x Abu Dhabi, UAE Thursday 20 July 2017

Convenience stores thrive amid downturn

The economic downturn has failed to halt growth in the UAE's convenience store sector.

A Fresh Plus food store in Dubai: convenience stores are thriving in current market conditions.
A Fresh Plus food store in Dubai: convenience stores are thriving in current market conditions.

The economic downturn has failed to halt growth in the UAE's convenience stores. During the first four months of this year, sales were up by 11 per cent compared with the same period last year, according to the research firm Nielsen. Piyush Mathur, Nielsen's regional managing director for the Middle East, North Africa and Pakistan, said: "People still need to eat, they still need to drink." However, the growth rate had slowed sharply compared with last year, when convenience store sales in the first four months of 2008 increased 26 per cent compared with the same period in 2007. Sales at the fuel retailer Emarat, which has just launched a new chain of convenience stores, Freshplus, are up 3 per cent so far this year, according to Darren Smith, Emarat's manager of retail, marketing and support. The drop in the UAE's population has shortened the queue of cars waiting to get on the forecourt at petrol stations, queues which had previously discouraged potential customers, he said. "We think that people are choosing to use us because they don't have to queue like they did in the past," Mr Smith said. "It's easier to shop. "When you look around, the roads of Dubai, much quieter than used to be, but still our sales are doing well. They're quite robust. I think that's because we mainly supply items that people eat. They snack on the go." Emarat opened its first Freshplus outlet at Business Central Towers in Dubai three weeks ago and has four more planned for this year. The company also plans to open more outlets in other GCC countries through franchising, Mr Smith said. Martin Pointon, the operational director of the convenience store chain 24 Seven, said its 14 outlets in Dubai had the same number of customers, but the spending per person had gone down by roughly 10 per cent this year. However, 24 Seven still plans to add six more stores to its portfolio, including outlets in Abu Dhabi. The company is also exploring potential locations in other Gulf countries, beginning with Qatar and Kuwait. "We're not put off by the downturn in the market," Mr Pointon said. Convenience store retail should grow by 10.4 per cent this year, largely because those sales are increasing from a low base, according to Shonil Chande, a food and drink analyst with the research firm Business Monitor International (BMI) in the UK. Purchases at smaller, on-the-go stores accounted for just 4 per cent of total grocery sales last year. Between this year and 2013, BMI expects convenience store sales to grow by 48.9 per cent, outpacing its prediction for growth in the total mass grocery retail segment of 40.1 per cent. "Demand for small, medium-sized retail outlets is clearly rising, specifically within residential neighbourhoods," Mr Chande said. "New-style modern convenience stores are likely to be an increasingly important growth area for existing retailers like Lulu and Spinneys, particularly once the downturn passes." aligaya@thenational.ae

However, Mr Mathur said, the growth rate has slowed sharply compared to last year, when convenience store sales in the first four months of 2008 grew by 26 per cent compared with the same period in 2007. Sales at the fuel retailer Emarat, which has just launched a new chain of convenience stores, Freshplus, are up 3 per cent so far this year, a figure that includes petrol purchases, according to Darren Smith, Emarat's manager of retail, marketing and support.

The drop in the UAE's population has shortened the queue of cars waiting to get on the forecourt at petrol stations, queues which had previously discouraged potential customers, he said. "We think that people are choosing to use us because they don't have to queue like they did in the past," Mr Smith said. "It's easier to shop. "When you look around, the roads of Dubai, much quieter than used to be, but still our sales are doing well. They're quite robust. I think that's because we mainly supply items that people eat. They snack on the go."

Emarat opened its first Freshplus outlet at Business Central Towers in Dubai three weeks ago, and has four more planned for this year. The company also plans to open more outlets in other GCC countries through franchising, Mr Smith said. Martin Pointon, the operational director of the convenience store chain 24 Seven, said its 14 outlets in Dubai have the same number of customers, but the spending per person had gone down by roughly 10 per cent this year.

24 Seven still plans to add six more stores to its portfolio, including outlets in Abu Dhabi, however. The company is also exploring potential locations in other Gulf countries, beginning with Qatar and Kuwait. "We're not put off by the downturn in the market," Mr Pointon said. Convenience store retail should grow by 10.4 per cent this year, largely because those sales are increasing from a low base, according to Shonil Chande, a food and drink analyst with the research firm Business Monitor International (BMI) in the UK.

Purchases at smaller, on-the-go stores accounted for just 4 per cent of total grocery sales in 2008. Between this year and 2013, BMI expects convenience store sales to grow by 48.9 per cent, outpacing its prediction for growth in the total mass grocery retail segment of 40.1 per cent. "Demand for small, medium-sized retail outlets is clearly rising, specifically within residential neighbourhoods," Mr Chande said. "New-style modern convenience stores are likely to be an increasingly important growth area for existing retailers like Lulu and Spinneys, particularly once the downturn passes."