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Thu 16 May 2019 10:34 AM

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Dubai's Majid Al Futtaim eyeing 'long target list' of e-commerce acquisitions

Majid Al Futtaim is predicting 1.5 million online orders this year, up from 4,000 in 2017

Dubai's Majid Al Futtaim eyeing 'long target list' of e-commerce acquisitions
Majid Al Futtaim Retail made significant investments in its digital infrastructure last year, with the Carrefour brand offering a greater range of groceries online and the launch of CarrefourNow, which offers an express 1-hour delivery service.

Dubai-based retail giant Majid Al Futtaim is considering “a very long target list” of potential e-commerce acquisitions as it sees its online orders grow nearly 375 times within two years, the company’s CEO told reporters on Wednesday.

“You see digital becoming much more important and the impact on technology in the business,” Alain Bejjani, CEO of Majid Al Futtaim Holding, said during a media roundtable on Wednesday.

Majid Al Futtaim Retail made significant investments in its digital infrastructure last year, with the Carrefour brand offering a greater range of groceries online and the launch of CarrefourNow, which offers an express 1-hour delivery service.

Bejjani said this has led to a massive surge in its digital operations and it is on target to process around 1.5 million online grocery orders by the end of 2019, up from just 4,000 in 2017.

As a result, the company is planning to continue to make investments in the e-commerce sector. “This is a trend that is here to stay and grow and it is why we are investing so much,” Bejjani said.

Investments

In October, Majid Al Futtaim announced an investment in Saudi online grocery delivery platform Wadi and Bejjani confirmed on Wednesday his company had competed a 100 percent acquisition of the brand earlier this year.

Majid Al Futtaim also announced in November the acquisition of Beam Portal, a mobile wallet app operator which allows retailers to accept mobile payments and engage with customers through their smartphones.

“What I can say is we continue to look at this space and invest in this space, either incrementally in greenfields or start-ups. That is something we will continue to do. We invest when we find start-up companies that provide real solutions to real problems for our ecosystem,” Bejjani said.

While the CEO declined to say how much the company plans to invest in potential e-commerce acquisitions in 2019, he did say it had drawn up potential targets.

“We have a very long target list and continuously refresh it,” he said.

Majid Al Futtaim estimates that the e-commerce sector currently accounts for only around 2 percent of shopping in the UAE, but Bejjani said he sees this growing rapidly in the next five years, especially with the arrival into the Middle East market of global players like Amazon.

“In the UK it is about 8 percent and moving up to 15 [percent] in the US and it is going to grow faster. I think in this part of the world it is going to be much faster. In five years I think we are going to surpass the UK or US,” he said.

E-commerce growth

This growth is already underway, with digital payments firm Visa in March reporting that the number of online shopping transactions in the Middle East and North Africa surged by 44 percent year-on-year last year.

The region’s e-commerce sector is expected to be worth $48 billion by 2022, with the UAE and Saudi Arabia driving its 16.4 percent growth over the next few years, according to a report last year by Fitch Solutions.

On Wednesday, Majid Al Futtaim debuted its $600 million green sukuk bond, a first for the region and a new corporate benchmark for the sector. The proceeds from the latest sukuk will be used to fund environmentally-friendly projects in sectors such as green real estate, renewable energy, sustainable water management and social impact initiatives.

In January, the retail conglomerate reported that revenue in 2018 rose 8 percent to reach AED34.6 billion ($9.42 billion), resulting in a 9 percent rise in EBITDA (earnings before interest, tax, depreciation and amortization) to AED4.6 billion over the same period.

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