Choithrams expands with corner shops

Retailer is doubling number of outlets and opening convenience stores for first time

Choithrams, the UAE-based supermarket chain, is to almost double the number of shops across the country and is opening smaller convenience store versions of its big supermarkets for the first time. Nineteen new outlets will be added to the company's portfolio of 27 supermarkets across the country.

With more new grocery chains setting up shop in the Emirates, Choithrams decided to up the ante to stay competitive, said its director Manoj Thanwani. "We've had to readdress where we are in terms of positioning," he said. "Due to that, we've had a very close look at our concepts and our stores and really created a new brand manual and a new identity which we will be rolling out in future stores." Sales at major grocery retailers across the UAE last year hit an estimated US$7.7 billion (Dh28.28bn), up 10.5 per cent from the year before, according to the UK-based research company Business Monitor International (BMI).

This was a slower rate than the 16 per cent sales growth in 2008 but mass grocery sales are tipped to grow in the long term. By 2013, sales at retail outlets such as Spinneys and Carrefour are expected to increase by 80.1 per cent, BMI says. In turn, new grocery brands are entering the market and existing players are widening their footprints. The French supermarket chain Auchan opened its first outlet in the UAE in October in Dubai, with plans to launch 15 hypermarkets and 40 supermarkets across the GCC in the next decade.

Another French brand, Geant, has unveiled plans to open a hypermarket on Yas Island in Abu Dhabi. It has already opened one convenience store, called Geant Easy, in Dubai and has plans to open about 20 more across the GCC. David Edwards, the managing director of IMES Consulting Group, a market research company based in Dubai, said competition in the Emirates had become fierce and Choithram was wise to take action.

"If you think of Choithrams stores, you think of pretty narrow aisles and pretty crowded stores, which are quite distinct, say, from Spinneys and Carrefour," he said. "So it probably needed to do something to freshen their format in the face of more aggressive competition." Choithrams has been working with a design consultant to revamp its look and it opened the first of its new outlets, a convenience store, in Dubai's Jumeirah Beach Residence last week. The company has spent "millions of dirhams" on its new image, said LT Pagarani, the chairman of Choithrams.

"The core theme running through [the stores] is the ambiance, which will be clean, bright and not cluttered ? a lot of the [old] sites we inherited from existing buildings and we faced challenges." The shift towards sleeker stores also reflects changing preferences in the region, Mr Edwards said. "Historically, we have seen this in Saudi. Locals in Saudi in particular, they kind of like a slightly more cluttered feel for their stores in many ways, in the sense that its a bit more like the old souq type of approach," he said. "And [many think] anything too clean and modern is probably going to be charging you through the nose for the privilege. But I think with the varied population in Dubai that Choithrams has probably chosen the right route to go."

The chain will open five outlets over the next five months or so, said Mr Thanwani. These include a 33,000 square foot store in the DEC towers in Dubai Marina, a 40,000 sq ft outlet in Jumeirah Lakes Towers and a 22,000 sq ft store in Dubai Silicon Oasis, he added. Depending on how the new look is received by customers, retrofitting of the company's existing stores will begin in October, said Mr Pagarani.

Their expansion strategy also includes setting up stores in newer neighbourhoods, such as Dubai Marina, as they develop. "We have taken a well-assessed step of confidence in locating here while occupancy improves, rather than waiting for occupancy to build up then coming post that," he said. [e-mail]