Inflation in Kazakhstan has reached 8.9% as of January 2025, leading to significant changes in consumer purchasing habits across the nation. The growth in consumer price sensitivity has prompted a remarkable 78% of shoppers to actively seek out promotions and discounts, illuminating a broader reshaping of both retail strategies and shopping behavior.
According to the Bureau of National Statistics, the increase in inflation during the new year marked a 0.3 percentage points rise from December, with cost increases touching all major categories—food prices escalated by 5.8%, non-food items surged by 8.4%, and the cost of paid services soared by 13.8%. This surge in pricing has compelled consumers to tighten their budgets, with 99% of participants in a recent JD.expert survey indicating that they have experienced rising food costs over the past two to three years. Alarmingly, 40% of respondents reported that their grocery expenses have at least doubled in that timeframe.
As consumers react to these financial pressures, a striking 70% have reduced or completely eliminated purchases of sugary items such as cakes and desserts, further contributing to a notable decrease in overall purchase volumes of food products. Interestingly, roughly 41% of consumers believe that the quality of available products has diminished, a sentiment that rises to 53% among those with lower income levels. With escalating costs, 49% of respondents have shifted towards cheaper product alternatives, impacting their choices at the supermarket.
Supermarkets and convenience stores remain the go-to spots for grocery shopping in Kazakhstan, but there is a growing trend among low-income consumers towards utilizing wholesale markets. About 33% of this demographic is now relying on these markets for their food needs compared to just 8% among higher-income consumers. This shift shows a changing landscape in consumer behavior as individuals prioritize savings over brand loyalty.
From a retail perspective, the market is reacting dynamically to these economic shifts. Leila Musatayeva, director of retail at NielsenIQ, highlighted that the share of modern trade in Kazakhstan increased to 55% in 2024, despite a noted reduction in sales volumes that year. The fast-moving consumer goods (FMCG) market saw a contraction in physical sales by 2%, but an increase in revenue by 7% illustrates the complexities of retailing during high inflation periods.
Growth in price sensitivity has also sparked the emergence of a new group of consumers dubbed "promo hunters"—shoppers who actively seek stores with the best discounts. Over the last decade, their numbers have skyrocketed from 33% to 78%. In June 2024, the share of sales derived from promotional pricing hit an impressive 44.3%, meaning nearly half of all FMCG purchases were made at a discount.
Purchasing store-branded products has become a featured strategy for many shoppers. Store brands, often priced more competitively than premium brands, currently account for 1.5% of total sales in relevant categories—a figure that marks a slight increase from previous years. This rise demonstrates how consumers are increasingly leaning towards affordability.
The retail sector is also witnessing a significant uptick in e-commerce. The convenience of online shopping is reshaping how non-food products are bought, with a dramatic 77.3% increase in e-commerce sales year-over-year by the end of 2024. All told, e-commerce's share of modern retail reached 8%, showcasing a substantial shift from traditional shopping practices.
As these trends advance, retailers are adapting their strategies to align with consumer needs and shopping behaviors. Significant trends include enhanced online channels, optimized marketing strategies, and increased focus on own-brand offerings, translated into better price-performance ratios. The question remains whether these measures will lead to sustainable competitive advantages in a market where consumer preferences are shifting rapidly.
Looking ahead into 2025, the competitive landscape among retailers will likely center around developing robust online channels, refining promotional strategies, and managing relationships with store brands to appeal to increasingly frugal consumers. However, the traditional factors such as personal experiences and customer satisfaction will continue to weigh heavily in consumers' decision-making processes. Innovations in technology will further advance retail strategies, incorporating smart pricing methods and enhanced data analytics to bolster customer engagement.
In light of these dynamics, companies in Kazakhstan's retail sector are encouraged to adopt an omnichannel approach, embrace digital tools, and personalize customer offerings. The growing intersection of technology and retail represents a critical juncture where adaptation is essential for survival and success. Enhanced consumer engagement practices, combined with continuous innovations in product offerings, will likely define the future operations of retailers adapting to this fast-evolving marketplace.
