The first of a series of wholesale megastores has set foot in Egypt MAKRO Cash and Carry, a member of the German METRO group, last week celebrated the groundbreaking of its first wholesale store in Salam City, Niveen Wahish reports. At an investment of 20 million euros, the store is scheduled to open in spring 2010. A second store will open in July in a yet undefined location. MAKRO Cash and Carry is an international market leader in the sector of self-service wholesale. This will not be another hypermarket; it will serve specific segments of the Egyptian market, including supermarkets and small stores, hotels, restaurants, cafés, caterers, work canteens, and general and specialised food and non- food retailers. Egypt is the 31st country where MAKRO has stores. Jean-Luc Tuzes, the group's regional operating officer for the Middle East North Africa (MENA) region, sees a potential of up to 10 stores in the medium term and estimates a potential for 20 stores in total, with an investment of 20 million euros per store. In the MENA region Egypt is not MAKRO's first stop. It is already operating seven stores in Morocco. Egypt's 80 million population and fast growing economy were the main reasons in attracting the German chain to invest in Egypt, Jean Pierre Bienfait, outgoing managing director, told Al-Ahram Weekly. Bienfait has overseen MAKRO's investment for the past 18 months. He is moving to Holland where the group has 17 stores and will be replaced by François Oliver. Bienfait is optimistic about the market's acceptance of MAKRO's business model, unlike the case of Sainsbury's some years ago when the English chain was forced to shut down in Egypt. "Those were different times. Today there is a much more open economy and a welcoming environment." Nonetheless, he said that the company is taking its steps prudently. "We analyse the market and visit thousands of customers to understand deeply what we are doing and to bring what people need." One challenge that faces MAKRO in Egypt is securing land plots as big as the 30,000 square metres needed for the store and parking area. Bienfait and other MAKRO top managers speaking at the groundbreaking ceremony repeatedly said expansion depends on securing land plots and the necessary licences. Minister of Trade and Industry Rachid Mohamed Rachid said the government is working to address the shortage in the supply of land plots. Bienfait confirmed that Rachid's efforts have been "really helpful to bring the company quicker to the market and to make sure all the licences are properly in place." MAKRO has no competition for the time being in Egypt. "It is a market in development," said Bienfait. He pointed out that professional customers in Egypt have difficulty sourcing their products. "They wake up in the wee hours of the day and go from market to market. Now they will come to one location." Furthermore, the store policy is to source directly from suppliers, whether farmers, factories or producers. "That enables us to offer much better prices in the market." But while MAKRO may have the market to itself at the moment, the situation is bound to change once similar businesses start tapping into the Egyptian market. According to Rachid, several chains have expressed interest in the Egyptian market. "They will improve the efficiency of the market and prevent monopolies." Not only does this create better wholesale markets but also the quality of products will improve as manufacturers seek to meet the higher quality specifications of the new wholesale outlets. This is all part of the Ministry of Trade and Industry's efforts to improve internal trade in Egypt. It will also mean competition for local Egyptian companies, which will encourage them to improve accordingly.
