The management of the largest supermarket chain of Uzbekistan MAKRO, held a series of meetings with producers of food and other goods in Nur-Sultan and Almaty (Kazakhstan) in early April.

More than 50 Kazakhstani producers took part in the meetings, including Maslodel, Bizhan, Tsesna, RG Brands, Kamerton, Raimbek, MPS and others. Agreements on cooperation in the promotion of Kazakhstani goods from all regions of Kazakhstan in the MAKRO chain were reached, ElDala.kz writes.

According to the director of the MAKRO logistics department, Aleksandr Borzov, the supermarket and the hypermarket chain offers comfortable shopping in an environment with safe and high-quality goods. The company is planning a large-scale network expansion.

“We plan to expand our activities both in Uzbekistan and throughout Central Asia. In 2021, MAKRO plans to open 20 more supermarkets and 80 express markets. We strongly believe in the development of our chain, because consumer behavior in Uzbekistan and everyday shopping habits are shifting from bazaars to shops, as it happened in neighboring countries such as Russia and Kazakhstan,” he stressed.

Read also: Fresh fruits and vegetables are the sales engine – Roman Sayfulin, CEO of Makro supermarkets in Uzbekistan

According to Deputy Chairman of the Board of KazakhExport Aslan Kaligazin, partnership with such a major player as MAKRO will ensure the growth of Kazakhstani companies, and most importantly, the recognition of local brands throughout Central Asia. “MAKRO works at high standards and is a strong player in the Uzbek market. For example, by the end of the first quarter of 2021, they plan to implement an integrated system under ISO 9001 and ISO 22000 standards,” he said.

As EastFruit already wrote, on April 10, the prime ministers of Kazakhstan and Uzbekistan launched the construction of the International Center for Trade and Economic Cooperation (ICTEC) “Central Asia” , which will help create a fundamentally new system of interregional and border trade relations.

There is a potential for cooperation projects in the food sector with goods like flour products, confectionery, fat and oil products, meat products, fruit and vegetables, as well as non-food products within the Center. The  markets are estimated at more than $21 billion in Afghanistan, Tajikistan, Turkmenistan, China, the EAEU countries and Central Asia.

The Ministry of Trade also proposes to build a joint system of trade hubs, which should become the core of Eurasian trade flows development.

“Tashkent and Shymkent agglomerations of more than 9 million people within a radius of 500 km make up 15% of the total population of Central Asia. There is a high level of economic complementarity, especially in agriculture and food industry,” Minister of Trade Bakhyt Sultanov said.

Tashkent region is also an important transit point for Kazakhstan in the direction of Tajikistan, Afghanistan and Pakistan.

Сообщение Uzbek chain MAKRO is ready to purchase goods from Kazakhstan появились сначала на EastFruit.

The administration for the shopping and entertainment centre Samarkand Darvoza in Tashkent, Uzbekistan announced a power outage in both the retail space and warehouse of the Makro supermarket. An official representative of Makro (Darvoza Savdo LLC) told Kun.uz that, firstly, this incident undermines the company’s credibility, and secondly, the company suffered financial losses. “This situation, according to Uzbek law, directly violates the requirements of the lease agreement,” says the Makro spokesperson.

The possible closing of the Makro supermarket in the Samarkand Darvoza mall after January 7, 2021, was discussed after a message was disseminated about the establishment of strategic cooperation between Majid Al Futtaim and UzOman.  It is noteworthy that within the framework of this long-term cooperation, both companies, combining their capabilities and experience, will contribute to the development of modern retail trade in the country as well as the economy and industry of Uzbekistan.

Majid Al Futtaim plans to open two new Carrefour hypermarkets in Tashkent. The stores are scheduled to open in March-April this year. The hypermarkets will be located in the largest shopping and entertainment centres operated by UzOman – Samarkand Darvoz and Compass. The expansion of Carrefour’s activities in the country began with the opening of its first supermarket in December 2020 according to the announcement.

It turns out that the administration for the large centres Samarkand Darvoza and Compass, which is Uzbek-Omon Investment Company LLC, had not yet terminated their lease agreement with the Makro supermarket chain when it reported the launch of Majid Al Futtaim’s Carrefour supermarkets. The Samarkand Darvoza mall was commissioned in 2013 and the Makro supermarket started operating there from the first days of the mall’s opening.

Read also: Fresh fruits and vegetables are the sales engine – Roman Sayfulin, CEO of Makro supermarkets in Uzbekistan

The Makro spokesperson said that on January 6, 2021, Samarkand Darvoz sent them a letter asking them to vacate the rented premises the day before the news of the establishment of strategic cooperation ties between Majid Al Futtaim and UzOman was released. According to the Makro spokesperson, this request is illegal for a number of reasons:

“During the term of the lease agreement and the documents attached to it, SD Mall LLC (administration of Samarkand Darvoz) has not received a single complaint about any violation of the terms of the lease agreement. Also, Darvoza Savdo LLC (owner of the Makro trademark) on several occasions proposed to extend the lease agreement for 10 years with an increase in the rent. In addition, the spread of news about the opening of Carrefour in Samarkand Darvoza violates the rights of Makro.”

The Makro supermarket chain was not given the opportunity to resolve the matter with the SD Mall out of court. Therefore, Darvoza Savdo LLC was forced to file a claim with the court. “Before a decision had been made regarding the case in court, the power supply was cut off on the premises used by Darvoza Savdo LLC as a trading floor and warehouse,” says a representative of Darvoza Savdo LLC.

Samarkand Darvoza has not yet commented on the incident.

EastFruit will continue to monitor the situation.

Сообщение Battle for retail space escalating in Uzbekistan – Carrefour or Makro? появились сначала на EastFruit.

Uzbekistan is a country of world-famous bazaars whose prominence was unshakable for centuries. “I myself go to the bazaar in the season of fruits and vegetables and the best merchandisers work there,” says Roman Sayfulin, CEO of the largest supermarket chain in Uzbekistan Makro, in an exclusive interview with EastFruit.

However, if the number of bazaars in Uzbekistan is decreasing and modern shopping centres are growing in their place, then the number of supermarkets is growing at a very high rate. Makro is going to double the number of its stores in 2021. The new chain Baraka Market opened its first store in December 2020 with plans to increase their number to 50 in two months and 800 stores in two years! Carrefour, a major international food retail operator already operates in Tashkent and is actively competing for retail space with Macro.

In addition to opening brick-and-mortar stores, there is a more surprising trend in the development of online stores in Uzbekistan with a considerable share made up of fresh fruits and vegetables in the assortment of these stores! In 2020, a successful aggregator company Zakaz.ua entered the market with the Zakaz.uz brand and is already actively investing in advertising its site. This company is open to working with various supermarket chains and providing them with additional sales.

Read also: French supermarket chain Auchan sought to enter retail market of Uzbekistan

The Makro supermarket chain decided to develop its own unique platform but also cooperates with aggregators like Zakaz.uz. Makro CEO Roman Sayfulin admits that during the quarantine, they simply could not keep up with all online orders, but after the quarantine was cancelled, their numbers dropped sharply:

“If we talk about the share of sales through online trading, today it is insufficient in customer confidence, technological process, and speed of delivery. It is necessary for people to get used to it. This year we are launching our Dark Store, the first in Uzbekistan. We have made a decision to work on online delivery for our stores, but we are ready to launch any online aggregator on our platform that will offer online delivery services.

“It seems to me that shelf selection for an online store is obviously a business with great restrictions. The biggest example is out of stock and picking off the shelves is always a surprise. Therefore, our Dark Store format is a different approach that can guarantee the availability of goods because there will be a direct link to the online store. This will also speed up order collection,” says the CEO of Makro.

Since Makro focuses on the standardization of fruits and vegetables, in the long term, according to EastFruit experts, this will increase consumer confidence in online orders of fresh vegetables, fruits, herbs, and berries.

Video of the interview with Roman Sayfulin can be viewed on the EastFruit YouTube channel.

Сообщение Supermarkets in Uzbekistan increasing online sales of fruits and vegetables появились сначала на EastFruit.

In an exclusive interview with EastFruit, Makro supermarket chain CEO Roman Sayfulin said that the chain was negotiating with Auchan to enter the food retail market in Uzbekistan.

“Since 2016, we have been negotiating with representatives from the French network Auchan. Unfortunately, they failed to enter the retail market of Uzbekistan, but the team that worked here for a long period of time brought for the first time a whole book of fruit and vegetable standards,” says Roman Sayfulin.

In 2016, the first Auchan hypermarket was opened in the capital city Dushanbe of neighbouring Tajikistan. This event was the starting point for the creation of the EastFruit platform. Considering the difficulties that Auchan experienced in purchasing local fruit and vegetable products as well as the prospects for further development of the country’s food retail, the Food and Agriculture Organization of the United Nations (FAO) together with the European Bank for Reconstruction and Development (EBRD) began to conduct training sessions and conferences on the development of production, processing, and trading of fruits and vegetables in Tajikistan.

Read also: Supermarkets in Uzbekistan – bananas, apples, mandarins account for over half of sales; fresh berries most difficult category

In November 2020, Auchan was the best supermarket in Dushanbe according to the comprehensive assessment of the fruit and vegetable department in our retail audit. However, the working conditions in Tajikistan for the chain continued to remain difficult and EastFruit auditors received a lot of complaints about the fruit and vegetable department of Auchan. Schiever Tajikistan, the Auchan franchisee, launched smaller Bi1-branded stores, but the produce departments in these stores were eliminated altogether.

Currently, there is a real boom happening in the development of supermarkets in Uzbekistan. Makro is going to double the number of its stores in 2021. Baraka Market is a new chain that opened its first store in December 2020 and plans to increase their number to 50 in two months and open 800 stores in two years! Carrefour, a large international food retail operator, is already operating in Tashkent and is actively competing for retail space with Macro. The Korzinka.uz network is going to bring the number of stores in the chain to 140 by 2025 thanks to the EBRD’s investments.

Nevertheless, the Auchan supermarket chain continues to be one of the leaders in the region’s fruit and vegetable retail sector according to EastFruit estimates, which is largely due to its relatively successful work in the Ukrainian market.

Video of the interview with Roman Sayfulin can be viewed on the EastFruit YouTube channel.

Сообщение French supermarket chain Auchan sought to enter retail market of Uzbekistan появились сначала на EastFruit.

In 2020, many were surprised by the statement from Zafar Khashimov, the founder of the Anglesey Food companies, which includes one of the leading retail chains in Uzbekistan Korzinka.uz, that bananas are the best-selling fruit in Uzbekistan’s supermarkets. In his exclusive interview with EastFruit, Roman Sayfulin, the CEO of Makro, which is the largest supermarket chain in Uzbekistan by the number of stores,  partially confirmed this information.

“Bananas are also among the leaders in our country. In 2020, it occupied 31.1% of all fruit sales. This is a fairly high figure. However, I do not agree that this is the best-selling SKU with us, but it is in the lead every year. This year, for example, bananas are in second place,” said Mr. Sayfulin.

He also named the Top-3 imported fruit and vegetable positions: bananas, apples, and mandarins. Yet the sales gap between the imported products of bananas and apples is very large. With the share of bananas in the sales of all fruits at 31.1%,  apples are only 16% and mandarins are only 9%. When combined, it turns out that bananas, apples, and mandarins account for about 56% of sales.

Read also: Fresh fruits and vegetables are the sales engine – Roman Sayfulin, CEO of Makro supermarkets in Uzbekistan

The main local fruits in terms of sales volume in the Makro chain stores are apples, lemons, and pears. In 2020, lemons ousted table grapes from the Top-3, but this was due to the surge in demand for lemons during the coronavirus pandemic, while the supply of grapes in Uzbekistan has decreased.

Fresh berries are the most problematic position for the Makro supermarket chain, according to the CEO. “The fact is that for the majority of fruit and vegetable items, we work with suppliers on a return basis. In the case of berries, suppliers do not accept this condition. In addition, it is not possible to provide berries to all of our chain stores due to their high prices.,” noted Mr. Sayfulin.

Roman Sayfulin sees great prospects for frozen foods, including berries and cocktail mixes and talked about the high growth rates of their sales. After all, they are essential for the HoReCa catering segment, which is very well developed in Uzbekistan.

Video of the interview with Roman Sayfulin can be viewed on the EastFruit YouTube channel.

Сообщение Supermarkets in Uzbekistan – bananas, apples, mandarins account for over half of sales; fresh berries most difficult category появились сначала на EastFruit.

Despite famous oriental bazaars with their abundance of delicious fruits, vegetables, melons, watermelons, and dried fruits seemed unshakable in Uzbekistan for hundreds of years, the country’s horticulture trade is rapidly moving towards modern, convenient, and consumer-friendly supermarkets of late. Almost every month, both ambitious local chains and international retail operators announce their entrance to the market.

Roman Sayfulin, the CEO of Makro, which is the largest supermarket chain Uzbekistan, explains in his interview with EastFruit about how difficult it is for supermarkets to compete with traditional bazaars and what chains cannot yet offer compared to bazaars and why. Also discussed was the current lack of high-quality retail space and work in the regions as well as difficulties with assortment, local suppliers, VAT, quality standards of fresh fruits and vegetables, and the future of online trading in fruits and vegetables in Uzbekistan.

Video of the interview, which was conducted by Andriy Yarmak, an economist of the Investment Centre of the Food and Agriculture Organization of the United Nations (FAO), is available for viewing on EastFruit’s YouTube channel by clicking here.

“Standardization is what sets our network apart from the markets”

– Roman, earlier you stated that the main competitor of supermarkets in Uzbekistan is traditional Uzbek bazaars. Based on this, who is the most loyal customer in supermarkets and who still goes to the bazaars? What are your advantages and disadvantages over bazaar trading?

If we talk about our loyal customer base, then I always say that the Makro supermarket chain has stores for all age and social groups – youth and adults, men and women, students and workers. Everyone who comes to our stores should be satisfied with their purchase. This is confirmed by our work on the development of the first price categories, premium goods, middle departments.

If we talk about the fruit and vegetable segment, the bazaar is a very strong competitor. From communication with suppliers, I can conclude that our network in many categories of the fruit and vegetable segment purchases only 1% of the output in the country. I, myself, go to the bazaar during the fruit and vegetable season; the best merchandisers work there. For example, during the peach season, products from all regions of Uzbekistan are presented at the bazaars. The same goes for cherries. However, of note is that all this is present on the markets in relatively small volumes. This is a premium product known far beyond the borders of Uzbekistan but, unfortunately, most producers cannot guarantee the delivery volume needed by supermarket chains and this is our biggest problem. We, as a network serving on average about 85,000 customers daily, must provide the necessary volumes of products in stores located throughout Uzbekistan.

For this, we have our own large distribution centre (DC). This is a distinctive feature of our network over our competitors, which in many regions give fruit and vegetable products for outsourcing. We try to ensure the regularity of deliveries but, naturally, there are also interruptions.

I believe that our great merit in the horticulture trade is working with suppliers in terms of standardization because our customer wants to find, for example, the same tomato in each of our stores. We are talking about the standardization of a local product as imported goods, as a rule, enter the network already standardized. Why am I talking about this? The point is that standardization is what sets us apart from bazaars. Here you will find quality products of the same standard in the required volume all year round. At the bazaar, you can see premium products, which we will not have due to the fact that we do not position ourselves as a premium-format store. Yet, the premium segment on the market will be presented in small volumes during a certain short period of the season.

– The news regarding the Carrefour retail chain entering the food retail market in Uzbekistan, it seems that the country has already begun to feel a shortage of high-quality retail space. Is it true? Also, do you invest in your own retail property or do you prefer to rent it?

The commercial real estate market in Uzbekistan is not saturated. This applies to both the capital city of Tashkent and the regions of the country. This is not about the first floors of residential complexes but about professional commercial real estate like shopping centres and there is not enough space on the market. If we talk about the format of medium-sized supermarkets, there are still such options, but not for super- and hypermarkets. In this segment, tough competition is brewing today in connection with the entry of the Carrefour network into the retail market of Uzbekistan. In addition, a large Kazakh chain wants to enter (Magnum Cash & Carry). In Tashkent, there are not many vacant places yet in order to build a classic hypermarket.

We have chosen a different direction for ourselves. We launched hypermarket projects and then had to reduce the area by almost 30% due to the fact that we could not provide consistent supplies of the assortment that is necessary for this format. Therefore, our strong point is a classic supermarket with an assortment of goods up to 25,000 items. We are abandoning hypermarkets and increasingly moving towards the format of express stores, which are more accessible in terms of location for the buyer. However, in this segment, the competition is even greater. Since the area of ​​our express stores today range from 70 to 500 square meters, on average it is 220 square meters and so we compete with Havas, which is actively developing in this direction. In addition, at the end of last year, the Baraka Market network entered the market, which is also actively developing and has already announced plans to open 800 new stores within 2 years.

Due to competition in the retail market, the price of retail space in the country has doubled in the last 6 months alone. At the same time, our activity is completely based on the lease of retail space; we own only 6 stores.

– Small-format stores in Uzbekistan offer help to customers in the form of a tab in which debts for goods are recorded. In this regard, do you plan to attract the format of selling goods on credit in your stores?

Indeed, such a situation related to the human factor is very important and take place during trade throughout Uzbekistan. Very often in small stores, the owner, cashier, and seller are one person and he can sell goods on credit because, as a rule, he knows all his customers in person.

Over the past year, we have been actively working on launching an express lending program in our network. Now, we are actively negotiating with one of the banks to introduce such a service. We do not want to make money on this ourselves since this is a completely separate business practice to us, but we want to be able to provide this service to our customers. For this, an express checkout service must be introduced in the network, which will be provided to our customers at the cash registers.

“By the end of this year, the Makro network plans to be represented in 35 cities of Uzbekistan”

– The development of your network in the regions is a surprise. According to experts, it is not always worth rushing to launch in the regions given the lower average amount of a customer’s checkout receipt than in the capital. In this regard, why are you actively expanding in the regions?

Actually, the largest checkout is not in the capital. The largest average checkout in our chain stores is in the city of Samarkand. In this regard, we plan to open our “makrocity” format store in this city, which is a large supermarket with an area of ​​2,500 square meters, in March of this year. In addition, shops in Bukhara show good results. Therefore, we are entering the regions with our classic store format. Today, we are operating in 26 cities of Uzbekistan and, by the end of the year, we plan to be represented in 35.

Speaking about entering the regions, you need to understand that 6 years ago there was enough space in Tashkent to open new stores. However, today there is not. We want the Makro chain to be known in every region. In addition, when we want to expand to a certain city, we also see other cities along the way, which, from the point of view of logistics, are convenient for us to enter. Additionally, we also look at the experiences of large Russian and Ukrainian companies, which operate throughout the country. Based on this, the sooner we enter a particular region, the stronger our market position will be.

– In essence, you are talking about strengthening the Makro brand?

Yes, exactly that. I am sure that our customers will not fully satisfy all of his or her needs in our store, but we want him or her to buy as many items as possible in our network. For this, we are working on such components as price, quality, and product range. However, I repeat, it is difficult to cover the entire range of consumer preferences, not only in Uzbekistan but from my observations, for European chains as well.

Speaking about the strength of the brand and the strength of customer loyalty, I want to say that it means a lot to us. In our network, we have a loyalty program and a digital cash-back program. Another important factor is that the more stores and retail spaces there are, the faster we can go down the path of reducing product prices.

“Fruit and vegetable products are the sales engine”

– Are the fruit and vegetable departments in your network the centre of profit generation or are they unprofitable but a necessary addition? What is the share of fresh fruits and vegetables in the total revenue of the chain?

It is fundamentally important for us to have fruits and vegetables in our stores and they are represented throughout our network. They are, figuratively speaking, the engine driving our sales. If we talk about revenue, then in 2018 the share of fruits and vegetables was 11.3%. This is a fairly high figure. In 2019, after the introduction of VAT, the share decreased to 10.1%. This happened due to the fact that we began to lose in price to traders in bazaars, which were not subject to VAT. Last year we managed to increase the share of proceeds from the sale of fruit and vegetable products by 0.5 percentage points.

It should be understood that the behavioural model of buyers in Uzbekistan is very different from the northern countries. Our people prefer to buy fresh fruits and vegetables every day. Nobody buys them a week in advance.

– According to the EastFruit retail audits of supermarket produce departments, Makro is not the most competitive in this segment. Taking into account the presence of your own distribution centre and rather large sales volumes, what further steps do you envision to increase the competitiveness of the fruits and vegetables in your stores?

An audit by your platform is a fear for our pricing department. After the publication of your data, they received comments, first of all, from me. It was also an unpleasant surprise for me that in terms of prices for fruits and vegetables, we turned out to be the most expensive in retail in Uzbekistan. Today, we pay great attention to this fact. If we consider us when compared with our competitors, then in many positions we have already caught up. It is quite difficult to compete in pricing with small stores due to the difference in the specifics of purchasing goods. After all, we do not work with suppliers who are not VAT payers and this is our biggest problem of finding suppliers who pay this tax.

For this reason, only 35-40% of our suppliers of fruits and vegetables are producers of these products. The bulk is represented by companies that buy, sort, pack, and calibrate fruit and vegetable products. All these factors lead to a higher price. Yet, work on the pricing policy is among one of the priorities of our company for the current year. We understand very well that price is the determining factor for the buyer.

– What are the positions of the fruit and vegetable trade in which you can and cannot successfully compete with the bazaars?

For imported products, we are very competitive in this segment in terms of prices. This, in particular, concerns citrus fruits, potatoes, and a number of other products. This is due to the fact that VAT is already included in the price of imported products regardless of where it goes be it to a bazaar, supermarket chain, etc.

If we talk about local products, then during the season we can successfully compete in prices for apples, tomatoes, and table grapes. As for the rest of the positions, we sometimes lose here.

– Which horticulture position is the most problematic for you?

Berries. The fact is that for the majority of fruit and vegetable items, we work with suppliers on a return basis. In the case of berries, suppliers do not accept this condition. In addition, it is not possible to provide berries to all of our chain stores due to their high prices.

– How important is the fresh greens segment for you today? Are there any trends to expand the range of this segment by adding new types of greens, taking into account, for example, the increased consumption of lettuce salads?

Here we keep up with the times. I want to praise the entrepreneurs who have started producing new types of greens. These are new technologies for the production of salad mixes. Today, almost all our stores have separate refrigerators from suppliers with packaged chopped single and mixed greens. The assortment of greens is growing and, most importantly, the interest of buyers in these products is growing. Even 7-8 years ago, products like broccoli were considered a luxury in the Uzbek market. Today, it is sold in almost every store.

Growth in the greens category is very important for retail as greens are an expensive category. For most people, greens are associated with a healthy diet and when a person thinks about their health, they usually no longer try to save on it.

– Considering such trends, is there movement in the greens market of Uzbekistan towards microgreens since this has become very popular in many countries recently?

Unfortunately, there is no such movement in Uzbekistan yet. In my opinion, this direction is new to the markets of Western countries.

– You said that you are not a premium segment store and yet Makro is a confident leader in assortment judging by the EastFruit retail audits of the supermarket produce departments in Uzbekistan. Given the opportunities to improve the quality of merchandising and information content, Makro may well qualify for the premium segment.

Unfortunately, there is already a well-established opinion that Makro is an expensive store. We are trying to break this stereotype so we are following the path of private label development (e.g., the chain’s own trademark, private label, etc.). It is rather difficult to develop private labels in the fresh market segment. Our goal is not only to provide the first price on the shelf of our store but also to make our first price compete with the price of any other store. This is a priority for us.

In express format stores, the assortment of fruits and vegetables is much smaller with only those in which there is an urgent daily need. It is on these positions and the reduction in prices for them that we will work on in the future.

– You mentioned that your share of suppliers-producers of fruit and vegetable products is no more than 35-40%. What is the conventional portrait of such a supplier in Uzbekistan and what is necessary to supply those products to the Makro network?

I will tell you about such a supplier using the example of GDF – Gold Dried Fruits. This company has large areas of its own greenhouses and stone fruit orchards. Today, we have signed a one-year contract with them for the supply of greenhouse vegetables (cucumbers, tomatoes), greens (iceberg lettuce), as well as cherries and peaches. In addition, they supply us with a unique product – the earliest melons of the season. This supplier has its own processing and very strict standards in handling, sizing, labelling, and packaging. For example, they no longer use wooden containers for the delivery of products. This is very important for us today. We have already received the ISO 9001 certificate and, most importantly, the HACCP standard food safety certificate. Our RC, management system, and the first two stores have already passed this certification. Throughout this year we will continue to certify our stores. One of the requirements of this certification is the absence of wooden boxes for fruit and vegetable products. Today, our suppliers supply fruits and vegetables in plastic containers because there are problems with cardboard packaging in the Uzbek market.

– Do you use the pooling system of reusable folding plastic boxes that can withstand about 200-400 revolutions of fruit and vegetable products, which are widely used in the EU and Ukraine?

We haven’t come to this technology yet. Our plans for today are to standardize all fruit and vegetable crates, taking into account our limited space. At the same time, we want to lease such containers to producers so that in the future they will supply their products in it to our network.

“For suppliers wishing to work with us, we have a 3-month trial period”

– If a farmer is psychologically ready to work with your network and has the required volume of products for delivery, what other characteristics should he or she have in order to approach your purchasing department and offer services as a partner?

First of all, a supplier must be a VAT payer. Secondly, it is important for us to guarantee the supply of the annual volume of products, unless, of course, we are talking about seasonal products. The third point is the terms of payment.

In addition, we study the products offered to us such as their quality, packaging, and other characteristics. We offer a trial period for cooperation since there are unscrupulous suppliers who send the first batch as quality products then supply products of inferior quality in subsequent batches. We monitor the consistency of quality in each batch. We give any supplier a 3-month trial period. During this time, we study in detail the sales of the products supplied by them, we study the price, the display of the goods on the shelf, etc. Based on this information, we make a decision on further work with the supplier in the future.

– An interesting position is bananas. Zafar Khashimov, the founder of Anglesey Food, which also includes the Korzinka.uz chain, said that bananas are the best-selling item in the fruit and vegetable segment of supermarkets in Uzbekistan in terms of volume. Meanwhile, according to our data, the consumption of bananas in Uzbekistan is almost the lowest in the world. How are you doing with the sale of bananas in the Makro chain?

The banana is also among the leaders in our country. This year, bananas occupy 31.1% of the share of sales of all fruits. This is a fairly high figure. However, I do not agree that this is the best-selling SKU with us, but it is in the lead every year. This year, for example, bananas are in second place.

– What are the Top-3 best-selling fruits and vegetables in your network for imported and local Uzbek products respectively?

The Top-3 import positions are bananas, apples, and mandarins. The Top-3 local products are apples, lemons, and pears. Last year (2019), this list also included table grapes, which was replaced by lemons this year. When we consider the Top-3 imported products, the gap between bananas and apples is very large. As I already said, the share of bananas in the sales of all fruits is 31.1%, while apples are only 16% and mandarins are only 9%.

– Are the mandarins a product from Pakistan?

Mandarin is the only category of fruit and vegetable products that we have imported ourselves over the past 4 years. The leader in the mandarin segment today is the Medovka variety from China. It is a seedless citrus fruit with a thin skin. This position competes with Georgian mandarins. True, Georgian citrus fruits ripen much later than Chinese ones. Chinese importers can ship their products at the end of October.

In 2020, there was a transport collapse with supplies from China due to delays in the transhipment of goods at the Sino-Kazakh border. This almost doubled the price of Chinese mandarins. Then, there was a transport collapse associated with the supply of Turkish mandarins. At the same time, a significant amount of Pakistani mandarins remained on the market. By the end of the year, the market had already stabilized and was saturated with supply.

– Have you given up direct imports this year? Do you plan to do this in the future?

We refused due to the fact that due to the coronavirus pandemic, the cost of transportation has increased significantly. We refused to take the risk of “freezing” money at such a high cost. Due to the increased cost of transportation, the price of products also increased while the suppliers of these fruits did not receive a higher price for their products.

– Some food retail operators are also large operators of the wholesale market, importing volumes of products that are many times higher than the sales in their networks. This practice is specially developed for those items that require infrastructure improvements. Do you have such plans?

We studied this issue in terms of banana imports, but so far such projects have been postponed. However, I think that over time we will return to this topic. From time to time, we import, for example, Russian potatoes, when we understand that the harvest of local products on the market is running out, but this is not a consistent practice.

“We see online trading as the company’s potential future.”

– How did the coronavirus pandemic affect the sales of fruits and vegetables? Which vegetables and fruits sales in your network have grown and which have fallen?

If we talk about fruit and vegetable sales, then garlic sales have grown the most. The increase in sales of garlic showed a record of 962% for the year followed by potatoes, onions, dill, and radishes. However, if we talk about sales volumes, then the leader is potatoes. We sold it with zero mark-up and people bought it quite actively.

If we talk about the most affected segments, then it is worth highlighting the finished product. We ourselves produce salads and pastries and their sales have decreased threefold.

– Is the HoReCa segment your client?

HoReCa is our client. We have contracts with large hotels where there are many restaurants with large restaurant chains. In addition, we are the exclusive distributors of such brands as the Russian Miratorg, a major meat producer, and Vici, a Lithuanian seafood producer. We are also distributors of frozen fruits and vegetables, including berries and all kinds of cocktail mixes.

In fact, speaking about the sale of frozen products, we took a difficult path. It all requires refrigeration facilities, warehouses, special transport, and delivery conditions, but the frozen food category is growing dramatically. Personally, I associate this with a change in the rhythm of people’s lives. 5 years ago, I find it hard to remember the presence of such an assortment of semi-finished products on store shelves. Today, they are presented, as there is consumer demand for them.

– You have a very good online store. You previously stated that during quarantine it was unable to handle customer orders. Then, as the quarantine was cancelled, this number decreased again. How important is the online trading segment for Makro?

If we talk about the share of sales through online trading, today it is insufficient in customer confidence, technological process, and speed of delivery. It is necessary for people to get used to it. This year we are launching our Dark Store, the first in Uzbekistan. We have made a decision to work on online delivery for our stores, but we are ready to launch any online aggregator on our platform that will offer online delivery services.

Zakaz.uz is an internet aggregator that is already operating in Uzbekistan. They can work with any of the stores and they are great. Unfortunately, due to the pandemic, they had a long delay in launching. Instead of in March, they opened only at the end of last year. They invest in Internet advertising and from time to time we even compete in this. It seems to me that shelf selection for an online store is obviously a business with great restrictions. The biggest example is out of stock and picking off the shelves is always a surprise. Therefore, our Dark Store format is a different approach that can guarantee the availability of goods because there will be a direct link to the online store. This will also speed up order collection.

“We conduct quality control of fruit and vegetable products twice”

– You have already mentioned the quality standards for fruits and vegetables in your stores. Where did you get them from? Did you use ready-made ones or developed standards you needed by trial and error?

Since 2016, we have been negotiating with representatives from the French network Auchan. Unfortunately, they failed to enter the retail market of Uzbekistan, but the team that worked here for a long period of time brought a whole book of fruit and vegetable standards for the first time and this was the base. However, a distinguishing feature of today’s stores versus yesterday’s is that quality control today occurs twice at the DC and directly in the store.

It is worth noting that in small-format stores, we do not have the opportunity to carry out quality control at the entrance. Therefore, there is a so-called confidential shipment of goods from the supplier. A specialist from Ukraine today heads the department for product quality control and she is also involved in the implementation of ISO standards. Therefore, all our quality standards for fruit and vegetable products have been supplemented by international requirements. I cannot say that we have time to follow them 100%. However, work in this direction is being carried out, given that not everything here depends on us and a lot of work should be done by product suppliers. For example, if previously we had frozen products that could have been brought by a Zhiguli car, today no one would dare dream of doing it, even in a nightmare.

– Today, supermarkets from the EU, the US, and a number of other countries present various initiatives to minimize the negative impact of product consumption on the environment. This concerns the transition to reusable containers, abandonment of plastic bags, and emphasis on the consumption of local products. Do you have similar green initiatives?

We have such initiatives and we are rightfully proud of them. We are the first and only company in Uzbekistan to replace all plastic bags with biodegradable ones. First, we introduced using such bags at the checkout. In the second stage, we replaced plastic bags with biodegradable ones at the packaging stage all fruit and vegetable products. We do not make money on the bags but sell them at cost. People have come to understand that they need to be used more rationally. We have our own nylon bags called “I am good” designed for a load of 25 kg. Plus, very soon we should have fabric bags that have a folding design taking up as little space as possible for daily purchases. It is designed for 10 kg of weight.

In regards to ecology, we support our partner companies in various social projects related to, for example, planting trees in parks, but we are not particularly advertising this yet. Also, the process of sorting waste inside the stores has been introduced in our network.

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EastFruit would like to thank Roman Sayfulin and the Makro supermarket chain for their openness and we wish them every success. We believe that it is very important for all participants in the horticulture market – from producers to wholesalers – to understand that whether we want it or not, the retail trade is transforming from bazaars to more organized formats. The openness of all participants in the transformation process will allow us to focus on the opportunities and minimize the risks of switching to a different trading model.

Сообщение Fresh fruits and vegetables are the sales engine – Roman Sayfulin, CEO of Makro supermarkets in Uzbekistan появились сначала на EastFruit.