Brand Lulu is spreading itself across new markets and geographies. The new Milan base will provide Italian foodstuffs across the 250 plus Lulu network worldwide. Image Credit: Bloomberg

Dubai: The UAE hypermarket operator Lulu is making sure its supply pipelines are operating at a perfect pitch. This time, it has opened a food processing and export hub in Milan, Italy, as the retailer widens its sourcing arrangements across Western Europe.

It earlier opened bases in the UK and Spain, to go along with all the other centralised sourcing arrangements Lulu has in place in Asia and elsewhere.

The Milan base is located at the World Trade Center Malpensa Airport, and will focus on sourcing, processing, storing, packaging and exporting of food products from Italy to ‘more than 255 Lulu Hypermarkets spread across GCC countries, Egypt, India, Indonesia and Malaysia’.

"As a key partner in food security for the Middle East, it is our ongoing strategy to set up our own sourcing and food processing units around the world to ensure uninterrupted supply," said Yusuffali M. A., Chairman and Managing Director of Lulu Group. "And ensure competitive pricing by eliminating middlemen."

In the near future, the retailer is mulling options to expand its base in Europe by adding Germany, Greece and France. (No firm dateline has been set.)

Lulu Italy
UAE mega-retailer Lulu gets a taste of Italy with new Milan food processing hub.

Lulu in the recent past has categorically dismissed any suggestions that Western Europe represents the next big opportunity for a retail presence through its hypermarkets. Instead, the emphasis has been on creating supply and food processing centers to feed into the store networks it operates elsewhere. This remains the case even with the move into Italy.

So far, we have no plans to launch Lulu hypermarkets in Europe. Now, that's not the same as saying we will not do that ever

- Yusuffali M. A. of Lulu Group

"We will be initially exporting worth 50 million euros and expect to reach 200 million euros in 2 years," said Yusuffali. "We are tying up with Italian farmers cooperative societies to source fruits and vegetables, which will surely have a very positive impact on the agricultural sector of Italy.

"In addition, this project will also generate significant employment in Italy.”

Focus categories from Italian venture
The main categories to be sourced by Lulu's Italian base will be cheeses, chocolates, jams, sweet and puff pastries, organic pasta, infused extra-virgin olive oil, and high-quality sea-salt from 'well-known Italian brands'. Apart from packed food, the center will also source and export fruits and vegetables.

Fast track expansions

The UAE group is beefing up its retail and sourcing networks ahead of a planned IPO, for which the initial steps have been taken. No definite timeframe has been provided, but indications suggest early 2024 could be a good call to make in timing the stock market float.

"There are still some markets such as Saudi Arabia where Lulu could add to its retail presence," said an analyst. "As for Europe, embedding strong supply chains and food processing facilities makes are ideal moves to be making. Medium-term, Lulu will be focusing on creating higher revenue streams in markets other than the UAE and India."

The Group has a turnover of $8 billion and employs more than 65,000 across its network. It has been rated as one of the Top 50 fastest growing retailers in the world by Deloitte.