You don't need to hop on a plane to buy quality products anymore: They're right at your doorstep
A friend of mine traveling abroad for the holidays called me up to ask for my requisite shopping list. As I started to jot down some of the items I needed, I quickly realized that most of what I was about to ask for was now locally available. The retail revolution that has taken place in Egypt during the past couple of years is nothing short of miraculous. From clothing and shoes to furniture, household items and food products, a vast array of foreign and high-quality local goods have made their way into the Egyptian market or mall, to be more accurate.
Indeed, historians will probably recognize 2006 as the Year of the Mall.
Egypt's experiment with shopping malls began in the early 1990s, with the now essentially defunct World Trade Center. It was followed by a series of hideous attempts at modern retailing that failed to attract consumers with real spending power. A combination of protectionist legislation and bad merchandising kept foreign brands from entering Egypt's potentially lucrative market.
It took about 15 years for lawmakers and business leaders to finally get it right.
The CityStars Shopping Center, which opened its doors to throngs of eager shoppers two years ago, is Egypt's first successful Western-style shopping center. There were initially doubts about the viability of the $800-million Saudi investment. After all: Why travel to a "destination" mall when you'll only be able to buy the same domestic brands available elsewhere in the country? Well, that changed as the Nazif government began to open the market to the foreign retailers that now anchor CityStars.
According to Elhamy El-Kerdany, CityStars' general manager for operations and tenant relations, approximately 45,000 people visit the mall each day. On weekends and holidays, the figure skyrockets to into the 50-75,000 range each day.
An additional 60,000 square meters of leasable space CityStars Phase Two is currently in its final stages of construction and should launch in early 2007. The extension promises to include two of the most anticipated foreign arrivals: Spanish fashion giant Zara and American coffee phenomenon Starbucks.
Mango was the first international clothing brand to open its own storefront in Cairo when it launched at CityStars in 2005, and several similar-style retailers followed suit in 2006. Vero Moda, part of Denmark's Bestseller Group of companies, opened its doors with a lavish launch party and fashion show last summer. Its affordable casual clothing is a nice addition to the trendy offerings now available at CityStars.
Also making an appearance at CityStars last year were foreign apparel retailers Morgan, Calvin Klein Jeans, Billabong (surf wear), Springfield (a popular Spanish men's wear line) and Canadian lingerie giant La Senza. A Guess store is also included in the lineup, offering men's, women's and children's clothing; Guess' accessories store operates separately and has been in the market for the past couple of years.
Hot on the heels of the highly successful Charles and Keith a Singapore-based shoe franchise that opened in late 2005 and expanded to Mohandiseen in 2006 was Walking Culture, a subsidiary of one of Asia's largest retailers, the Da Vinci Group. Both shoe stores offer stylish footwear at affordable prices that pose stiff competition to local manufacturers selling in the same niche.
While CityStars is proving to be the destination of choice for foreign retailers trying to enter the Egyptian market, there are some who have chosen to venture out on their own. Among the most notable have been Etam, the French clothing and lingerie manufacturer; Roche Bobois, the exclusive French furniture brand; and Cairo's very first Apple computers boutique. All three have secured spacious locations in Mohandiseen, a prime shopping district prized by foreign retailers, where good locations are extremely difficult to come by.
Hypermarkets
After a three-year monopoly on the food retail market, Carrefour, with its three prime locations in Maadi, Cairo-Alexandria Desert Road and Alexandria, finally has competition in the form of Dubai-based food retailer Spinneys. In the six months that it has been in operation at CityStars, Spinneys has already attracted a huge clientele who flock to its doors for bargain prices, quality service and convenient location. With 9,000 square meters of space, more than 50 points of sale and 733 employees, Spinneys claims that its sheer size allows it to offer shoppers a different kind of shopping experience and prices lower than its competitors'.
Micheal Wright, the managing director of Spinneys Holdings, told Business Today Egypt in July that "suppliers normally face a battle with retailers over trying to display their products" but that in the case of Spinneys it's the other way round. "It's us saying to them we want to display your products better because it's going to sell better. It ends up being a win-win situation."
According to Wright, Spinneys is already looking for "multiple sites to expand into." Wright considers the company's current location in CityStars to be "the best in the country for a market." Spinneys managed to strike a deal with Golden Pyramids Plaza, the owners of CityStars, whereby the mall owns a 25% stake in the local Spinneys outlet. "We believe Heliopolis-Nasr City is the largest [concentration] of people who would probably be customers of modern retailing."
As formidable new competitors like Spinneys enter the market, Carrefour is by no means standing still. Construction on its new Almaza City Center, located just down the road from CityStars, is proceeding rapidly and an expansion of Maadi City Center is also underway. Forty-two new stores including newcomers to the Egyptian market such as Body Shop, Next, Mothercare and Starbucks are due to open at Maadi City Center in 2007.
Many of the new franchises, including Esprit and La Senza, have already opened at CityStars and will be opening their second stores at the Maadi City Center extension.
The Luxury Market
While Egypt may not seem like a natural market for luxury goods, a small but expanding luxury-goods sector made its first legitimate appearance in late 2005 with the opening of Beymen department store, a 6,000-square-meter upscale shopping emporium at the Four Seasons Nile Plaza.
Cem Boyner, the Turkish fashion and retailing mogul who owns the global Beymen brand and is a one-third partner in the Egyptian operation, told bt, "We may not see the purchasing power clearly in Egypt because, to this day, the money was being spent outside. But now that some of these luxury goods are available here, we will get people to shop at home."
In addition to local customers, Beymen also caters to the tourist market, primarily Gulf shoppers who favor the Four Seasons brand.
According to Ola Dajani, head of Oryx Fashion Holdings, Beymen's Egyptian partner, the luxury retailer's first year went exactly according to plan: "In just one year, we have managed to build a very strong and loyal client base primarily made up of Egyptian shoppers. I think we have succeeded in establishing Beymen as more than just a shopping destination. With the presence of the Beymen Caf, it is an experience, an outing in itself," says Dajani.
Hosting receptions, brunches and seasonal fashion shows has helped foster a special relationship between Beymen and its shoppers, she contends. "We are also continuing to expand our lineup of brands. For example, this season we started carrying Gucci. It did extremely well, the handbag collection sold out almost immediately. Soon we will be introducing several new brands, including the trendy Italian brand Marni, True Religion jeans and Juicy Couture accessories," adds Dajani.
Earlier last year, Ego, Egypt's second luxury goods department store, opened in Heliopolis. The brainchild of businessman Khaled Thabet, Ego like Beymen is a multilevel emporium that carries both men's and women's designer clothing and accessories. Brands including Roberto Cavalli, Armani and Julian McDonald can be found at Ego, but its most talked-about attraction thus far has been its excellent selection of Diesel and Seven Jeans.
Two new designer boutiques Givenchy and the leading Italian menswear brand Ermenegildo Zegna -- have also come to town at CityStars and First Mall, respectively.
The Implications of the Retail Revolution
It is still too early to judge how the arrival of leading European and American brands will change the face of high-end retailing in Egypt. Despite the tremendous influx of new products in the high-end and luxury categories, the shopping experience in Egypt is still lacking in many ways.
With an approximately 40% customs tariff still in place on most ready-made garments, shopping for foreign goods in Egypt is still more costly than it is elsewhere. Retailers, however, claim that the full 40% tariff is not reflected in the price of clothing because other factors like lower rent and labor costs help to offset the customs burden.
Sales associates have improved, but a courteous and efficient sales person continues to be a rarity. The customer is not always right, and restrictions on exchanging merchandise even in international franchises are still too stiff by international standards. And refunds, even on damaged or faulty goods, are unheard of.
But hey: Two years ago, the notion of sipping a Starbucks latt while thumbing through your latest purchase from Virgin Megastore before heading to buy a pair of Prada jeans was simply unheard of. In Cairo, at least.
Starbucks: Finally here?
The Egyptian market has been anticipating and analyzing the arrival of Starbucks coffee for at least the past five years. At press time, Starbucks Egypt's PR representatives told bt, "the shops are 100% ready and simply await final municipal permits." The global coffee chain had yet to set an exact opening date, but said that Egypt's first Starbucks would be opening sometime in January 2007.
An initial opening date was set for Alexandria last August, but licensing and other logistical issues put the launch on hold.
"The Alexandria Starbucks will open directly after the first Cairo branch at CityStars shopping mall in Nasr City," said the PR rep.
"We're looking forward to sharing the Starbucks experience with coffee lovers in Egypt, and we hope to be welcomed and enjoyed by the Egyptian population," said Mohammed AlShaya, CEO AlShaya Group, the Kuwaiti conglomerate that owns the Starbucks franchise in the Middle East and Russia, in a company statement.
The addition of Starbucks to Egypt's rapidly growing cafe sector currently dominated by local market leader Cilantro and recent foreign entries such as Costa Coffee and the upscale Coffee Bean and Tea Leaf, a California-based franchise that has become a hit in Zamalek since it opened late 2006 will definitely up the competition a notch or two.
By Hadia Mostafa
© Business Today Egypt 2007
