Géant to open 35 stores in Gulf expansion spree

Géant, the French hypermarket chain, plans to open 35 new stores across the Gulf within the next three years under an aggressive expansion drive, the firm’s Middle East managing director said.

The retail giant will launch five hypermarkets and 30 smaller stores across its key regional markets, Bahrain, the UAE and Kuwait, Arif Shaikh told Arabian Business, and plans to debut the brand in Qatar and Oman.

“We kept a low profile during the boom years because the cost of real estate was not real, but since the financial crisis we have embarked on an aggressive expansion plan,” said Shaikh, of Retail Arabia, which holds the franchise rights for Géant in five Gulf states.

“Other markets we are looking at include Qatar and Oman. Hopefully we should be in these markets in the next two years. At this point we don’t know how many stores [will open] but it will definitely be more than one in each market.”

The brand’s has seen steady sales growth across the Gulf, despite the onset of the global financial crash, helping to fund its expansion.

“The best thing about the GCC is that people have a high disposable income, there is a growing population and the region hasn’t been as affected by the recession as other places. It is still booming. Even in the UAE we have seen growth of eight to nine percent year on year.”

Géant, which operates 114 stores worldwide, began its Middle East operations in 2001. Retail Arabia now operates three hypermarkets and eight supermarkets across Bahrain, the UAE and Kuwait, and a further 15 outlets under the ‘Gulfmart’ umbrella.

Saudi’s Savola Group in 2009 paid SR440m to buy all 11 Geant supermarkets owned by Fawaz Alhokair Group, in a deal that saw its retail arm Azizia Panda take an eight percent share of the Saudi retail market.

Retail Arabia plans to open 12 Géant supermarkets in the UAE over the next six to 18 months. The chain is also considering a move into smaller convenience stores, making it the latest retail brand to look to broaden its customer base through local grocers.

“One thing we have seen especially in Dubai and Sharjah is the number of small supermarkets going up. We are looking into convenience stores, but how profitable they are we don’t know yet. The challenge is the price of real estate,” Shaikh said.

The neighbourhood store concept has become the new battleground for big supermarket chains, keen to expand their brand through residential locations rather than large shopping malls.  

Carrefour said in July it would open four ‘Express’ convenience stories in the UAE by the year-end, while Lulu Hypermarket Group said it was planned to roll out 50 local stores across the Gulf over the next three years.  

Retail Arabia also plans to launch 10 Géant supermarkets in Kuwait within 12 months and eight branches in Bahrain by 2014.

Shaikh said the retail chain had seen the biggest demand in Kuwait but had struggled in the past to find appropriate retail space to house its growth.

“In the last 12 months [financial year July 2010 to June 2011] we saw 35 percent growth compared with the year before, and we are estimating another 30 percent growth for the year ahead,” he said. “Our best growth is coming out of Kuwait, but there is a shortage of real estate.”