Géant will roll out 35 new supermarkets in the Gulf in the next two years in a battle with Carrefour to dominate the US$36 billion (Dh132.23bn) market.
Both brands are embarking on major expansions this year. Retail Arabia, Géant's franchise partner in the Gulf, plans to roll out 35 supermarkets and hypermarkets across the region in the next two years, going up against an equally rapid expansion by Majid Al Futtaim (MAF), the operator of Carrefour, which last month said it was aiming to open 15 of its larger stores and 25 to 30 smaller supermarkets.
"Consumers are spending more and the [Gulf] market is back, people have their confidence back," said Arif Shaikh, the managing director for Géant at Retail Arabia. "Definitely the trend in the UAE is going at a faster rate."
Total sales from grocery retailers in the UAE and Saudi Arabia grew 12.5 per cent to $36bn last year, according to Euromonitor, a research and information provider.
Géant does not yet match the Gulf footprint of its successful French rival Carrefour, but that is not stopping its franchise partner in the region from trying to grow market share. "There is population growth, the economic growth is there, the market is there to stay," said Mr Shaikh.
Retail Arabia runs three hypermarkets and 24 supermarkets in the Gulf, under the Géant, Le Marché and GulfMart brands, and the company makes about Dh3bn a year in sales with profit margins at about 5 per cent.
The scale of Retail Arabia's operations in the region is dwarfed by Carrefour, which made Dh13bn of sales from its 43 hypermarkets and 34 supermarkets last year.
Matthew Green, the head of consulting at the property consultancy CBRE in Dubai, said that although Géant and Carrefour were expanding aggressively, they were not likely to be competing head to head for customers. "The MAF malls have the Carrefours and Géant are in other independent malls," he said. "They have to compete for the overall market, but I do not think there's too much direct competition there."
Grocery retailers are increasingly looking to gain exposure to a growing younger population in the Gulf that does not shop on a weekly basis in a hypermarket but prefers to buy locally and more frequently.
"We clearly see that there is a shift across the markets from hypermarket and the next growing thing is supermarket and convenience stores," said Mr Shaikh.
Retail Arabia has launched Géant Easy supermarkets, MAF has expanded the number of its Carrefour Markets, LuLu has opened Express stores and smaller, new players such as Zawya and SPAR International have also pledged to roll out nearly 100 shops between them.
Despite the growth in demand for supermarket and convenience stores, the hypermarket segment was one of the fastest growing last year, with sales rising 10 per cent to $4.7bn in the UAE, according to Euromonitor.
David Macadam, the head of retail in the Middle East at the property and research consultancy Jones Lang LaSalle said the image portrayed by brands such as Carrefour, Géant and LuLu in new markets would determine their success.
"The expansion [of these stores] is not only in the UAE. If you look on a wider Gulf basis, Saudi and Qatar, you will see greater expansion," he said. "But supermarkets will need to build their brands wherever they are. It all depends on the location, the catchment area and the presence these retailers have."
Mr Shaikh said Géant was opening a "significant" number of supermarkets across the UAE, as well as hypermarkets earmarked for Yas Mall and Capital Mall in Abu Dhabi, DragonMart in Dubai and one in Wahat Hili Mall in Al Ain.
"We are seeing real trend change happening in the last six months. People are confident," he said.
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