Spinneys goes global

North Africa and Western Asia have been earmarked for new store openings in an ambitious five year expansion plan.

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By  David Ingham Published  February 15, 2005

Spinneys Holding has confirmed plans to open around 15 new stores across the Arab states, Pakistan and Iran over the next five years. The openings will transform Spinneys into a Pan-Arab, South Asian supermarket chain at a time when international operators like Carrefour and Geant are increasing their investment in the region. Spinneys Holding currently has five stores in Lebanon, with one due to open in Cairo’s City Stars Centre this year and two more planned for Lebanon. Existing Spinneys stores in the Gulf are run independently under license by local investors. The likely cost of the expansion has not been revealed, but Simon Davies, a director at Spinneys Holding and CFO & executive director at Abraaj Capital (a 35% shareholder in Spinneys Holding), confirmed to RNME that US $10 million will be put into establishing the store in Cairo. Davies says the company will be flexible in its approach to new investments, opting to go into new markets with other investors or 100% direct as appropriate. “We will look at both the options,” Davies told RNME. “We see retailing as a tremendous opportunity in the region and we will carefully consider the correct strategy in each market with regard to issues of equity partners and franchise or license partnerships.” Spinneys stores have traditionally been seen as targeting higher income consumers, such as expatriates, but Davies says outlets in new markets will have the leeway to adjust to realities on the ground. “Our business model has a flexibility and adaptability built into it, enabling us to tailor our strategy and positioning to fulfill the expectations of the particular markets we are entering,” he says. Spinneys Holding’s big push is based on what it sees as an emerging trend towards supermarket shopping in the region. According to figures quoted by the company, retail food sales in Lebanon, the UAE, Saudi Arabia, Egypt, Bahrain, Oman and Qatar were worth US $28.6 billion in 2002. Less than 10% of that went through supermarkets, compared with around 50% in major Western economies. “There are clear opportunities arising from the region’s rapidly increasing young population and a noticeable shift in consumers’ attitude towards shopping,” says Sheikh Abdulrahman Al Turki, chairman of Abraaj Capital. “We intend to seize those opportunities and open outlets where customers can benefit from them,” he adds. Another factor behind the planned expansion is Spinneys’ solid performance in Lebanon, which has given it a strong foundation from which to start its regional push. “With sales turnover crossing the [US] $100 million mark in Spinneys Lebanon, we have a platform from which to launch our expansion across MENA and the subcontinent,” says Sheikh Abdulrahman. Michael Wright, who oversaw Spinneys’ growth in Lebanon, has been promoted to the position of group managing director. Spinneys is expanding at a time when Carrefour, through Majid Al Futtaim Investments, and Geant, through Retail Arabia, are expanding across the Middle East. Geant’s latest regional outlet opens in Dubai in the next few months.

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