The distribution network in Pakistan
- Evolution of the Sector
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Pakistan’s retail scene faces the longest haul towards modernization. Planet Retail estimates that only around 8,4% of the country’s grocery retail sales are generated by modern businesses. This should grow to just 9,0% by 2020. Modern retail infrastructure in Pakistan is, thus, limited to the largest cities such as Karachi, Lahore, Rawalpindi/Islamabad and Faisalabad.
On a national level hypermarkets and superstores account for far less than 2% of national food retail sales. However, the fact that there is already a significantly-sized consumer market available for retail investors is shown by the 30 million people who live in Pakistan’s 10 largest cities alone. In the grocery arena, key players include neighborhood store giant Utility Stores at the retail end and Metro Group at the wholesale end of the market. In convenience store retailing, decent petrol station networks are already operated by western giants Shell and Chevron (Caltex), as well as domestic operator Pakistan State Oil.
Utility Stores, Pakistan’s undisputed grocery market leader, concentrates on neighborhood stores. The Islamabad-based company continues to be fully-owned by the government and now operates just over 6,000 outlets.
Germany-based Metro Group, as a classical player in global cash and carry, opened its first Pakistan store in late 2007 and has since expanded its network to 9 stores. The company has announced plans to build a network of 20 outlets in the medium term.
In the medium term, retail investment in Pakistan is likely to focus on non-food and foodservice. As for food retail investment, this should emerge on a larger scale once the national food manufacturing base has improved along with the quality of infrastructure (roads, electricity, cool chain, education). Foreign food retail investment will additionally depend on availability of investment capacities from the global multiples. However, this short-term lack of foreign competition in food retailing should enable a protected space for domestic supermarket chains to grow, who will accordingly make interesting partners for international FMCG brands.
- Market share
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The retail sector in Pakistan is experiencing impressive growth as global brands and outlets enter the market. Local retailers are also extending their activities to compete with their biggest foreign competitors.
There are two types of mass retailers:
- Pakistani mass retailers:
- Retail Sector Organisations
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The Federation of Pakistan Chamber of Commerce and Industry
Marketing Association of Pakistan
Ministry of Commerce Pakistan
Economic Affairs Division - Government of Pakistan
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Latest Update: March 2024
Pakistan: Buying and Selling
