Spinneys plans 12 stores in Saudi Arabia by 2028: CEO

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Spinneys 1961 Holding Plc is planning to open 25 new stores in the UAE between 2024 and 2028, CEO Sunil Kumar told Argaam.

He noted that these plans are already underway, with two new sites launched and another location set to open before the end of this year, along with a new food hall similar to "The Kitchen by Spinneys”.

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Kumar emphasized the company's commitment to this rapid pace of store openings across the UAE, with no plans to close any stores in 2024, as the focus remains on expansion.

He stated that Spinneys aims to open up to 12 new stores in Saudi Arabia by 2028, following the launch of its first store in La Strada Yard in Riyadh.

The CEO highlighted the significant growth potential of the Saudi retail sector, anticipating an increase in the affluent population within the company's target market.

Here are the details of the interview:

Q: You launched Spinneys stores in the Saudi market. What does this mean for your business and why now?

A: Entering the Saudi market has been a strategic priority, with the Riyadh store opening marking a significant step.

We've been clear about our ambitions during the public offering and see substantial expansion opportunities amidst robust sector growth bolstered by favorable economic and consumer trends.

The local grocery market is witnessing rapid demand growth.  The company's UAE management can leverage their successful operations there and tailor them to the Kingdom's thriving grocery sector. Riyadh and Jeddah are ideal for building our brand and expanding market share.

Q: How will you develop your brand in Saudi Arabia? What are your goals?

A: Our store in La Strada Yard, Riyadh, is the first step. We plan to open three more sites in Riyadh and Jeddah by year-end, aiming for 10-12 stores in the Kingdom by 2028.

La Strada has self-production facilities supporting economies of scale, crucial for food offerings and profit margins. These will supply food to other planned locations. We aim for La Strada to perform like our core UAE stores. As our first in the Kingdom, we expect "Spinneys La Strada" to attract customers from a wider area than if it were in a city with multiple branches.

Q: What locations and consumer segments are you focusing on?

A: We focus on establishing a strong presence in Saudi Arabia's wealthiest and most populous cities, like Riyadh and Jeddah, representing economic and demographic powerhouses. They together account for over 50% of the Kingdom's population. Expats, expected to make up 50% of the population by 2040, are also a key factor.

Riyadh and Jeddah communities have high-income levels. With the affluent population projected to grow at a CAGR of 6.4% between 2022 and 2028, increasing purchasing power is crucial. Overall, disposable income is rising, inflation is relatively low, and initiatives like Vision 2030 are driving diversification, creating an attractive environment for business growth.

Q: How does the Saudi market support Spinneys' regional expansion program?

A: We have ambitious expansion plans, aiming to open 25 new stores in the UAE between 2024 and 2028. We have already launched two new sites and plan to open another location by year-end. We also opened the first standalone food hall, "The Kitchen by Spinneys," in Dubai, with another planned later this year. We will maintain this rapid expansion across the UAE without closing any stores in 2024.

We aim to open up to 12 new Spinneys stores in Saudi Arabia by 2028. This year marks the start of our operations in the Saudi market, with our current location in the La Strada complex in Riyadh and three more stores launching by December. Our initial focus will be on Riyadh and Jeddah. The next store will be 11,600 square feet in King Abdullah Financial District (KAFD) in Riyadh.

Q: Is the Saudi market part of your broader corporate strategy?

A: We focus on like-for-like growth in our existing stores, expanding in the UAE and Saudi markets, growing our "The Kitchen by Spinneys" food hall model, and developing our e-commerce channel "Spinneys Swift."

Expanding in Saudi Arabia is a cornerstone of our growth strategy and essential for targeting significant opportunities in regions with favorable consumption dynamics.

We can achieve our expansion goals in the Kingdom by leveraging our strengths in entering an untapped, high-potential market supported by strong structural factors.

Q: How well do you understand the market you're entering? How confident are you of your success in the Kingdom?

A: There is a significant opportunity for expanding the Saudi grocery market, with substantial growth potential. Independent research predicts the total grocery store space will rise to 86 million square feet by 2033, equivalent to 1,200 Spinneys stores. We have ample room to invest in this vast market.

Moreover, favorable structural factors support the growth of the Saudi retail sector. The affluent population in our target market is expected to grow at a CAGR of 6.4% by 2028. This means Spinneys' target market is growing faster than the broader grocery market, with our target market in Riyadh and Jeddah projected to grow at a CAGR of 6.7% between 2022 and 2028, compared to a CAGR of 4.8% for the overall Saudi grocery market during the same period.

Additionally, disposable income and purchasing power are rising, which is a positive indicator for us.