Danube Riyadh Saudi Arabia

Al Hasan does not think a mass merchandise format like a hypermarket inappropriate to target a specific, top-end clientele. “We cater to affluent locals and expats and this class A group of customers represents some 40 per cent of Saudi Arabia’s total customer base,” he says. “Like other countries in the Gulf region, Saudi Arabia is a growing economy and this can be attributed to different factors. From the oil industry to tourism and new business opportunities such as real estate, infrastructure and the continuous influx of foreign direct investment in different fields including retail. The market entry of Carrefour and Géant are good examples. Danube distinguishes itself by providing a classy ambiance and comfortable shopping with the best customer service. Furthermore, there are corners in the hypermarkets with speciality shops that offer the best fresh foods imported from all corners of the world, as well as organic foods.”

Own label
There are currently five Danube supermarkets and two Danube hypermarkets in Saudi Arabia,
with one more hypermarket expected to be opened in January 2008 in Jeddah. In February this year Danube opened its second hypermarket – the first store outside its home-base Jeddah – in Hayat Mall which is situated in the Kingdom’s capital Riyadh. This store has plenty of room, with a sales surface of 16,000 square metres and over 8,000 metres of storage capacity. The store’s size allows for spacious fresh foods and non-food departments. It has a 30-metre long bakery counter – after all, Danube origins from a pastry business – and butchery and seafood counters stretching 20 metres each.

There are some 140,000 items on Danube’s shelves, which is a combination of local products and imports. Al Hasan estimates that some 60 per cent of the assortment is imported, while 40 per cent is locally sourced. “We import high quality products from Europe, the Americas, Asia, Africa and the countries in the Gulf region,” says Al Hasan. “Our stores offer a variety of organic and healthy diet products, from fresh vegetables to specially made jams, cereals and honey. All made exclusively for Danube.”

Al Hasan says that private labels have been considered, but it is not a priority. “In the past we made some initial products under our own label – tissue, instant tea, bottled water, some houseware items, to name a few – but since our customers are on the higher tier, they prefer mostly international brands that are known to them to have the best quality. We do have own label items but very selective and only items of high quality. We are not just going on the trends of having private labels but losing the momentum later on due to poor quality.”

Danube hypermarket in Riyadh employs 400 people full-time. A large number, even for such a large store. “This number includes all people, from the checkout operators to the security guards, the butchers and people working in the store’s warehouse,” Al Hasan comments. “For European standards this is a big number, but in Saudi Arabia labour costs are much lower. Each of our supermarkets employ between 100 and 150 people.”

Stand alone and independent
Since 2001, Saudi retailer Bin Dawood acquired a majority share in Danube. This retailer operates 14 superstores and hypermarkets under the Bin Dawood banner. “Bin Dawood is our sister company, but for the rest Danube operates as an independent entity, with separate sourcing and a clearly different positioning,” says Al Hasan, who points out that these stores are more mainstream retailers, catering to a less exclusive clientele compared to Danube.

Given the growth of the Saudi market, Al Hasan intends to roll out the Danube chain nationwide. Apart from the hypermarket in Riyadh, all Danube stores are in Jeddah. “Our focus for the next two years is on expanding the Danube network in Saudi Arabia’s largest cities. Our aim is to open six more hypermarkets with average sales levels of 16,000 square metres and ten new supermarkets with sales surfaces of some 5,000 square metres. We have a preference for stand alone stores, which would allow us to make our own decisions, for instance on opening hours. All our supermarkets are stand alone stores and they are open 24 hours a day. In shopping malls there are restrictions to operate stores, but we have several mall-based stores as well.”

According to Al Hasan, Danube might as well build an operation abroad, but that’s clearly a long term perspective. “Yes, we have plans to expand in the Gulf region and we even considered locations in Dubai and Qatar. We now focus on Saudi Arabia. But when we expand Danube abroad, we won’t do it with a local partner. It’s better doing this alone.”