BGF Retail’s CU looks beyond Kazakhstan deep into Central Asia

Kazakhstan, a Central Asian country 27 times the area of South Korea, did not have any modernized convenience stores until early this year.

The country only had large marts and supermarkets, where people would go once in a while to buy groceries and daily necessities in bulk.

In March, BGF Retail Co., the operator of Korea’s top convenience store CU, opened its first Kazakh convenience store in Almaty, the country’s largest city, to meet Kazakhs’ growing itch to buy daily goods near their homes at any time.

“Despite fast-growing shopping demand for daily necessities in the neighborhood, there was no small retail channel in the country. That’s why we’ve brought in CU,” Alina Shin, chief executive of CU Central Asia (CUCA), said in a recent interview with The Korea Economic Daily.

Shin, 29, is a fourth-generation ethnic Korean who runs Shin-Line Co., Kazakhstan’s largest ice cream maker and distributor.

With its master franchise agreement signed with BGF Retail earlier this year, CUCA now operates seven CU outlets in Almaty.

“Young people here are already exposed to the CU brand through K-dramas. They show a keen interest in K-food,” she said.

ONE OF THE FASTEST-GROWING ECONOMIES

Kazakhstan is one of the countries with the fastest economic growth rates.

Last year, the Central Asian country posted a gross domestic product growth rate of 5.1%, double the global average.

It is also a “young country” with more than half of its population under the age of 30.

Shin said CU is changing the local shopping culture with its Korean business practice of “open 24 hours a day, 365 days a year.”

“In Kazakhstan, it was common to visit a large mart or a supermarket once or twice a week to buy groceries and daily necessities in bulk. Since the opening of CU outlets here, however, people have been visiting our stores multiple times a day to enjoy food and shopping. They buy coffee on their way to work, eat kimbap and ramen for lunch and buy daily stuff on the way home,” she said.

CHANGE IN LOGISTICS

The CUCA chief said CU has also brought innovation to the country’s logistics and distribution system.

She said it is common in Kazakhstan for each product seller to directly deliver products to stores. As a result, there have been many cases where stores could not sell products if the seller failed to make it to the stores in time.

With its entry into Almaty, BGF Retail set up a logistics center on a 3,000-square-meter plot of land to systematically manage the product supply and inventory at its CU outlets in Almaty.

“CU’s Improved service quality is elevating the overall service level of Kazakhstan’s distribution industry,” Shin said.

READY-TO-EAT FOOD INSIDE STORE

The popularity of K-culture and K-food in Kazakhstan has allowed CU to quickly establish a foothold in the country.

CU outlets in Almaty not only put dried food such as instant noodle ramen packs and triangle-shaped kimbap on the shelves but also sell ready-to-eat products such as tteokbokki and fried chicken.

Tables and chairs are placed inside the stores to make eating easy.

The usual convenience store goods and ready-to-eat food account for over 30% of CU Kazakhstan’s total sales.

“Many people visit our stores to taste Korean food and buy Korean goods that they saw in K-dramas,” Shin said.

BUSINESS BEYOND KAZAKHSTAN

BGF Retail aims to use Kazakhstan as an outpost to advance into other Central Asian countries.

“We aim to open 500 CU outlets in Kazakhstan by 2029. We’re also planning to enter other countries using Shin-Line’s sales infrastructure,” Shin said.

Shin-Line's broad distribution network throughout Central Asia, particularly its comprehensive cold chain infrastructure, will be a boon for the convenience store chain's operations, enabling effective handling of temperature-sensitive goods, she said.

“Among the 100 ethnic groups in Kazakhstan, Koreans or ‘Koryoins’ are a relatively small group of people. As a fourth-generation Koryoin, I am very proud that we are introducing Korean culture here and upgrading Kazakhstan’s distribution industry through Korean convenience stores,” she said.

Write to Sun-A Lee at suna@hankyung.com

In-Soo Nam edited this article.