Savola-owned Panda to drive regional expansion

Date : 29 August 2014

Saudi-Arabia-based, Savola-owned Panda has announced regional expansion plans that will see it grow its presence in UAE, where it operates one store, and enter the new market of Egypt. If Panda does hit its target it will increase competition across the Middle East and add a third leading regional competitor, alongside UAE-based Majid Al Futtaim and EMKE-owned LuLu.

Investment to focus on UAE first…

Speaking at the opening of its renovated store in the UAE, Panda’s chief executive, Muwaffaq M Jamal, said that the retailer was planning to open between eight and 12 stores in the UAE over the course of the next three years, with a 50:50 split between the supermarket and hypermarket formats.

Jamal said that the new stores would see Panda invest between AED2 billion and AED3 billion (US$544.4 million and US$816.5 million), with the first store set to open in the first half of 2015 and a further two to open in Dubai, three to four in Sharjah and two in Ajman between late 2015 and 2016. Finally, Panda is planning to open stores in Abu Dhabi in 2016 and 2017.

…Before investigating opportunities in Egypt

Jamal said that Panda was also looking at expanding ‘aggressively’ into Egypt, with a plan to open seven stores – a mixture of supermarkets and hypermarkets – in Cairo during 2015. He was quoted as saying: “In the first half [of 2015], we will witness two [openings] — one supermarket and one hypermarket, and in the second half, we will witness three to five more — two supermarkets and three hypermarkets.

Expansion to continue in Saudi Arabia

In its home market, Panda will maintain its expansion pattern, investing between AED1 billion to AED2 billion (US$272.2 million to US$544.4 million) annually over the course of the next four to five years. To help maintain its expansion, Jamal said that the retailer would invest AED391.7 million (US$106.6 million) in the building of an additional warehouse on Saudi Arabia’s east coast, with a further distribution centre to be opened in 2018.

Growth will increase competition in the region

Panda’s expansion into Egypt and UAE and its market leading position in the region’s largest economy is likely to increase pressure on regional retailers Majid Al Futtaim and LuLu, while also increasing competition for local chains in both countries. Given its multichannel strategy, which saw it add a convenience store format in late 2013, Panda will be able to flex its formats to target different areas and shopper bases, while by using Savola Group’s brands and its own private labels, it should be able to offer competitive prices.

Jon Wright is Europe, Middle East & Africa Region Manager at IGD and is responsible for conducting and shaping the research programme across these regions. Jon has been analysing global retailers and emerging markets for more than a decade.