x Abu Dhabi, UAEMonday 24 July 2017

A big market to match depth of each pocket

According to a price comparison by The National of nearly 40 products, Lulu is the most affordable hypermarket for a basket of branded and basic products combined, followed by Carrefour and Géant.

Lulu Hypermarket offers the most affordable basket of basic foods among major supermarkets in the UAE, pipping Carrefour and Géant.

For products such as bread, rice and flour, Lulu is 6 to 7 per cent cheaper than the two other hypermarkets, according to analysis by The National.

"I'm not surprised by the findings," says Sana Toukan, an analyst at Euromonitor International. "Lulu is targeting the value consumer. They are targeting the lower-income group."

For a basket of branded goods, including Coca-Cola, Heinz ketchup and Kellogg's cornflakes, Carrefour came out as most affordable by a couple of dirhams, with Lulu second and Géant third.

Matthew Green, the head of research at the property consultancy CBRE, says Carrefour is the biggest player in the supermarket and convenience store sector in the UAE.

"It's dominant because of the mall-based product it offers," he says. "They can attract a lot of people in the major malls."

According to a price comparison by The National of nearly 40 products, Lulu is the most affordable hypermarket for a basket of branded and basic products combined, followed by Carrefour and Géant.

Ms Toukan says it is clear from the locations of Géant stores in areas populated by western expatriates that the brand is targeting a mid-range segment, rather than aiming to provide the lowest price.

"Some supermarkets are known to be more expensive because they have a lot of imported goods," she says.

The high level of imported western goods in some stores is attractive to western expatriates looking for home comforts, but such goods are more expensive, says Ms Toukan.

She adds that the value chain supermarket companies in the UAE starts with Lulu, moves up slightly to Carrefour, with Géant and Almaya in the middle and Spinneys and Waitrose at the top end.

Total sales among grocery retailers in the Emirates and Saudi Arabia grew 12.5 per cent to US$36 billion (Dh132.23bn) last year, according to Euromonitor.

Analysts say the food market will continue to grow this year as salaries rise and more expatriates move to the UAE for work.

"I think the general fundamentals remain strong. Spending power has increased," says Mr Green.

Supermarkets are also predicting an increase in consumer spending as they open hundreds of stores in Gulf countries.

Convenience stores and smaller supermarkets are cropping up in more affluent areas where residents can afford the costlier practice of buying food on a daily basis.

Retail Arabia, the franchise partner for Géant in the Gulf, has launched Géant Easy convenience supermarkets, Majid Al Futtaim (MAF) has expanded the number of Carrefour Markets it operates, and even value-conscious Lulu has opened Lulu Express convenience stores.

Some lesser-known supermarkets are also rapidly expanding their networks. Zawya and Spar Internationalplan to open nearly 100 shops between them.

"A lot of the focus recently has been on convenience stores, filling in the gaps in well-established communities," says Mr Green.

Retail Arabia plans to open 35 supermarkets and hypermarkets across the Gulf in the next two years, going head to head with MAF, which said in January it was aiming to open 15 larger stores and 25 to 30 smaller supermarkets.

rjones@thenational.ae