| 26 Aug 2010 |
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Egypt: Refining retail
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Egypt's retail and wholesale sector is flourishing: total sales grew from $35bn in 2003 to $76.4bn in 2009, and that trajectory is expected to continue in the near future. AT Kearney's 2010 Global Retail Development Index ranks Egypt 15th in the world in terms of its growth potential, and Egypt's General Authority for Investment projects sales to reach $141.66bn by 2014, amounting to a growth rate of 85% over five years.
Yet as striking as the sector's expansion may be, it only tells half the story, for over the past several months the sector has begun not only to expand, but also to grow in sophistication.
The recent opening by Germany's Metro Group of its first Makro wholesale store in Cairo, for example, part of the rush by international firms to seize a slice of Egypt's robust retail food market, indicates a shift in Egypt's retailing sector towards internal trade and distribution, rather than end-user outlets.
To ensure adequate supply for the 12 stores it plans to open by 2012, the company will establish collection platforms throughout the country, as well as a programme to train Egyptian farmers in vegetable production.
Mohamad Rashid, Egypt's minister of trade and industry, called Makro's launch "a very important step in the development of the internal trade mechanism in Egypt. The development of wholesale outlets," he said, would upgrade "the whole supply chain, starting from the suppliers in the field all the way through until the final products reach the consumer".
Indeed, one of the most worrisome trends in the country's economy in recent years has been the volatility of food prices, which will be alleviated somewhat by the growth in wholesale retailing, which can ensure greater stability in foodstuff pricing, even in small or independent businesses.
Egypt is taking steps to strengthen other parts of its retail economy, as well. The Ministry of Trade and Industry, along with the Cairo and Alexandria Chambers of Commerce, is working with a range of international organisations, such as the US's National Retail Federation, to establish a series of training and certification programmes for workers in the sector, with the aim of introducing them to industry standards and best practices.
"We want to see small retail enterprises understanding how to do a window display, knowing how to sell, how to keep proper stocks, how to manage space and how to do proper accounting," Ali Moussa, the chairman of the Cairo chamber, told local media.
The rise of e-commerce and e-payment is also affecting Egypt's retail landscape. Souq.com, an auction and e-commerce website, is currently the fastest-growing website in Egypt. Earlier this year it was ranked by Alexa Internet as the 7000th most popular site in the country; it is now ranked 255th. Having recently added a consumer electronics store with local warranty and after-sales support, it may well increase its visibility and market share in the coming months.
Nor is Souq alone. According to a survey conducted by the Arab Advisors Group in April, Egypt's internet users spent an estimated $2.1bn on e-commerce in 2009 (including bill payments). The survey indicates that 34.6% of the country's adult internet users, or roughly 2.36m people, are in the habit of shopping or paying bills online.
© Oxford Business Group 2010
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