If retail is king in Egypt, as Mansour Group Chairman Youssef Mansour says, then his company is the King of Kings. The 100% family-owned business has partnered with some of the world's largest companies, including Caterpillar, Dell, Compaq and McDonald's, earning $2 billion in sales per year through 11,000 outlets in the Middle East, Africa, Russia and England. Mansour spoke with bt by phone about how his group has contributed to the rise of retail. Excerpts:
We choose excellent partners and we add local knowledge -- that's our secret formula. We have long-term partners who excel in what they do, like Philip Morris and McDonald's and General Motors. The strategy is very simple: choose quality partners and adapt systems to the local environment.
We are 100% Egyptian owned. We deal with foreign entities, but it's fully owned by the Mansour family. At the end of the day -- through that partnership -- we provide Egyptians with jobs.
Our intention is to continue to grow locally and internationally by joining with world-class companies. Metro, our supermarket chain, is all alone, but we have had other [joint ventures like] GM.
Ever since we restarted in the 1970s, to us, Egypt has been a land of opportunity. The major initiative is the building of confidence in the Egyptian economy, and we see it in the people. Disposable income has increased; people are spending more and investing more. Our group has bought into shareholding of the Bank of Alexandria recently along with Calyon Bank. Definitely we feel [our] confidence in the future is much higher.
The Nazif government is tackling a whole range of issues [Mansour is brother of Minister of Transport Mohammed Mansour]. The reduction of the corporate tax was significant for us, because we are already the largest Egyptian taxpayer in the private sector. We have paid our taxes, so now it gives us more cash on hand to invest in other opportunities.
I know they are working to speed up the legal process. If there is a conflict to resolve it shouldn't take years, it should take months. There has to be more of a framework to help businesses.
One important issue is the sales tax. With a few exceptions, it is based on an 'ad valorem' scale [regressive on lower-value items]. If you look worldwide, the people are demanding the highest quality product at the lowest price. With an ad valorem structure you end up producing lower quality. With a flat tax you will be able to meet world demand, which is quality.
Why did I decide to open Kheer Zamaan [Mansour group's low-cost supermarket, starting this year]? Strategically, when you analyze the many markets, the majority of [Egyptians] cannot afford to enter Metro.
So far, we have served a maximum of 5-10% of people, but we are leaving behind 90 to 95%. With Kheer Zamaan we will be able to offer our services to that majority.
We have stayed away from the hypermarket concept. If you look at Metro, we're trying to be in every town.
We are trying to be your friendly neighborhood store. Many people want to be served by a certain butcher because they know them by name. It's very important to have person-to-person relationships.
Service and retail are definitely a growing part of the economy, and with time they will be more important.
Egypt and Africa could be the manufacturing center. It is service with manufacturing done outside. If the government sets the right framework with investors, I could see it being done. With time, Europe will become much more service oriented. There is definitely an immigration problem, and my opinion is that people can go back to their countries as long as their countries offer the manufacturing base.
If you go back 30 or 40 years, the manufacturer was king. If the manufacturer said, 'Jump!' you jumped. This has reversed, because the retailer is the closest to the consumer. So today it is the retailer that is king. We entered knowing full well that is the future and by putting pressure on the manufacturer and supplier you are able to give the consumer the best price.
We are concerned about local business. I don't want to belabor the past, but one international company in the past undercut not only the local retailer but also the local wholesaler. You always need your local butcher and cheese shop. In my opinion, the pie is so big; we can all exist. One should not try to annihilate anyone else.
Youssef Mansour (60)
Chairman, Mansour Group
Education: BS Textile Technology (North Carolina State University) BS Textile Chemistry (North Carolina State University) MBA (Auburn)
Mentor: Without any doubt my mentor was my late father, Mr. Loutfy Mansour. He was a man with a vision, a mission in life, a person who never gave up.
Inspirations: Henry Kissinger and Anwar Sadat. They both created history.
Best advice: Nothing is impossible. Also, never trust what the salesman says: Always go down to the market and see for yourself.
Brand Egypt: "The Gateway to Opportunity"
By Andrew Bossone
© Business Today Egypt 2006
