Small shops take battle to big-box retail chains

Zawya Supermarkets plans to take on hypermarkets by opening 90 stores across the country in the next five years at a cost of nearly Dh100 million.

Convenience: Zawya Supermarkets plans to open 90 stores across the country in the next five years. Jaime Puebla / The National

A wave of convenience stores is set to open across the country in the latest challenge to the dominance of hypermarkets and other big retailers.

Zawya Supermarkets, part of Saif Abdulla Al Ghurair Group, plans to open 90 stores across the country in the next five years at a cost of nearly Dh100 million (US$27.2m). The Canadian-owned company Circle Kalso plans to expand in the country.

"There was a time when people went to hypermarkets for their shopping, but most people have changed," said Mohammed Hafeez, the marketing manager for Zawya.

"It's all about convenience now."

Zawya launched its first store last year and the company has since rolled out four more. It now aims to expand aggressively in residential areas in all seven emirates.

As commercial rents continue to fall after the financial crisis and amid an over-supply of property in Dubai, the major supermarkets, including Carrefour Market, LuLu Express and Géant Easy, are currently expanding into community developments.

Zawya's plans are echoed by those of Circle K, which is also set to announce expansion plans next week, opening more convenience stores in the UAE.

Circle K has more than 3,800 stores in North America, China, Japan, Indonesia, Vietnam and Hong Kong.

Community developments are key to retailers' future success, according to a white paper on the future of retail in the Gulf, published this week by Retail City.

The research found that convenience shopping remained strong throughout the financial crisis because such shopping was commonly seen as necessity spending.

"If there is any area that has not been hit by the recession, it has been the local shopper," said Mark Pilkington, the brand director at the women's chain Nayomi and a contributor to the white paper.

The supermarket operator Al Maya Group has opened nine convenience outlets across the Emirates in the past three years.

LuLu said recently that although it was expanding into convenience stores, its hypermarkets would remain its priority.

"There is an increasing trend towards 'I need to buy for today', rather than buying the weekly shop," said David Macadam, the head of retail for Jones Lang LaSalle in the Middle East and North Africa. "You really need to understand your catchment area and community."

Adding to its convenience offering, Zawya is also to launch a home delivery service with a dedicated call centre and guaranteed delivery times of less than 45 minutes.

The company estimates it receives a total of 5,000 customers daily at its five stores and wants to appeal to 10 per cent of its customer base through its home delivery call centre.

It will open stores next in the Abu Hail area of Dubai and at Black Square Ajman. The management is in talks about a number of locations in Abu Dhabi's new residential developments.

"We thought there was a need in Abu Dhabi for a standard of convenience store that the hypermarket carries along with similar prices," said Mr Hafeez.