Retailers race to gain initiative

While the overall FMCG retail sector in the UAE remains fragmented, the larger supermarket and hypermarket groups are taking an increasing share of the market. And as this happens, so competition between the rival players becomes key to creating a healthy sector.

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By  Roger Field Published  July 10, 2006

|~||~||~|Savola Group’s new Panda hypermarket in Dubai, the company’s first outlet outside Saudi Arabia, is no doubt good for consumers in the UAE. While the overall FMCG retail sector in the UAE remains fragmented, with a significant proportion of goods being sold from small and medium sized groceries, the larger supermarket and hypermarket groups are taking an increasing share of the market. And as they take a greater share of the market, so competition between the rival players becomes key to creating a healthy sector. The Dubai HyperPanda store is certainly impressive, with 175,000 sq ft of floorspace, a strong fresh foods offering and a dedicated electronics department. Being based at Dubai Festival City, just a stone’s throw from rival Carrefour’s Deira City Centre branch, HyperPanda’s store also makes a bold statement to its rival. Indeed, both groups are planning to gain a strong presence in each others’ established ground. Dr Mohammad Amin Kashgari, president of Savola Group’s retail division, said recently that the Dubai store is part of a plan to make Panda the number-one retailer in the Middle East and North Africa by 2010. Earlier in the year, French hypermarket group Carrefour, which already has three hypermarkets in Riyadh announced plans to open 18 more stores in Saudi Arabia within the next few years. Another hypermarket group, Geant is also determined to take a piece of the action, and is planning to open 11 stores within the next 18 months. But hypermarket groups are not the only retailers who are looking to gain ground in the Middle East’s FMCG sector. Marks & Spencer, a UK department store, is planning to open its fifth store in the UAE in Autumn. Furthermore, the group has also signalled that it may increasingly give weight to food and drink products. Meanwhile, Boots, a pharmacy chain from the UK, is pushing forward with plans to gain a strong presence in the GCC. The company recently opened stores in Kuwait and Dubai, in partnership with MH Alshaya Co, a Kuwait-based retail group. “Under the terms of the franchise agreement, we have agreed to cover all of the GCC countries,” said Andy Powell, Boots’ regional country manager for the UAE. While the main supermarket groups are not likely to be too concerned about the appearance of Boots in the region, they are likely to be watching Marks & Spencer with more suspicion, not least because hypermarkets such as Carrefour and Panda are increasingly driving margins through the sale of non-FMCG goods, such as electronics and clothes. Either way, the main contest remains between the main hypermarket groups already present in the region. For retail analysts ACNielsen, the battle between the main supermarket groups in the Middle East boils down to a simple formula: whichever group opens the most stores in the best locations will become the dominant player. “Whoever capitalises first will be most successful,” Hubert Lobo, retailer services manager at ACNieslen said. Whatever the outcome, the next 18 months will be exciting for those involved in the sector. Roger Field, Editor. Email: roger.field@itp.com||**||

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