METRO Group to start work on Egypt stores

FRANKFURT/CAIRO, Oct 22 (Reuters) - Germany's Metro Group (MEOG.DE) starts work next week on the first of potentially 23 wholesale stores in Egypt, the firm said on Thursday, a move Egypt expects will help boost internal trade and cut prices.

Metro Group, which will trade under its Makro brand in Egypt, sells wholesale to customers such as hotel and restaurant operators and small- and medium-sized retailers.

The groundbreaking ceremony for the first store will take place on Tuesday in Cairo, said a spokesman for Metro's wholesale unit, Metro Cash & Carry.

"This is considered to be one of the biggest breakthroughs we have had in developing internal trade. Our internal trade is very weak, the supply chain weak," an Egyptian Trade and Industry Ministry source said.

The plan involves having 12 stores open in 2012, the source said, with each store requiring investment in building, training, supplies and other costs of about 20 million euros.

Metro Group said last year it saw the move into Egypt, with a population of 77 million, as an important step into the growth region of the Middle East and North Africa, and said it saw potential for 10 stores in the medium term and over 20 in the long term.

The government has been seeking to improve internal trade throughout Egypt and hopes to encourage efficiency and lower costs for consumers, said the source.

Egypt has been battling to bring down inflation, which surged above 20 percent 2008 and is currently around 10 percent. The cabinet has been working on a range of reforms since 2004 to boost growth and cut red tape for businesses.

The store opening is scheduled for early next year, the Metro spokesman said, adding that it was difficult to say at the moment when and where the next stores would follow. (Reporting by Edmund Blair in Cairo and Eva Kuehnen in Frankfurt; editing by Elaine Hardcastle)