x Abu Dhabi, UAEWednesday 26 July 2017

Carrefour plans expansion of UAE network as sales in home market fall

Carrefour, the world's second largest retailer, plans to expand its UAE network amid a decline in sales in its home market.

Carrefour may be able to capitalise on the recent closure of scores of small local shops in Abu Dhabi. Sarah Dea / The National
Carrefour may be able to capitalise on the recent closure of scores of small local shops in Abu Dhabi. Sarah Dea / The National

Carrefour, the world's second- largest retailer, plans to expand its UAE network amid a decline in sales in its home market.

Majid Al Futtaim, which owns the exclusive rights to the Carrefour franchise in 19 markets across the Middle East and central Asia, yesterday signed a 20-year lease for the first Carrefour Market, a convenience-sized store, in Abu Dhabi.

The 1,200 square metre store in the AD-1 Tower Project, which is managed by Abu Dhabi Commercial Properties and located in the heart of Adnec's new Capital Centre development, is expected to open within four months.

"This is the first one and I think the size will be fit for that location," said Younis Al Mulla, the senior vice president of retail development at Majid Al Futtaim.

"We created this concept for convenience, [for] day-to-day shopping for the people who are around these premises. The size starts at 1,000 square metres up to 2,200 square metres approximately. We thought why not go ahead with this concept? We can serve the community in a better way."

The chain also intends to open a Carrefour Market at Al Muneera in Al Raha Beach. The two new stores could be followed by many more, depending on market demand.

"It depends on how we find the locations and depends on the market research we will do. It's not only just one or two. It might be 100, it might be 20 or it might be 50. Whatever the market needs we will be there," added Mr Al Mulla.

Carrefour may be able to capitalise on the recent closure of scores of small local shops in Abu Dhabi.

Abu Dhabi Food Control Authority told the capital's 1,300 neighbourhood groceries, which are also known as dukhan, in May 2011 that they had until the end of last year to upgrade in line with new storage and sanitation rules aimed at making them more hygienic. But many were unable to afford the changes and shut for good.

Carrefour yesterday reported a decline in first quarter sales, blaming Europe's beleaguered economy and the weather for a fall in business in its home market, France, where sales were down 0.7 per cent to €9.2 billion (Dh44.13bn).

"All three formats, hypermarkets, supermarkets and convenience stores, posted a resilient performance in a challenging economic environment and despite unfavourable weather conditions," said Carrefour in a statement.

Revenue at hypermarkets in France open at least a year fell 2.9 per cent in the first quarter, excluding petrol.

Sales in Latin America did much better, rising by almost 14 per cent to €3.9bn at "constant" rates. But depreciation of the Argentinian and Brazilian currencies effectively reversed the gain, leading to a decline of 0.2 per cent in euro terms.

"Strong sales growth continued in Brazil in all formats, with organic growth of 13.3 per cent. Sales in Argentina rose 23 per cent at constant exchange rates, of which 16.5 per cent was organic growth. A price freeze has been in place in the country for the past two months and has been extended into the second quarter of 2013," the statement said.

Asian sales were broadly stable, according to Carrefour.

It did not mention how business was in the Middle East, which it groups into a region it refers to as "others" that includes the Maghreb and Dominican Republic.

In the first quarter, Carrefour opened or acquired 142 stores, eight of which were in the region that includes the Middle East.

It operates a total of 10,036 stores worldwide, 198 of which are in the "others" region.

In the past five years Carrefour has dispensed with assets in five countries, pouring money into its domestic business.

The chief executive Georges Plassat has said Carrefour's goals for this year include improving its price perception, refurbishing outlets and broadening its multichannel offering.

"Subdued headline figures belie slow underlying improvements," Gildas Aitamer, an analyst at Planet Retail, said in a note to Bloomberg. "We believe Carrefour is moving in the right direction."

 

gduncan@thenational.ae