French retailer Carrefour and its local partner will open two stores in Egypt in 2002, undeterred by British supermarket chain Sainsbury's decision to pull out of the country, the partner said.
An official at Majid al-Futtaim (MAF) Egypt, a subsidary of the Dubai-based MAF group of companies, told Reuters that MAF had begun building two shopping malls in March, one in Cairo and the other in the Mediterranean port city of Alexandria, where the hypermarkets will be located.
“We've started constructing the two malls which will contain the hypermarkets that we will lease to the joint venture company,” MAF-Egypt General Manager for Business Development Mohamed Galal said.
Carrefour in Paris confirmed that its partner al-Futtaim “is looking for sites in Egypt”, but would not be more specific.
Galal said MAF had made investments of close to LE800 million ($206 million) since it entered the Egyptian market in 1998. The company has purchased land for a total of four malls it plans to build. All four are due to contain Carrefour hypermarkets, he said.
Asked about Sainsbury's decision to pull the plug on its Egypt operation, Galal said: “We feel Egypt has good potential, otherwise we would not invest these large amounts of money in Egypt.”
Sainsbury announced early this week that it was selling its 80.1% stake in its Egyptian operations to its minority partner, al-Nasharty group.
“In the current economic situation, there is a need for discount stores, and the hypermarket concept is a discount store where all items are available for the target (customers) who are middle class,” Galal said.
Sainsbury tried, with its network of over 100 stores, to tap into a wider-based market, usually served by local stores. Some analysts considered this a departure from the traditional foreign supermarket target of serving mostly upmarket customers.
At a time of strained Israeli-Arab relations, Sainsbury was dogged by rumours that it had Israeli links. Sainsbury Chief Executive Peter Davis called the speculation unfounded.
Galal said each hypermarket would cost MAF Egypt some LE50 million to build. ($1=3.88 Egyptian pounds).
This article was first published by Reuters on 11 April 2001.