As the coronavirus pandemic empties the bustling bazaars that have long dominated Uzbekistan’s food trade, supermarkets are driving into the vacuum, foreseeing a reshaping of food retail should social distancing become the new normal, Reuters said.
While a slew of industries around the world are scrapping growth plans, some food retailers in Uzbekistan are pressing ahead, believing changing consumer habits due to the outbreak will accelerate their efforts to win market share from traditional farmers’ markets.
However being able to reliably source the wide range of products required by supermarkets will be a severe challenge given the current disruptions to global supply chains, a significant risk factor that could derail expansion plans.
United Arab Emirates-based Majid Al Futtaim, for example, said it was on track to open its first Carrefour store in the capital Tashkent in the third quarter as construction has continued during the national lockdown.
“Phase one will see four stores open in 2020, of which there will be three supermarkets and one hypermarket,” CEO Hani Weiss told Reuters.
The company, which operates Carrefour stores under a franchise deal with the French retail giant will earmark about $11 million for its market entry, and invest $10 million a year to support expansion in coming years, he said.
Local supermarket chain Korzinka.uz said it was sticking to its strategy of tripling its number of stores by 2023 in Uzbekistan, Central Asia’s most populous nation with 34 million people.
The company may open slightly fewer locations this year than previously planned due to the pandemic, with its increased focus on online sales which are likely to grow faster than before, said founder and CEO Zafar Khashimov.
The pandemic could speed up Uzbekistan’s retail modernisation by driving some bazaar traders and convenience stores, who have smaller financial buffers than large chains, out of business, Khashimov said.
“In the medium and long term, most likely, consumer preference and behavior will change. Sanitation, safety and hygiene will become more important,” he added.
“We need not three times as many, but 10 times as many stores to catch up, to provide full modern retail coverage.”
Tashkent residents buy more than two-thirds of their groceries at traditional farmers’ markets and more than a quarter from small convenience stores. Large, modern retail outlets account for only 4.4% but their share could more than triple with five years, he added.
Both Weiss and Khashimov cautioned, however, that a key challenge to growth was ensuring reliable sourcing amid output disruptions and border closures.
