UAE's retail sector to totally recover by 2021, Majid Al Futtaim CEO says
20 December, 2020
Majid Al Futtaim, the center East's biggest mall operator, expects the retail industry to totally recover in 2021 and the business is evaluating potential acquisitions since it adjusts to the post-pandemic reality.
“I think by June 2021 we ought to be there [fully recovered],” the business's chief executive Alain Bejjani told The National on Thursday. “But … we need to recognize that there is a major chunk of retail that currently happens online and … we can not ever again look only at offline, because many of them will never get back to what it used to be.”
Mr Bejjani, who oversees a network of malls, retail outlets and the company’s Carrefour supermarkets, said the UAE’s retail sector is witnessing a "soft W-shaped recovery" up to now from the pandemic.
A W-shaped recovery occurs when an economy undergoes a recession and into recovery accompanied by an immediate downturn and another rebound.
Retail sales in August picked up 3 per cent compared to the same month in 2019 and 2018 because of increased spending by residents, but fell in September and October. Sales have found further towards the finish of the entire year, partly boosted by the government’s initiatives, Mr Bejjani said.
He estimates growth in the UAE's retail economy was down 10 % annually this season, but said he expects the industry to recover strongly in 2021.
Majid Al Futtaim, which is privately held, had to temporarily shut its malls and businesses following the onset of the coronavirus pandemic. The company saw earnings before interest, tax, depreciation and amortisation (Ebitda) for the half a year ending June 30 fall 27 % to Dh1.6 billion ($435.6m), while earnings for the time declined 3 % to Dh17.3bn.
But as the pandemic restricted people to their homes, the business benefitted from increased grocery sales from Carrefour - the French hypermarket chain it runs in the region. Most of these were transacted online.
In the UAE, the group's digital sales grew 200 per cent annually this season, while markets like Egypt and Saudi Arabia saw transactions rising by 730 % and 1,400 %, respectively.
“Each of them started from different bases [so] the growth [rate] differs,” Mr Bejjani said.
To meet up increasing demand, the business is investing in establishing more fulfilment centres and deploying artificial intelligence across outlets.
Mr Bejjani said the e-commerce space may possibly also see some consolidation in the near term but declined to supply further details.
The group is evaluating potential acquisitions, he said.
“We are always open and looking for opportunities and in today’s world there's been a whole lot of movement available in the market and some opportunities will certainly come and we are ... prepared to consider that,” he said.
The business previously acquired Saudi Arabia's online retailer Wadi.com and smart wallet firm Beam to check its push into e-commerce. But Mr Bejjani would not be drawn to touch upon which sector the mall operator is targeting acquisitions.
“We are considering all the sectors that people operate in, and in a few industries that we are actually starting to diversify into, that people think would add value to your ecosystem,” he said.
Majid Al Futtaim is pushing ahead using its expansion of its Carrefour franchise, particularly in East Africa. It already operates in countries like Kenya and Uganda and is eying new markets aswell, Mr Bejjani said.
The legal professional turned retail executive is bullish on Saudi Arabia and Egypt - two markets where Majid Al Futtaim is likely to expand. In the kingdom, the business is continuing to purchase its cinema business regardless of the pandemic.
“The cinema expansion in Saudi Arabia is ongoing despite everything this season. We are opening new screens in Saudi Arabia.”
The conglomerate, which also has a real estate development arm, is likely to release new units in its Tilal Al Ghaf development in Dubai and launch another project in the emirate next year.
The new launch will target increased end-user demand that the business currently sees, Mr Bejjani said.
Source: www.thenationalnews.com
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