Lulu to open 15 outlets in Indonesia as part of $300m expansion

Lulu currently operates 117 stores across the UAE, Oman, Bahrain, Kuwait, Qatar, Saudi Arabia, Yemen, Egypt and India. Antonie Robertson / The National

Lulu Group plans to open 15 hypermarkets in Indonesia over the next two years as the Abu Dhabi-based retailer rolls out a US$300 million expansion plan in the South East Asian island nation.

Lulu announced yesterday that the group plans to open its first hypermarket and a central logistics and warehousing facility in the capital Jakarta before the end of the year.

It also plans to open 15 new hypermarkets in areas including Bandung, Solo, Semarang, Surabaya and Yogyakarta by the end of 2017. The group said that overall investment over the coming five years in Indonesia will reach $500m.

Lulu said that it would bring its concept of halal-only hypermarkets to Indonesia, the world’s most populous Muslim majority country, generating more than 5,000 jobs.

Owned by the Indian businessman Yusuffali MA, who was ranked first on the Forbes list of the richest 100 Indians in the Arab world last year, the Lulu chain is expanding rapidly across the Arabian Gulf and Asia.

The chain currently operates 117 stores across the UAE, Oman, Bahrain, Kuwait, Qatar, Saudi Arabia, Yemen, Egypt and India.

In May 2014, the company announced its entry into the South East Asian market with plans to build 10 hypermarkets across Malaysia. At the time Lulu said it was aiming to win a 20 per cent market share in the country.

“The fact that we are going to Indonesia with our halal hypermarket concept is giving us the encouragement to look for a wider market segment there” said Mr Yusuffali, speaking at an event at Khalidiyah Mall in Abu Dhabi to welcome the Indonesian president Joko Widodo as part of his five-day state visit to the Middle East.

“We also plan to set up contract farming to ensure continuous supply of high-quality products and to support the Indonesian agriculture sector,” he added.

“Lulu is expanding rapidly at the moment and the hypermarket concept is already working well in a number of overseas locations,” said Stuart Gissing, regional director at Colliers International. “Lulu tends to suit its business model to the local demographic.”

The group is also expanding in India, where it has operations in the state of Kerala.

India has previously blocked foreign investment by multinational retailers in a bid to protect small grocery shops that employ millions.

Along with other bureaucratic hurdles, global grocery giants have been cautious in the past about entering India.

Lulu Group also owns four hotels in India and one in Muscat. Its Grand Hyatt hotel in Kochi, India, is expected to open next year.

In July the company paid £110 million to acquire Great Scotland Yard in London as it expands further into the luxury hotels sector.

Follow The National's Business section on Twitter