Sherine Abdel-Razek reports on the privatisation of Egypt's biggest chain of department stores The deadline for bids to buy 100 per cent of the 150-year-old department store group Omar Effendi expired in mid-October with only one bidder expressing interest in the company. The Sultan Centre (TSC), based in Kuwait, offered LE300 million for the group's 82 stores. TSC, one of the Gulf's leading retailers, generates over $600 million in annual revenues and controls an estimated 15 per cent of the Kuwaiti retail market. The company, which operates 25 stores in three countries -- Kuwait, Oman and Jordan -- has region-wide expansion plans. That the bidder should come from the Gulf is hardly surprising. In placing the sale ad in just a handful of Gulf newspapers the government appeared to be targeting Gulf investors who have been eyeing potential investments in the Egyptian market following their retreat from Europe and the US in the wake of 9/11. The Ministry of Investment is currently studying the details of the bid amid rumours that TSC is stipulating major lay-offs among Omar Effendi's workforce. In advertising the sale the government had stipulated that "the buyer must be committed to preserving workers' rights and privileges." Omar Effendi came under the umbrella of the Holding Company for Internal Trade in the early 1990s as a first step towards privatisation. Two subsequent attempts to sell off the store group in 1999 and 2001 foundered over the reluctance of bidders to take on board the stores' payroll of 6,000 workers. In 2000 Omar Effendi attempted to lesson the burden on potential investors by offering early retirement packages to its employees though the number of employees remains almost double international retail staffing levels. During the last two years the company has also renovated several stores in key locations, installing air conditioning and electronic payment systems. According to HC Securities, TSC's advisor on the offer, TSC plans a major restructuring of the company involving all Omar Effendi stores. New retail management systems are planned, and staff will benefit from an ongoing training programme designed to improve skills. Omar Effendi, Egypt's largest state owned department store chain, was founded in 1856 by two Jews and initially traded under the name Orosdi Back. The first flagship store, which still exists, was located on Abdel-Aziz Street, and targeted well-heeled foreign and Egyptian customers. New outlets opened in the early years of the 20th century as the shop faced growing competition from other department stores such as Benzione, Cicurel and Dawood Ades which were expanding their activities in Cairo and Alexandria. Sold by the original owners in the 1920s Orosdi Back underwent a change of name and became Omar Effendi, under which name it weathered the 1952 Revolution only to be nationalised in 1957. The company grew under state ownership from only 20 stores in 1961 to the current 82 stores nationwide, though it suffered from top heavy, bureaucratic management. Beginning in the 1970s Omar Effendi faced growing competition in the retail sector as private stores and later shopping malls opened offering more attractive displays, a wider range of products and better service. Over the past two decades Omar Effendi's customer base has been steadily eroded as wealthier customers stayed away, opting instead for privately owned shops. The company's financial performance slumped and the store group was left floundering with a massive workforce of unskilled labour. In today's increasingly crowded retail sector a great many eyes will be watching the progress of the sale of Omar Effendi. Its success, or otherwise, is likely to determine the fate of other state-owned department stores, including Haneaux and Sidnawi.
