Jean Marc Lebrun, Chief Operating Officer, Retail Arabia, Geant Image Credit: Pankaj Sharma/Gulf News

There has been talk of retail sales in Dubai suffering declines of 20-30 per cent, and a sharp drop in footfall. How has Géant fared in Dubai and the Gulf generally in the current downturn, including discounting policy? Has your own rent been an issue?

For us the year 2009 was good; in Dubai the turnover was up by 12 per cent, and in the first four months of this year an increase of some 7-8 per cent might be recorded. This [outcome] is due to the hypermarket concept, which is based on discounted prices and the range of products made available. This concept responds better to crises than other retail operations such as those that target a high-end customer profile (luxury furnishings and fixtures, cars, jewellery, etc.).

Moreover, the drastic decrease in housing rents during the past 12 months has significantly contributed to [benefiting] the purchasing power of Dubai's customers.

I think therefore that the turnover of the hypermarkets and supermarkets in Dubai was not noticeably affected by the crisis. However, I have to add that — with one hypermarket in Ibn Battuta Mall and one supermarket Le Marché in Arabian Ranches — we (Géant) may not reflect the true state of the economy.

We have continued to increase our turnover in food and maintain our market share in non-food. In this [non-food] segment customers' habits have drastically changed — they started inspecting and comparing prices. The sales volume has increased but the turnover remains stable. Two years ago customers were spending Dh25 to Dh30 on a T-shirt. Now they are not willing to spend more than Dh15.

Another aspect is that we saw a lot of expatriates coming especially to Dubai during the boom time who purchased various home appliances. Today this is much less in evidence. Besides, we at Géant only focus on the population living here and are not much affected by any variation in the number of tourists visiting.

I think the frenzy of increasing rents for commercial outlets and shops is over. Frankly speaking, we work in close partnership with the mall owners in Ibn Battuta and Arabian Ranches. They clearly understand that high rents do affect not only our business but consequently also the purchasing power of Dubai's customers. I would say they have become more reasonable.

In Kuwait, we only started our operations in July last year. Until now business has been reasonably good. In Bahrain we have been since 2001 and are the market leaders there.

Where does the Gulf feature in Géant's overall global strategy? As one of the world's large retailers with international operations, what factors have been important for success in establishing in overseas markets? How important is selecting a good partner?

The Casino Group (the parent group to which Géant belongs) is mainly present in Europe, South America, Thailand, Tunisia, as well as in the Gulf. Our main target group is the middle class.

The existence of a well-versed logistic system from the suppliers' end is not essential in the beginning. But if we enter a new market, we encourage our suppliers to invest in their logistic infrastructure in order to meet our expectations.

Our local partners clearly understand where we want to go. Our philosophy is to provide value to our shareholders and our partners. That is why we consider our expansion [approach should be] reasonable and justified rather than buying market shares at any price.

Even with the impact of the crisis, not only in the region but worldwide, we are still confident that the GCC remains an interesting market with regards to consumption. Our investment is everything but temporary. We have already been in the market here for the past ten years and we will continue to expand our operations at a reasonable pace in the long term.

Given a particular cultural/customer mix and the climatic aspects of doing business in the UAE, how has the company moulded its operations?

The multicultural aspect is not only reflected in our customers butalso within our group. Our Dubai Géant team, for example, [covers] 27 different nationalities.

As mentioned previously, our concept is based on discount and choice. We have realised with time that UAE customers are actually less sensitive about their original food habits. One of many examples would be that [it was assumed] our subcontinental customers prefer Basmati rice. About 18 months ago Basmati rice prices went through the roof, due to a decrease in Indian exports. Consumers turned to Jasmin rice, which rose to be one of our best-selling items in only a few days. Thereby we can observe that our customers become more and more price-sensitive to the detriment of previous habits.

However, we insist on providing our customers with as much choice as possible even in ‘niche' products. If a customer finds a product in our hypermarket that he/she cannot find at our competitors, he/she will not only purchase this particular item but also all the other items he/she might need.

What about the mix of outlets in your growth strategy? Beyond hypermarkets and supermarkets, how do you see the growth in small, neighbourhood grocery stores?

We tightly link our expansion plans to multiple concepts: (a) the hypermarket concept is still successful in the Gulf, offering 60,000 different items on over 10,000 square metres to our customers — we have just announced we will open a Géant hypermarket in Yas Mall in Abu Dhabi; (b) ‘convenience' hypermarkets, with approximately 4,000 square metres and catering more to food items — we will start testing this concept in a couple of months from now in Al Ain; (c) supermarkets, with about 2,000 square metres; (d) convenience stores, with about 500 square metres — we are currently testing this concept in International City.

Small convenience stores are the new way to attract customers in Dubai. We have to wait for some time for new supermalls to open. But anyhow such stores will not compete [against each other]; they will exist side by side.

The different buying patterns of customers do determine that. When they go shopping in the hypermarket within the malls they usually buy everything they need for the next week [and] non-food items. When they go to a convenience store it is for purchases such as fresh milk, bread or some other food item. Nevertheless we are talking about the same customer, and he/she does know that convenience stores are more expensive than hypermarkets. Nonetheless in order to survive these stores cannot be dangerously expensive either and he/she knows that too.

Has Dubai reached a saturation point? What about the UAE overall? What about Géant's expansion in Sharjah, Northern Emirates and Abu Dhabi? Likewise, Kuwait and Bahrain?

As I mentioned earlier we prefer expanding according to a reasonable and justified pace. We remain open to any offers from Sharjah and the Northern Emirates.

Moreover as said previously, we will soon announce the opening of our stores in Abu Dhabi and Al Ain, where markets seem to be promising for the next years. In the coming weeks we will further open one more supermarket in Kuwait and two more in Bahrain.

I am still confident about the future of the UAE in general. I believe Abu Dhabi will stand by Dubai. Development will, maybe, be slower but it is heading the right way. Dubai is right to continue to spend on its infrastructure (bridges, roads, Metro). Today many people do work in Abu Dhabi but continue to live in Dubai. It therefore seems that with regards to consumption the saturation point is still far from being reached.

What do you consider to be the foremost challenges facing your sector in the years ahead?

I consider there are three main challenges to be faced by the UAE retail industry.

First, keeping real estate prices reasonable for families as well as retailers, which, like stability of energy prices, would considerably reduce the risk of inflation.

Second, being vigilant with regard to implementing VAT or other taxes which could strain household budgets.

Third, developing an agricultural industry. It is not normal to depend to such an extent on fluctuations in the worldwide agricultural market. The efforts made by the Kingdom of Saudi Arabia to try to become independent from that, and even succeeding to export, shows that this ambition is achievable.