Saudi Arabia's Fawaz Alhokair bets on retail rebound, to open new stores

DUBAI (Reuters) - Saudi Arabia’s Fawaz Alhokair Group will add more physical retail stores and expand its food and beverage offering this year, betting consumers still want to shop in-store despite the pandemic changing spending habits.

FILE PHOTO: Makkah Mall, one of the shopping malls operated by Arabian Centres, owned by Fawaz Alhokair Group, is pictured in Makkah, Saudi Arabia, April 17, 2019. REUTERS/Waleed Ali

Chief Executive Marwan Moukarzel said on Tuesday people had recently returned to shopping centres in large numbers, sometimes reaching capacity limits under current coronavirus restrictions.

“I am hopeful retail is going to bounce back pretty fast,” he told an online industry conference.

The franchisee retailer lost 761.9 million riyal ($203.2 million) in the nine months to Dec 31, which it has largely blamed on the pandemic-induced temporary closure of physical stores.

Alhokair would open more Apple re-seller stores this year under its “Aleph” brand, Moukarzel said, after seeing strong demand for electronics throughout the pandemic.

He also said a 1,500 square metre Saudi cuisine food and beverage (F&B) concept would open, and that the portfolio could be further expanded through an acquistion of a Saudi company.

“It all depends on the valuation.”

Alhokair could add 30 stores for bakery chain Cinnabon this year, Moukarzel said, however, would not expand into fine dining.

Alhokair opens its first Decathlon store next month under a franchisee agreement with the French retailer, and Moukarzel said there were opportunities to grow in sports retail.

The coronavirus pandemic has driven a shift in Gulf spending habits where consumer traditionally bought products in person and with cash. In-store credit card transactions have increased, while shoppers are also going online more.

Moukarzel said online purchases now accounted for 6% of all sales, up from less than 1% a year ago, while credit cards were being used for 85% of all transaction - online and in-store.

Alhokair announced this month it was taking a minority stake in e-commerce platform VogaCloset, where Middle East consumers will be able to purchase products of Alhokair brands online.

Moukarzel said VogaCloset’s management would not change for at least the next three years, and that a marketing campaign would be launched for the e-commerce website next month.

Alhokair also plans to start offering consumer financing this year, Moukarzel said.

($1 = 3.7503 riyals)

Writing by Alexander Cornwell, editing by Louise Heavens