Sainsbury Storm Sweeps Egypt
by Mona Salem
CAIRO, April 13 (AFP) - A wind of change has been blowing through Egypt's marketplace since British chain store Sainsbury hit town in January, with France's Carrefour and German Metro soon to follow.
Sainsbury has brought a new strategy to the market, with real price competition to shake out local operators, large and small, say experts.
While Egypt's big stores like Alfa Market and ABC have traditionally opened stores in upmarket neighbourhoods targeting the well-to-do, Sainsbury is aiming at the middle class.
It has opened two stores in highly populated areas of town to the south and north, the Pyramids and Shubra areas.
Sainsbury-Egypt has paired up with a local partner, the Arab Group, which holds 20 per cent of its stock. It has also bought out ABC's stores and will have 49 outlets in Cairo over the next four months, the company's president Amr al-Nasharti told AFP.
Sainsbury is offering basic items at half price, with non-essentials at roughly the same rate as the competition. Even if some of its products are not top quality, that hardly matters in a country where average income is around 1,200 dollars per year.
Spending hits a high Friday, which is a day of rest. It has become a family outing, not simply because of the low prices, but also because the kids get to ride the multi-coloured trolleys lined up at the entrance.
Shoppers get a litre of sunflower oil at 2.25 Egyptian pounds (60 US cents), around half the normal price, and they pick up supplies of rice, pasta, milk, fruit juice and cleaning products.
The shoppers' delight is, however, not shared by wholesalers and manufacturers. Egypt's manufacturers' union and chamber of commerce have launched a campaign against the British chain store group, in the name of nationalism.
"Sainsbury is slashing prices. Foreigners are going to monopolise the market", according to leaders of the two associations, reviving the debate on an anti-trust bill that has been gathering dust in a drawer at the economics ministry for three years.
"Producers are worried that Sainsbury will monopolise distribution and force down prices and profit margins," Mustafa Zaki of the Egyptian chamber of commerce said.
"No monopoly, no dumping. Quite the opposite", says the head of Sainsbury-Egypt. "We are bringing competition and that is good for the consumer.
"Our strategy is to offer competitive prices resulting from efficient operating."
"Sainsbury's arrival on the Egyptian scene shows that the market is opening up real competition, and what's more highlights the pressing need for laws to regulate the market," he added, saying that Egypt's business community does not want to see that kind of legislation as "they themselves make up cartels and control prices, one way or another."
And the fight over Egypt's consumer market has only just begun in a country seen as an emerging market. Supplies Minister Hassan Khedr announced early April that two other supermarket chains are about to set up store in Egypt, Carrefour of France and Metro of Germany. AFP Photo
© 2000 Mena Report (www.menareport.com)