Retail chains: Carrefour’s new Karachi store, the first among many

French giant, and UAE partner, are planning to open at least seven more stores.

KARACHI:

Carrefour – the world’s second largest retailer after Walmart – is finally coming to Karachi, two years after its first Pakistani store opened in Lahore. Company executives say the store could open later this month, though they refused to provide a specific date.

The store will be part of the Hyperstar brand name used by Carrefour in several locations around the world. The French giant’s presence in Pakistan is part of its joint venture with Dubai-based Emirati conglomerate Abdul Majid al-Futtaim Group.

“The work at our Karachi store is in its final stages,” said Mubashir Jalili, Hyperstar Pakistan’s vice president for business development. “We want to launch it soon after Eid,” he added – without giving a specific date.

Spread over 100,000 plus square feet in Dolmen Mall Clifton, the hypermarket – a bigger version of supermarket – will have the capacity to display 30,000 products. With its state-of-the-art receiving yard and 35 exit cash counters, Jalili said, the hypermarket, much larger than existing competitors, will operate at a scale previously unheard of in Pakistan.

In 2009, the company launched its first store in Lahore where it achieved remarkable results – achieving Rs1 billion in revenues in its first year and set to cross Rs3 billion ($35 million) this year, according to sources familiar with the matter.

Jalili, a 32-year veteran of the MAF Group, did not confirm nor deny the revenue number nor did he disclose any other financial data. He, however, said that the average growth rate for packaging companies that work with Carrefour is over 30%, hinting that the growth rate of the retail business is much higher.

The company has already invested $25 million for their Lahore store and $15 million for Karachi. They have identified four more locations for Karachi and three for Lahore. The two stores employ more than 700 people, Jalili said, and every new store will add at least 350 jobs.

The Lahore store attracts an average of about 1 million visitors a month. The average number of people visiting every weekday is around 40,000 people, with weekend traffic often exceeding 80,000 people. “Karachi’s population depth can support at least five hyper markets,” Jalili said.

MAF group’s second hypermarket in Karachi is under construction at Lucky One Mall near UBL Sports Complex – the site previously housed the now defunct Fazal Mill. They have identified three more locations in Karachi but Jalili did not disclose the names saying the deal is not finalized yet. The company also wants to open at least three more stores in Lahore, he said.

“We want to launch these stores as soon as possible. It depends on how fast the developers can construct these sites,” he said. “We want our presence in every metropolitan city in Pakistan.”

At a time when many businesses, including several European and Middle Eastern ones, are looking to exit the Pakistani market, the MAF Group and Carrefour found Pakistan’s large, dense population – coupled with its rising middle class – an appealing prospect.

“We gauged Pakistan’s population strength by travelling road to road and street to street in both Karachi and Lahore when we first entered the market in 2005,” Jalili said.

Yet the size of the population alone was not what attracted the company. The relative youth of the market – with over 55% of the population under 30 years of age – means that the average Pakistani middle class household is rapidly gaining new earning members, increasing their income. Simultaneously, those making buying decisions are more willing to try new products.

“Whatever quantity a manufacturer produces and a retailer displays gets sold out, a unique attribute of the Pakistani market,” said Jalili.

MAF group owns 75% shares of Hyperstar while the France-based Carrefour Group holds the remaining 25% shares. Starting from Dubai in 1995, Hyperstar now has 50 stores in the Middle East region.

Carrefour and MAF plan on utilising the globe-spanning muscle power of the group to be able to offer lower prices to consumers. “We are talking with consumer goods companies to directly provide us with supplies at lower prices because we are such a huge buyer,” said Hyperstar executives.

The Clifton location can accommodate 3,000 cars and a higher number of motorcycles (for the entire mall). It has a selling area spread over 65,000 square feet while its warehouse is spread over 20,000 square feet giving them leverage for piling up stocks and putting a huge number of goods on display.

Published in The Express Tribune, November 10^th,  2011.