The number of Circle K convenience shops will more than double over the next 12 to 18 months, after it announced plans to open 55 stores in the UAE, with the majority in the capital.
The Canadian retailer runs more than 13,000 convenience shops around the world, with 40 in the UAE at present, of which 10 are in Abu Dhabi.
The brand partnered with Convenience Arabia in 2011, ramping up its expansion and opening shops at a rate of two a month.
The new initiative will involve the same rate of shops opening every month, endeavouring to beat the rising rents and build a client base in newer communities. “Since we opened our first store the yields have been good with return on investment as expected,” said Fahmi Al Shawa, the chief executive of Circle K Arabia.
“That is why we are fast-tracking our expansion as the market is picking up and we will, hopefully, avoid the heavier rents going forward.
“As convenience stores we do not go for prime locations, we choose secondary and tertiary locations were the rents are more comfortable. Obviously there will come a time when we need to look at our expansion as the market heats up.”
Circle K has no locations secured at present but envisages the growth primarily in Abu Dhabi in newer communities and apartment blocks that need a general retailer close to home.
The growing market for convenience shops will soon be joined by 7-Eleven, the world’s largest convenience store operator. It said last year it would open in the UAE this summer.
Total sales in convenience stores in the UAE are expected to touch US$263.7 million in 2018, up from $222.5m last year. This is in line with the projected rise to 443 such outlets in 2018, up from 336 last year, according to Euromonitor.
“It is a sector which is on the up, partly because we are an apartment culture, and the stores sit well on the ground level of tall buildings,” said Matthew Jay, the associate director of retail for the US-based real estate firm CBRE.
“Also because the population is growing and land is limited within the new communities, so hypermarkets cannot be built. Circle K sit well in both residential and commercial buildings, servicing both domestic and business customers. Obviously they do not pay big rent, needing a minimum amount of custom to stay profitable, but they are a draw and a valuable asset for any community.”
ascott@thenational.ae
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