The flower business in Kazakhstan is booming, but behind the scenes, high competition, logistical risks, and increasing costs make it a challenging industry. Adil Tasbolatov, founder of Royal Flowers, one of the country's largest flower chains, shares insights into the realities of the business, from rising expenses to expansion into global markets.
According to Tasbolatov, Kazakhstan's flower market is oversaturated, especially in cities like Almaty, which has around 1,100 flower shops. That means one flower shop for every 2,000 residents—an unsustainable ratio. Many small businesses are expected to close in the coming months due to fierce competition and rising operational costs.
The biggest challenge is the skyrocketing cost of customer acquisition. Just a few years ago, it cost $1 to attract a new customer through advertising. Today, that cost has risen to $8, making marketing a major expense.
Most imported flowers in Kazakhstan come from Ecuador, Kenya, and the Netherlands. However, growing local flowers, like tulips and peonies, is becoming a trend. In 2023, Royal Flowers launched its own tulip greenhouse, but costs remain high.
For example, tulip bulbs are imported from the Netherlands at a cost of about $0.45 per bulb. After growing, they are sold to other flower shops for $0.80 per flower. However, China, a major competitor, buys bulbs in bulk, reducing their production costs significantly.
Looking ahead, Royal Flowers is investing in peonies, a flower that takes five years to reach full production capacity. The long wait time makes it a high-risk, high-reward venture.
The demand for flowers remains strong, with significant differences across Kazakhstan. The highest average spending per bouquet is in Atyrau and Aktau ($55–$60), while in Almaty and Astana, it's around $50. In regional cities, the average purchase is about $44.
Holiday seasons bring a sales boost but don't guarantee massive profits. For instance, in March 2024, Royal Flowers recorded 461 million KZT ($1 million) in revenue, up 1.5 times from regular months, but not the "year's profit in a few days" that many assume. Prices for wholesale flowers also spike before major holidays—roses that usually cost $0.60 can jump to $1.20 per stem.
Royal Flowers is expanding beyond Kazakhstan, with stores in Bishkek (Kyrgyzstan) and Chicago (USA). The company sees potential in Boston, New York, Azerbaijan, and the UAE. Selling flowers in the U.S. is very different from Kazakhstan.
Tasbolatov notes that in the U.S., most flowers are sold in supermarkets, and customer reviews on Google play a critical role in business success. In contrast, Kazakh consumers expect premium service and a personal touch. Additionally, the cost of doing business in the U.S. is higher. Payroll is also more complex, as wages are paid hourly, not monthly, making 24/7 flower shops unprofitable.
While Kazakhstan's biggest sales occur around March 8, in the U.S., the most profitable day is Valentine's Day.
Despite these challenges, Kazakh flower shops are looking for innovative ways to compete. Tasbolatov believes that only businesses that prioritize customer experience and invest in automation will survive in an increasingly competitive market.
Source: digitalbusiness.kz