LuLu Group has opened its third hypermarket in Egypt. The much awaited store, part of Lulu Group’s long running promise to invest $300m-$500m in new stores in the country, comes a year after it opened its second store in the country. The new hypermarket has covers 8,700m², carries over 30,000 SKUs, and cost EGP 165m ($10.5m).
The new LuLu store is its largest in Egypt. It is located at Park Mall, Cairo and marks the group’s 200th outlet across its markets of UAE, India, Saudi Arabia, Bahrain, Kuwait, Oman, Egypt, Malaysia, and Indonesia. Park Mall is a Porto Group development in New Cairo, to the east of the city. The mall has a gross leasable area of 35,000m² and houses 130 shops. It soft launched in October 2019.
The company opened its first LuLu Hypermarket in Egypt in Cairo’s Nasr City in October 2010. That store subsequently closed after the disruption of the Arab Spring in 2011. LuLu restarted its Egypt retail network with a new hypermarket at the Emerald Twin Plaza Mall in New Cairo in 2015. It opened its second hypermarket in 2020 at the Wadi Degla Club, Sheraton Heliopolis.
LuLu Group plans to open 11 hypermarkets and four minimarkets in Egypt in the next three years. It will also invest in a new logistics centre to service its Egyptian retail outlets. The company has announced grand plans for expansion several times before. When LuLu opened its Emerald Twin Plaza store in 2015, it intended to spend EGP3bn ($300m at the time) to establish 10 new hypermarkets in the following 2 years. This did not happen. The company also announced detailed growth plans in 2018.
This new expansion plan is apparently driven by an investment agreement with ADQ. In October 2020, ADQ, one of the Middle East’s largest holding companies, entered into a non-binding agreement with Lulu International Holdings for an investment supporting LIHL’s expansion of operations in Egypt of up to $1bn.
The fundamental problem is that if LuLu’s development plans are tied to the construction of large hypermarkets in new, high end shopping malls then it cannot hit its expansion targets. LuLu’s anchor tenancy hypermarket at Park Mall has been planned since at least 2018.
Meanwhile, Majid Al Futtaim’s Carrefour franchise is genuinely accelerating. In July 2020 Majid Al Futtaim announced it had opened four more stores. By September it had outlined plans to have opened another 10 stores by the end of 2020, to bring it up to 63 stores in total. Carrefour currently has 54 stores in Egypt. It too is behind schedule: its plans in 2019 were to have opened between 56 and 60 stores by the end of 2019. Its mid-term target is to hit 100 stores in Egypt.
LuLu’s large store size will mean it attracts shoppers from a larger catchment than most of Carrefour’s stores. But nonetheless, its Egypt expansion plans are moving at a glacial pace. Furthermore, its actual strategy is slow too. While Majid Al Futtaim has pivoted strongly towards online retail in 2020/1, and is looking to take online sales up to 5% of its supermarket revenues, LuLu is still resolutely a bricks and mortar retailer in Egypt.