CEO Talks: Egyptian retail market driven by strong fundamentals

With a population of over 100 million, Egypt is a sizable market holding growth prospects for retailers, despite challenges of inflation and reduced disposable incomes.

According to real estate consultancy JLL, the retail gross leasable area (GLA) in Cairo stood at 20.45 million sqft by the third quarter of 2018. The projected addition of 2.7 million sqft before the end of 2018 and an additional 3.1 million sqft during 2019 will increase the city’s retail space to more than 25.85 million sqft by 2020. Add to this, the Shopping Centres Act passed by the government in May 2018, which eased legislation for the establishment of more new malls, further expanding the retail space.

Over the past 40 years since its inception in 1979, Egypt-based Baraka Retail Group has not only seen the significant transformation of the retail landscape in Egypt but kept pace with this evolution.

The Egyptian market is unique, observed Ahmed Ragab, group CEO of Baraka Retail Group. “In a massive market like Egypt, taking a single view of the retail market is difficult. The retail market has many segments, and the retailers must meet the needs of every customer segment. To do so, we – like any retail business – have had to overcome many hurdles around legislations, regulations and entry barriers.”

“From the time we started our family business, the retail dynamics in Egypt have changed dramatically. All along, our business has kept pace with the retail developments in the country, evolving constantly. Back in the 1970s, our family business started with a few successful retail brands; today, we operate six divisions – including fashion, jewellery, optics, make-up, furniture and concept stores. Currently, we have more than 22 brands in our portfolio with a 100-plus store network, occupying around 215,280 sqft of retail space,” he added.

The Egyptian market is indeed unique and dynamic. Ever since the shopping mall industry in Egypt started developing steadily towards the early 2000s – 2004 to be specific – substantial transformation was witnessed. Today Egypt has shopping malls of different sizes – from the mega mall to community centres – which are comparable to retail destinations in the GCC.

“As a retail group, therefore, we too had to think ahead of time to be able to add value to this kind of a market, to be able to create the right level of excitement in our business,” Ragab observed. “Hence, growth and diversification were central focus areas for us in 2019. We added four brands to our portfolio and opened 30-40 new retail outlets. What’s more, we have now added a new F&B division to our group.”

Transformation has been the central theme of Baraka Retail Group, especially over the past five years. “And transformation has been supported numerically. In our case, the business grew from 5 to 22 brands over the past five years, from 30+ to over 100 stores and the turnover almost increased four times, alongside maintaining profitability. These also indicate the strong fundamentals of the Egyptian market and the ability to absorb challenges – economic and political,” Ragan concluded.

To read the full article, subscribe to RetailME January edition