Following Majid Al Futtaim’s denial on Tuesday that they were preparing a bid to acquire Spinneys Dubai, the UAE supermarket franchise came out on Wednesday to issue their own rejection of the claims.
“There’s no plans. So, I think it was … a supplier that was spreading a bit of idle gossip,” incoming chief executive Matthew Frost told Gulf News.
“You’ve heard directly from Majid Al Futtaim, and you’ve now heard from us, and those would be the two parties who would need to get it on,” Frost added.
Commenting on the possibility of further consolidation in the supermarket sector, Anurag Bajpai, partner and head of retail for KPMG Lower Gulf, said: “We expect that there will be more consolidation in the market in 2018 — with hypermarkets continuing to dominate the retail food landscape.”
Given that the UAE is a relatively small country with a population of over 9 million, there is limited opportunity for further, rapid organic growth in the sector, Bajpai added.
“The major players are therefore more likely to rely on mergers and acquisitions to grow their footprint. This includes major food retail players looking to expand beyond the UAE borders,” he said.
Further, the margins in supermarkets and hypermarkets are very slim: It remains a business driven by volumes, so “the bigger you are in terms of size, the more profitable you are likely to be,” Bajpai said.
Meanwhile, Spinneys announced on Wednesday morning that it is set to invest Dh175 million in a brand new headquarters in Dubai, in an effort to grow its presence in the region.
The new headquarters will be located in Meydan, with a number of key retail brands managed from the site, which Spinneys says will help to build its brand and increase its reach across the region.
Hinting that further international expansion may be on the agenda, Frost said that where appropriate and within the bounds of their agreement with licenser Spinneys in Lebanon, they would look to establish new locations outside the UAE.
The site in Dubai will also feature a new flagship store and an on-site cookery school to aid culinary training and development. With construction already underway, the building is expected to be operational by April 2019.
The supermarket chain has also announced details of an expansion strategy that will see Spinneys increase its footprint across the region from 61 to 79 stores, with the opening of a further 18 outlets over the next three years, which it says will create 2,000 new jobs.
The 2018 strategy will also feature a feasibility study regarding a potential online grocery service, to “explore the opportunities and better understand the market,” Frost said, with an eye to launching an offering in the “next few years.”
Reporting by Ed Clowes
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