Down the Aisle

ABDALLA F. HASSAN | Business Today | August 1998

Funny how Hideki Okamoto, an instructor of karate for 28 years and a Japanese expatriate, wound up in the supermarket business.

 

Okamoto first came to Egypt as an employee of the Japanese government, training the national team, the police and the army. Faced with the prospect of being sent to another country, Okamoto, who had developed an attachment for Egypt, decided to remain. “I wanted to teach karate free of charge to my students,” he reminisces. 

 

The spirit of giving aside, he also needed to earn a living. Since his family had owned a supermarket in Japan, the choice wasn’t too difficult. 

 

He opened his first Sunny Supermarket in Zamalek in 1978.

 

Supermarkets are a new location on people’s shopping lists. Up until the late 1980s, the ubiquitous corner grocery store reigned supreme. Even after the emergence of the supermarket, the grocery stores sold basic necessities at lower prices than supermarkets, which have been slow to catch on — until recently. A marginal rise of per capita income of three percent and the spending power of an expanding middle class have promoted their viability. The supermarket chain, though, is still in its infancy. Sunny, Alfa and ABC are the only supermarket chains in Cairo. With five locations, ABC is currently the largest of the chains. The chain, which opened in February of last year, has set itself apart from other supermarkets in Egypt with its retail and marketing approach. Producers and distributers rent shelf space at the various ABC locations and have the benefit of receiving regular tallies of how their product is selling. 

 

The others are hot on ABC’s heels. “Egypt is a very big country. We need hundreds of supermarkets,” Okamoto maintains. Meanwhile, only a score of supermarkets can be found in Cairo and Giza, whose population totals 13 million. Tokyo, with the same number of inhabitants, can claim more than a thousand supermarkets. 

 

There are good reasons why it’s taken supermarkets a while to catch on. “The self-service system has become a little high cost,” Okamoto believes. It can also be difficult to find large enough commercial space in crowded Cairo to accommodate expansive supermarket outlets.

 

Nonetheless, supermarkets have the advantages for consumers of offering a wide selection, a temporary haven from the heat, and accepting credit card payments. Consumers can do most of their shopping under one roof, spending leisurely hours in climate-controlled comfort. Some supermarkets carry more than just edible goods. Alfa Market in Maadi resembles a shopping center where patrons can rent movies, sit down for a snack and purchase clothing, sports gear and electronics.   

 

“Previously the government controlled prices — wholesale as well as retail. With the free market policy, prices are bound to come down,” explains Hasan El-Terkawy, general manager of Alfa Market’s Maadi branch. “Supermarkets have started to be more realistic about prices.” Market competitiveness has been spurred by the eradication of price regulation. 

 

As supermarkets are on the rise, government cooperatives that have sold staples such as flour, sugar and rice may decline in more affluent areas.  

 

With the increasing number of supermarkets, there is a need among supermarket owners and managers to establish a loyal customer base. 

 

Purchasing a shopping card at ABC Supermarkets for LE 30 entitles members to reduced prices. So far, there are 15,000 cardholders, says Galal Fahmy, general manager of ABC Supermarkets. 

 

Loyalty-card programs are also providing retailers with useful data about their customers. The card allows ABC Supermarkets to compile a listing of consumer preferences and buying patterns. Items are bar coded and each customer purchase is recorded. This automated system is used to collect sales data that may help producers develop better marketing strategies. Alfa Market offers the discount “Alfa Charge Card” in conjunction with the National Bank of Egypt, which is used as a credit card for purchases at the store’s two locations, in Maadi and Giza. Other supermarkets, including Abu Dawood, plan to follow suit with a shopping card of their own. 

 

Supermarkets are changing the retail landscape in other ways too. ABC Supermarkets, for example, offers the convenience of online shopping and free home delivery for orders of LE 30 or more. Fifteen to 20 more outlets are planned for next year, according to Fahmy. The first phase involves the completion of 30 stores. “Our ultimate goal is to have hundreds of ABC Supermarkets,” enthuses Fahmy, “not only in cities, but also in villages.”