Iran: Chain Stores Increasing In Iran

Last Updated: 4 December 2017
Article by Shanda Consult Ltd

Iranian chain stores are gradually rising and attracting more consumers to do their routine shopping in a more efficient way.

According to Alireza Parvaneh, the manager of Food and Beverage Department of Refah Chain Stores Company, chain stores have about 9.2% share in Iran's retail market. This percentage was about 7% last year and only 3% five years ago, which shows an increasingly rise in number of chain stores in Iran.

Although this share compared with around 70% share of chain stores in advanced countries, is not high, however, the progressive growth trend shows that Iranians' shopping pattern is shifting and they find chain stores more convenient and cost effective.

On average, prices at chain stores are offered about 15% lower than the printed prices on products' packages to attract more consumers. This is because they are provided by main suppliers without any middleman. Also, chain stores allow customers to buy all their routine needs in one place.

Currently 2500 chain stores are active in Iran with around 25,000 employees, Amir Khosro Fakhrian, the head of National Union of Chain Stores, said. The National Union of Chain Stores was launched in March 2017 after receiving many applications for building of chain stores, aiming to control the operation of chain stores and to issue and extend licenses.

Expansion of chain stores

According to Amir Khosro Fakhrian, Chain stores have a 120-trillion-rial ($3.2 billion) share of the Iran's 1.3-quadrillion-rial ($34.6 billion) retail market. From this share 50 trillion rials ($1.3 billion) worth of investments have been financed by public and private sectors in this field.

Etka Chain Stores Company with approximately 500 outlets, is the largest goods retailing chain by number of stores. Etka established in 1955 by the economic holding company of Iran's armed forces.

Another large chain store company in Iran, is Shahrvand which launched in 1993 by Tehran municipality. As a result of foreign investment, Shahrvand has grown dramatically over the years, particularly in products layout and its online shop.

A year later, in 1995, three major Iranian banks (Bank Melli, Bank Tejarat and Bank Saderat), jointly formed Refah cain stores. Refah Chain Stores Company with estimated capital of 10 trillion rials ($266.098 million), is one of the major chain stores in Iran which covers all provinces. Currently, Refah has 230 branches and 3,000 employees and plans to expand its coverage areas by increasing its branches to 500 stores until the year 2022.

Refah issues its own shopping credit card as well as accepting bank credit card, which called Refah Card. These cards have short term credit with no commission aiming to ease shopping and limit cash needs. They can be used for online shopping as well.

Last year, Refah signed a MoU with Emart, largest retailer in South Korea, on electronic trade and joint investments in hypermarkets and small chain stores, aiming to begin the production of South Korean products in Iran with a focus on technology transfer and quality improvement, Farshid Golzadeh Kermani, CEO of Refah Chain Stores, said.

According to Mojtaba Khosrotaj, head of Trade Promotion Organization of Iran, several foreign countries such as Germany and France, are interested to launch chain stores in Iran. He said that there aren't any obstacles for these countries in opening chain stores in Iran.

Launching chain stores in Iran results lower prices and higher quality of goods. Also, supply chain will be shorter and distribution process will be minimized.

Shanda Consult is specialised in consultancy regarding project-based investments and as a partner in bringing together investors and investment projects. For any consultation regarding your business needs, please contact us.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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