Othaim taps Western Region's prospects

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Othaim plans to expand and franchise its Corners format.

The CIO of Saudi Arabia's Othaim Markets reveals plans to open two stores in the Western Region by 2010.

Saudi Arabia's biggest grocery retailer will focus on building its growth in the Western Region of the Kingdom this year.

Aadham Junaidallah, executive vice president of support and CIO of Othaim Markets said the company has decided to open stores in Jeddah and Medina by 2010.

"In the next year we plan to establish our presence in the region, as we exist in all other regions of the Kingdom, and strategically we have opted to serve customers in areas where we don't have a foundation," he told Retail News.

"We operate with four business models: hypermarkets, supermarkets, convenience stores and wholesale stores, and we plan to open up to 10 stores annually."

The Holy City of Medina holds considerable potential for retail players, and Junaidallah revealed the company will open its own mall in 2010 targeting local families and Muslim expatriates.

Junaidallah predicted the retailer will be faced by the need to meet a shopping style dominated by bulk purchasing and demand for fresh and preserved produce.

"The area is served by a lot of agricultural land, and we will supply a lot of fresh fruits and vegetables. One of our key strategies for the region will be to focus on working with local vendors and suppliers for our stock."

The company's convenience concept Othaim Corners could be adapted and transformed into a franchise operation, Junaidallah revealed.

"We will be providing them with the operations and management know-how, and this will be a scheme whereby the two partners benefit from the revenue generated."

He said no date had yet been confirmed for the move. There are currently 20 Othaim Corners stores in the Kingdom, and "they have proved there is big demand for the concept."

Junaidallah pinpointed the stores' low price strategy to their success. "We have a big power over the negotiations with our suppliers, goods at a preferred price which are the same at both convenience stores and supermarkets."

The cost consistency across the formats has bucked the usual trend in the region, and Junaidallah said the company's roots in the supermarket and hypermarket businesses have given it a distinctive, competitive advantage.

Othaim Markets will soon implement its new solutions from Oracle, he revealed, after recently selecting the strategic IT vendor to support its expansion plans.

The Oracle(r) E-Business Suite and Retail applications will provide a fully integrated retail solution that will serve as the backbone for the grocery chain, allowing Al Othaim to streamline business processes.

As the company intends to open more than 100 stores by 2010, Junaidallah said the company's training academy has conquered the recruitment challenge faced by the region's bigger players.

He said the retailer has stood apart from competitors as it is "more targeted with local values," and he added that an influx of American and European retailers to Saudi Arabia will "bring new dimensions to the grocery market."

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