Middle East Hypermarkets: Big, bigger … best
Elsevier Food International Vol.7, No.1, February 2004 Simon Thomson
The Middle East hypermarket is finally coming of age. It started in 1995 with a single Carrefour –then still known as Continent. The format is now being rolled out across the entire region stretching from Egypt in the north through Saudi Arabia to Oman in the extreme south.
Whereas MAF Investments – the regional partner of Carrefour – were more or less unchallenged as Middle East hypermarket operators only a few years back, serious competition is now beginning to be offered by the likes of Casino's Géant, Savola Group's Panda, and Spinneys.
Still Carrefour is seen as the hypermarket role model. Anchoring MAF Investments' 130,000 square metres Deira City Centre in Dubai, the 17,000-square-metre sized Carrefour is the benchmark against which all others so far measure performance. Recent announcements, not only by MAF Investments but also by the other key players mentioned, of new and larger projects may mean that the position of this original Carrefour may soon be challenged.
Carrefour and Casino in Dubai
A day barely passes without an announcement of yet another mega project. In October 2003, MAF Investments said that their already massive Al Nakheel Mall in Dubai would henceforth be known as Mall of the Emirates and be doubled in size. Due for completion in 2005 this will make the Mall of the Emirates some 400,000 square metres large. With this size it becomes the largest shopping mall outside North America. Of course it will be anchored by the largest Carrefour so far planned in the region.
This follows hard on the heels of it being revealed that French retailer Casino’s Géant hypermarket will anchor the 300,000 square metres Gardens Shopping Mall in Dubai, which is due for completion in September 2004. This will be the second Géant in the Gulf, the first opening in Bahrain in 2001, and trounces any concept of these two French brands not setting foot in the other's territory. This second store will cover 16,800 square metres of floor space including service areas.
Géant's local partner, Retail Arabia are reported to be investing US$20 million in the project and plan to carry more than 65,000 products ranging from groceries to textiles, fashion wear, electronics and household and other items.
Bahrain and Saudi Arabia
The Géant hypermarket in Bahrain Mall, which was completed in May 2001, was the first real hypermarket in that region. In the coming years Géant will be accompanied by Carrefour, as MAF Investments plans to start construction of The Mall of Bahrain in 2004. Located in the Seef district of the capital Manama, this new mall will add to the other leading malls located here. These include Seef Mall, Bahrain Mall, Al A'Ali and Al Dana. The latter is anchored by Giant – a Saudi hypermarket group not to be confused with the similarly sounding but quite different Géant. What this burgeoning concentration of retailing and already congested access roads will do for Seef remains to be seen.
In Saudi Arabia, the Saudi conglomerate The Savola Group is busy developing the Panda banner. This hitherto supermarket brand will be turned into a national hypermarket chain with its first hypermarket in Riyadh, anchoring Savola Group’s own shopping mall, Azizia Mall. This mall will encompass 32,000 square metres of leasable area and is due for completion in 2004. Panda Hypermarket will occupy 16,700 square metres of trading floor space.
To the north of Riyadh, The General Organisation for Social Insurance ('GOSI') are busy developing Granada Center, a destination mall of some 200,000 square metres. This mall will be anchored by the Kingdom's first Carrefour hypermarket, measuring some 12,500 square metres.
Egypt and Lebanon
MAF Investments is very successful with its Carrefour-anchored mall concept. In Egypt this is being rolled out by its joint venture MAF Misr. To date it includes Alexandria City Centre in Alexandria and Maadi City Centre in Southern Cairo.
Elsewhere in the Egyptian capital Monoprix (jointly owned by French retailers Casino and Galeries Lafayette) is earmarked to anchor Dandy Mega Mall. This mall will feature a 14,000 square metre hypermarket, and some 70,000 square metres of leasable space over the coming months.
Casino's third Géant in the Middle East, but possibly the second to open, is well under construction at Dora, in the northern suburbs of Beirut. Anchoring Admic's Dora Regional Commercial Centre the hypermarket will offer 11,000 square metres of floor space out of a total gross leasable area of 60,000 square metres. Not far away along the Jounieh coast road, MAF Investments are reported to have acquired a site for their first Carrefour in Lebanon. Rumours persist about a second Carrefour south of the city.
Elsewhere Spinneys – formerly owned by the UK Inchcape Group but now owned by the Cupola Group of Dubai – have a number of significant stores strategically located around the city including Jounieh Road to the north, Achrafieh to the south east of the city centre and the latest, in Jnah south west of the city centre.
Other regions and retailers
These latest hypermarket developments by the leading players will add to the existing stock that includes Carrefour in Abu Dhabi (2), Al Ain (1), Ajman (1), Sharjah (1) UAE; Muscat (1), Oman; and Doha, Qatar (1). Further expansion by Carrefour is expected in Saudi Arabia, Egypt, and Oman and potentially Kuwait, Jordan, and Syria.
Casino and their local partners can also be expected to carry on the pattern of development that is beginning to emerge for the Géant format with rumours circulating of being linked with various projects in Sharjah.
Other important players include Kuwait-based Sultan Center and India-based Emke Group's LuLu Centre brand. Sultan Center has major trading operations not only in Kuwait but also Oman and is reported to be planning a large cash and carry in the rapidly expanding Seeb district close to the international airport. LuLu Centre is opening its first hypermarket in Al Ghoubra, Muscat in 2004 followed by a second some months later.
UK retailer Tesco – although not established in the region – has historic trading links with Jawad, the respected Bahrain supermarket chain, and with Spinneys. The recent acquisition of the Turkish supermarket chain Kipa by Tesco brings its presence ever closer to the Arab world. Whether this is within the current horizon of Tesco Chief Executive, Sir Terry Leahy's "international strategy for long term growth" has yet to be revealed.
What is certain is that the hypermarket offer is now well established in the Middle East with the format being rolled out ever more widely across the region.
Head: Dubai: the retail category killer
Dubai is on course to become possibly the most densely shopped city on the planet. There, hardly a day passes without the announcement of a mega scheme of some form, invariably with a major retail component. Dubai with over 600,000 square metres of completed retail floor space is likely to increase almost fourfold within five years to some 2.5 million square metres. This might appear fanciful if almost 950,000 square metres were not already underway.
Dubai already provides 17 per cent of retail footage in the Gulf region and with 75 per cent of new mall development concentrated in Dubai, the expectation is that Dubai will offer 30 per cent of all retail space in the Gulf within five years. In retail terms, Dubai seems set on becoming the regional retail category killer.
Such a concentration of retail space in a relatively small population city could appear excessive. Dubai's indigenous population has, however, grown by 24 per cent with a similar increase in GDP in four years. Moreover, the Government is seeking to attract 15 million tourists every year by 2010. As if this isn’t enough, the United Arab Emirates – of which Dubai forms part – is already the trade and commercial hub to a region that includes the Gulf region, Levant, Africa, Central Asia and the Indian Subcontinent. A region with over 1.5 billion people and a combined GDP in excess of US$1.5 trillion. With a substantial element of this aimed at Dubai perhaps 27 million square feet of shopping space may be just the beginning!
Simon Thomson is principal of Retail International, an independent UK-based retail consultancy offering specialist professional services to the retail industry with particular emphasis on the Middle East. Thomson is an active member of the International Council of Shopping Centers as well as the Middle East Council of Shopping Centres – of which he was a founding director.
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