New Study: Non-Store Retailing in Kazakhstan

Direct selling remained the biggest non-store retailing channel in Kazakhstan in 2014 as sales were driven by two beauty and personal care direct selling operators: Oriflame Kazakhstan TOO and Avon Cosmetics. These companies have both been present in Kazakhstan for many years and local consumers often believe that products imported from countries such as Sweden and the US offer superior quality. Moreover, in more remote regions of Kazakhstan, direct selling companies benefit from the absence of modern retailing channels and the limited presence of high-quality products at affordable prices.

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Competitive Landscape

Oriflame Kazakhstan TOO led non-store retailing in 2014 with a 19% value share. The company offers a wide range of high-quality beauty and personal care products at attractive prices through direct selling. The significant number of direct selling agents on its books have helped the company to maintain high levels of sales. The second leading player in the channel in 2014 was another beauty and personal care direct seller, Avon Cosmetics Kazakhstan TOO and the difference between each of these company’s value shares was just one percentage point. Each of these companies has been able to maintain its high value share as result of the combination of high quality products and affordable prices. The catalogues issued by these companies act as attractive advertisements and often feature famous personalities in order to increase sales and attract customers. Many Kazakh women are not loyal to either Oriflame or Avon and they regularly switch between these two main players, depending on which products they want to buy.

Industry Prospects

Non-store retailing is expected to increase in value at a CAGR of 9% at constant 2014 prices over the forecast period, although this is set to be a slower rate of growth than what was recorded in the channel over the review period. The ongoing increases in value sales in the category can be explained by rising purchasing power and the increasing spending levels among the local population. The increases being recorded in the numbers of internet users in the country is also set to drive internet retailing sales over the forecast period. In addition, recent entrants such as Amway are set to attract a new consumer audience to direct selling. Nevertheless, there are some serious threats to non-store retailing including the increasing popularity of modern grocery retailers channels and store-based retailing generally. Store-based retailing is set to continue expanding further in Kazakhstan over the forecast period. Previously, most of the store-based retail outlets in Kazakhstan were based in Almaty or Astana, while further expansion into other regions of Kazakhstan is expected over the forecast period.

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