ASTANA – On January 17, The RTS Ministop Kazakhstan-Japanese joint venture opened its first combo-store under the Ministop trademark in Almaty. The joint venture plans to establish a convenience store chain worth about 10 million dollars around the whole of Kazakhstan.
The combo-store, which combines the properties of convenience stores and fast-food restaurants, is a brand-new retail format for Kazakhstan.
On May 11, 2012, the RTS Company of Kazakhstan and two Japanese companies, Ministop and Senko, founded a joint venture: RTS-Ministop. On June 12, 2012, the first RTS-Ministop General Shareholders’ meeting was convened. As a result, the Area Franchise Agreement was signed and the RTS-Ministop Company acquired the rights for sub-franchising in Kazakhstan.
Ministop is a Japanese company and a member of AEON Group, which owns and operates a chain of CVS convenience stores open 24 hours a day, seven days a week at 4,133 locations: 2,082 in Japan and 2,051 in other countries, including South Korea, China, the Philippines and Vietnam. The company has been working in retail since its foundation in 1980 and has established an original business format known as the combo-store, which integrates conventional convenience stores and in-store prepared fast-food retailing models, creating stores rooted in local communities of Japan.
Under the terms of the Area Franchise Agreement, the management of the CVS chain of stores will be carried out on a franchise basis in Kazakhstan. Franchising, also called commercial concession, is a type of business relationship in which one party (the franchiser) grants another party (the franchisee) the right to open a particular type of business and run it following the business-model the granting party has developed, using its trademarks and/or brands in exchange for compensation (royalties) to the franchiser.
Franchising is a way for successful companies to further develop their activities and an opportunity for small business entrepreneurs and beginners in business to start their own secure businesses because under normal franchise conditions the franchiser covers the complete business-system, including instructions and procedures, software, documents and other materials.
Fifteen combo-stores are expected to open in Kazakhstan this year and 600 are planned for the next 15 years. The official franchise sale will start in August 2013.
Depending on the area, Ministop stores may be located in free-standing buildings, integrated in both residential and non-residential premises, such as office buildings, shopping centres, train stations and undergrounds, close to or inside gas stations, at restaurants, banks and pharmacies, along streets and at crossroads. All locations have dense pedestrian traffic, so the stores will appeal to passersby wanting quick and convenient access to food or supplies.
CVS stores usually occupy small areas of 70 to 150 square meters, which limits the range they can stock of essential consumer goods such as soft drinks and beer, Japanese-made goods (snacks, onigiri and bento: rice with various components), household cleaning products, newspapers and magazines. The stores provide a variety of services, including payment of utility bills through payment terminals, copying documents, selling tickets to events, ATM access and more.
Fast-food items are always offered at Ministop stores. The menus vary depending on the season: the standard menu includes hot dogs, sandwiches, cold desserts, soft ice cream and drinks. Some items will be a novelty for customers in Kazakhstan, like Japanese karimans and stuffed doughnuts. In addition, the stores are all handicapped accessible.
RTS-Ministop Chairperson Bayan Kospenbetova said being the first network and having developed a format for stores at home, RTS-Ministop has all the prerequisites to succeed. The company has long-term plans for at least 25 years and strong financial support and expertise in the markets of Japan and South East Asia. Before selling franchises, the company works to show the market that the format of these stores will be successful, that they are a unique opportunity for businesses and that the business model is working and profitable. At the initial stage, the RTS-Ministop will be engaged in operational management of stores. Ministop prices will be at the level of an average round-the-corner store.
According to Bayan Kospenbetova, there is no network with unified corporate standards to monitor the service and quality in Kazakhstan.
“No one has developed this format in retail before us. Development of the retail market in Kazakhstan started from a segment of supermarkets and hypermarkets. The cost of the project is quite high. At present, about 300 million tenge has already been invested in the project.
According to data from the ACNielsen research company, supermarkets are losing their positions in Kazakhstan, while the importance of shopping “at home”, where about 90 percent of consumers make purchases every week, increased at the end of 2011 compared with the same period in 2010. The average consumer visits convenience stores 22 of 30 days in a month.
In recent years, the convenience store industry has found itself in a business environment characterized by increasingly tough competition that transcends retail formats. The combo-store format provides the convenience of being able to purchase everyday products at reasonable prices while adapting to the aging of society.
The Ministop chain of combo-stores is the first chain of round-the-clock stores of this format in Kazakhstan. According to the Japanese news agency Kyodo, the Ministop brand entered the Kazakhstan market due to its promising economic prospects as a Central Asian country abundant with oil, minerals and natural resources. Japanese experts believe that the combo-store business has a good chance of success due to the Kazakhstan’s swift population growth, high proportion of young people and rising standard of living.