Symbol retailer Spar International plans to enter Middle Eastern markets through a tie-up with Dhabi Co-operative Society (ADCOOPS). Katy Askew caught up with Spar MD Gordon Campbell to find out more about the retailer’s growth plans for the region.
Spar International has entered into a partnership agreement to boost the retailer’s presence in the Middle East. Dhabi Co-operative Society, or ADCOOPS, will open Spar stores in the United Arab Emirates under licence. The group will also have the option to sub-license Spar “to suitable partners” in the wider Middle East and North Africa region.
According to Spar managing director Gordon Campbell, the licencing model has proven a successful way for the retailer to expand into new territories and has shaped its global expansion strategy.
“The partnership model has been the basis of the success of Spar. It has brought Spar to 36 countries on four continents,” Campbell emphasises.
Spar and ADCOOPS aim to develop a multi-format strategy throughout the Middle East and North African region.
Spar hopes that, through franchise agreements with local partners, it will be able to take a share of grocery sales in these rapidly expanding economies. Oil rich Middle Eastern coutries have largely continued to florish while North African economies “out-performed” in 2012, according to frontier market investment firm Silk Invest. It is easy to see why Spar would want to tap into that potential.
The “initial development” phase of this strategy will see ADCOOPS open an outlet under each of Spar’s formats. Earlier this week ADCOOPS opened its first compact hypermarket in the UAE. The move follows the opening of a Spar supermarket in late 2011 and, today’s opening of Spar Express convenience.
“We will them have three formats open in Abu Dhabi; Spar hypermarket compact, Spar supermarket and Spar Express,” Campbell says.
While all of the Spar outlets will focus on being “the best in fresh”, each format has a “distinct” consumer proposition. The hypermarket carries “comprehensive” produce, meat, fish, deli and bakery departments; an “extensive” offer of food-to-go products featuring Arabian, Asian and European dishes and an in-store seating area. It has a “very wide range and depth” of food and non-food products – including electronics and a laundry service. The supermarket aims to meet “daily shopping needs” and also offers food, non-food and food-to-go items. Meanwhile, the convenience banner targets “people on the go” with an offering of fresh produce, meat, dairy and grocery products.
Campbell says the Spar outlets are superior to the local competition as the retailer looks to distinguish itself by delivering on quality and price. According to Campbell, the company has been well received by consumers with sales targets already exceeding expectations.
“The first Spar stores in the UAE offer an exceptional quality fresh shopping experience to our customers. They raise the bar on supermarket standards in the UAE. They combine excellence in fresh with quality, safety and personal friendly customer service. They have an enormous range and variety of products at very competitive prices,” he says.
However, competition in the region is heating up and Spar is far from the only international banner in the UAE. Indeed, Carrefour – which has a relatively strong presence throughout the MENA region – announced last year that its franchisee Majid Al Futtaim plans to open an additional 45 stores in the country. And, like Spar, the group has adopted a multi-format strategy, primarily focused on hypermarkets and supermarkets.
Nevertheless, Campbell is confident that Spar will be able to win consumers over by focusing on its points of difference.
As the group looks to expand in the region, Campbell acknowledges one of the challenges is to identify good locations for its stores. This is where ADCOOPS comes in and Campbell praises Spar’s regional partner for sparing “no effort” to find “excellent locations”.
Going forward, Spar plans to steadily develop its footprint in UAE. New store openings will be focused on the Abu Dhabi region, where the first three outlets are located.
“We plan to open five more Spar supermarkets in the Abu Dhabi region during 2013 giving a total of eight stores by year end,” Campbell says. “We are actively seeking suitable properties in Dubai for opening in 2014,” he adds.
Spar’s ambition does, however, stretch beyond UAE. The company has also signed a deal to open two Spar supermarkets in Doha in Qatar this year. Here, Campbell says, the group is working in partnership with major food distributor QNIE.
Spar has also confirmed it has already reached “an advanced stage in negotiations” with potential partners to open Spar locations in Lebanon and Oman. The company has indicated that it expects to be in a position to make an announcement of the signing of sub-licence agreements for both countries in the “coming months”.
“Our partner Abu Dhabi Co-op, will work in co-operation with Spar International to launch Spar throughout the MENA region. Together, we will recruit and licence partners in individual countries,” Campbell says.