Exclusive: MAF Retail expects Carrefour expansion to rake in 10% revenue growth

Majid Al Futtaim Retail, the supermarkets unit of the Dubai conglomerate, is aiming for 10 per cent year-on-year revenue growth in 2018, as it expands its Carrefour regional franchise and weighs acquisition opportunities in Saudi Arabia, its chief executive said.

The company plans to invest between Dh1.5 billion and Dh2bn in expanding Carrefour’s store portfolio by 2021, with Saudi Arabia, Egypt, Pakistan and East Africa the key growth markets outside the UAE, Hani Weiss told The National.

“We continued to see a very robust performance in 2017 and are forecasting even higher, growth this year – far above 10 per cent.”

MAF Retail has around 250 Carrefour stores – in either supermarket or hypermarket format – across 14 markets in the Middle East and Africa and plans to double that figure within the next five years. It has the rights to operate in 38 markets.

It is a private company and does not disclose detailed financials.

MAF Retail has operated the Middle East Carrefour franchise since 1995 and Mr Weiss does not oversee its other segments, which include fashion and specialist retail (merchandise).

The supermarkets business – of which 70 per cent is food and 30 per cent is non-food – witnessed 8 per cent revenue growth for the full-year 2017, driven largely by MAF Retail’s acquisition of another supermarket franchise holder Retail Arabia last year. Under the deal, it acquired 26 Geant hypermarkets in the UAE, Bahrain and Kuwait and four GulfMart stores in Bahrain, and rebranded them to Carrefour.

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The company is scouting for a potential acquisition of a supermarket operator in Saudi Arabia, the Arabian Gulf’s largest market. No talks are ongoing yet but Mr Weiss hopes to sign a deal in 2019 or 2020.

It was reported last year that MAF Retail was eyeing a stake in the Lebanon operations of another UAE supermarket chain, Spinneys. Mr Weiss said no discussions are taking place at the moment and, “Spinneys is not for sale”. Spinneys’ products retail at a higher price point than Carrefour and MAF Retail does not wish to start tapping a broader demographic than it already does, he said.

Growth in 2018 and beyond will be driven by both digital and bricks-and-mortar expansions, Mr Weiss said. The UAE will have around 95 stores by the end of 2018, while Saudi Arabia will have around 70 stores by 2021 from 17 at present, and Kenya, with six stores at present, has another four in the pipeline. MAF Retail announced plans in February to open 100 stores in Egypt, and it plans to enter Uganda in 2019.

At the same time, MAF Retail has invested “hundreds of millions of dirhams” this year in improving Carrefour’s digital operations. Investments include the establishment of a team of up to 150 data scientists to analyse customer data, a “Scan and Go” payment system using a mobile app, and the Carrefour UAE online delivery system, which promises one-hour delivery across the UAE by the end of 2018.

MAF Retail is also in talks with a “large European logistics provider” to develop a point-to-point distribution network for Carrefour in the Middle East, with a deal expected in the coming months, Mr Weiss said.

The company opened a 1.5 million square feet storage warehouse in Dubai’s Jebel Ali in June, and wants to open at least two more, in Saudi Arabia and Egypt. It wants to become a regional e-commerce giant for the hypermarket sector and reduce dependence on importing products to each of its markets directly from France. “We are actively seeking to automate the sourcing and delivery process for Carrefour in the next 2-3 years,” the chief executive said.

The introduction of VAT has had no impact on MAF Retail’s Carrefour business because it decided to offset the tax on around 400 of its items – amounting to 40 per cent of total stock. The company was able to do this by negotiating with its suppliers on increased bulk buying in line with store openings.

It would consider increasing the subsidy if there was a need in future, Mr Weiss added. This year, Carrefour launched a policy to refund customers the equivalent of 20 times a product’s cost in loyalty points if they found it cheaper somewhere else.

MAF Retail’s parent, Majid Al Futtaim Holding this week reported a 13 per cent year-on-year increase in revenues to Dh17.8bn in the first half of 2018.