to complete registration
process. Please check in your "Junk" folder in
case this communication was misdirected in your
If you have any questions please contact us at firstname.lastname@example.org
Sorry, but you have used all your free articles fro
this month for bne IntelliNews. Subscribe
to continue reading for only $119 per year.
Your subscription includes:
For the meantime we are also offering a free
digital weekly newspaper to subscribers to
the online package.
Click here for more subscription options,
including to the print version of our
flagship monthly magazine:
Take a trial to our premium daily news
service aimed at professional investors that
covers the 30 countries of emerging
For any other enquiries about our
products or corporate discounts please
contact us at
If you no longer wish to receive
Magazine annual print
Website & Archive
Combined package: web
access & magazine print
Take a trial to our premium daily news service
aimed at professional investors that
covers the 30 countries of emerging Europe: