Alghanim claims to be the largest electronics retailer in the Middle East. It is certainly the dominant force in Kuwait. The company also professes to offer a retail experience superior to many similar set-ups in US and Europe, an assertion that it is eager to cement through the roll-out of its ‘X-Cite by Alghanim’ retail store strategy. Hakim Amar, group product manager at Alghanim Electronics Group, discusses what it takes to succeed in the retail channel.
Explain the motivation and timing of the Alghanim re-branding?
The idea was really to create our own branding and identity, and we really wanted to expand our concept out of the region. We have some interest in Saudi and further plans that way are about to come. We wanted to be ready to open more stores with a stronger, free-touch retail concept. Right now, under X-Cite, we have seven stores — three in the small format and four in the Xpress format. What plans do you have to expand that business?
The idea is firstly to refurbish the older stores over the next three to five years because the concept was in an experimental period and now we have improved it. You want to be dominant inside Kuwait before you expand outside the country. When will you judge this objective achieved?
We believe that, right now, we are quite well-armed to go outside [of Kuwait] because Alghanim has more than 65% to 70% market share in Kuwait. But we also feel that there is important potential regarding the Xpress stores in Kuwait.
Is it wise to be opening so many Kuwait stores in the midst of a global financial crisis?
The Kuwaiti market is quite an experimental market as people are focused on new technology and products. We believe it is worth it to open more and more stores. We were scared about cannibalisation, but that’s not happening. We only open stores in extremely strategic areas. Expansion is mainly done around the Xpress format and that’s why we came with the format — in some areas it was not worth coming with the ‘big box’ model.
How has the financial crisis affected spending power among customers in the Kuwait market?
I’m extremely positive because we have not been affected that much by the crisis. We launched an aggressive promotion and, yes, the consumer does not have that much money to purchase, but we made sure we helped their decision and ensured our store is really attractive with lots of promotions to stimulate the market. We’re growing extremely well compared to last year. How about the way distributors have been addressing Alghanim and Kuwait — have you seen a difference in their approach?
They’ve also been quite optimistic because they saw that our business was still doing well. They were a bit scared that the crisis coming from Dubai would affect Kuwait, but they have been happy to see it has not been touching us that much and our level of ordering has been consistent and sustained. They were also hesitant and wanted to make sure that a market such as Kuwait would support large orders. We were pushed a bit by the suppliers at that time because they knew we had not been too affected.
And what about vendors, has the emphasis on targets reduced?
Vendors have a totally different view than the distributors, they are more realistic. They felt the crisis a bit before so they were being extremely pessimistic. But they just wanted to make sure we will achieve what we did last year. HP and other vendors have been pushing the ‘store-in-store’ concept among retail partners. Does this model suit Alghanim’s strategy?
This will not fit, we have our own concept. They approached us and said they wanted to do such a concept with Alghanim and we said no because we do not want to do any store-in-store concept.
What did HP say to that?
They were not happy, but afterwards they understood that we will try and optimise their display. What fits and makes the vendor happy is to have a dedicated area and that is what we are trying to do with our main brand.
It is true that smaller markets in the region have not been as affected by the crisis, but do you worry that there is a latency issue and the worse is still to come?
That is what we thought. But no, I am not worried, and I am confident that we are strong in our market and we will tackle this crisis without being affected. What strategy do you have for growth this year — is adding vendors a way to develop the business?
This has to be a very carefully considered decision for us as we do not want to cannibalise the market, and SKU rationalisation is a very important aspect of our business. Value is very important as well and as soon as there is an added value we will add a new vendor, but if it is just a case of bringing in a product with a new colour it is not right.For all the latest tech news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.
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