Tag Archive

Steinhoff raises Poundland offer after hedge fund increases stake

Comments (0) Africa, Business, Latest Updates from Reuters

LONDON (Reuters) – South Africa’s Steinhoff has improved the terms of its agreed takeover of British discount retailer Poundland, saying its 610.4 million pound ($794.6 million) offer is final.

The increased offer follows a recent move by U.S. hedge fund Elliott to up its stake in Poundland to 17.5 percent, making it the firm’s second largest investor after Steinhoff.

Elliott has a track record of getting bidders to increase their offers. It was among activist investors that last month helped secure an improved offer from Anheuser-Busch InBev for rival brewer SABMiller.

Steinhoff said it is now offering 227 pence in cash for each Poundland share, comprising an offer price of 225 pence and a final dividend of 2 pence.

The revised offer price represents an increase of 5 pence per share over the 220 pence offer announced on July 13, which together with the dividend valued the British firm at 597 million pounds.

“The 5 pence rise in the Steinhoff bid for Poundland is a pretty modest victory for shareholder activism,” said independent retail analyst Nick Bubb.

All other terms and conditions of Steinhoff’s offer remain unchanged from last month’s deal.

Steinhoff said its revised offer is final and will not be increased.

“By offering Poundland shareholders an improved cash offer we aim to bring certainty to the transaction recognising the strength and value of the business and its management team,” Steinhoff Chief Executive Markus Jooste said.

Steinhoff owns the Bensons Beds and Harvey’s furniture chains in Britain. The Poundland deal should be third time lucky after it failed to secure Britain’s Home Retail, which owns Argos, and was also unsuccessful in a bid for Darty in France.

Poundland shares were down 1.5 percent at 221 pence at 07.21 GMT.

($1 = 0.7689 pounds)


(Reporting by James Davey; editing by Paul Sandle and Jason Neely)

Read more

South African retailer Foschini posts 18% profit jump

Comments (0) Africa, Business, Latest Updates from Reuters

JOHANNESBURG (Reuters) – South African clothing retailer Foschini Group reported an 18 percent rise in full-year profit on Thursday, boosted by last year’s acquisition of British chain Phase Eight.

Foschini, which is expanding outside South Africa as consumer spending tightens in its home market, said that headline earnings per share (EPS) rose to 1,056 cents for the year to March 31, from 898 cents the previous year.

Headline EPS is the main profit measure in South Africa and strips out certain one-off items.

“The group’s overall gross margin has improved from 47.3 percent to 49.7 percent, mainly as a result of the higher Phase Eight clothing margin,” the company said.

South African clothing retail relies heavily on in-store credit cards, but more stringent affordability measures in Africa’s most advanced economy led to a slowdown in the second half of the reporting period, Chief Financial Officer Anthony Thunstrom told Reuters.

Foschini has instead focused on increasing cash sales, which accounts for less than half of turnover excluding Phase Eight but was boosted to 58 percent by the British retailer, making the group less vulnerable to the credit cycle, Thunstrom said.

The company said it plans to open at least 50 more Phase Eight stores this financial year.

Sales also benefited from the inclusion of the British retailer and rose 31.2 percent to 21.1 billion rand ($1.4 billion). Excluding Phase Eight, the increase was 11.6 percent.

The retailer extended its push into the northern hemisphere, buying British high street chain Whistles in March, as consumers in South Africa rein in spending because of higher interest rates, rising energy costs and unemployment at more than 25 percent.

Foschini has been the best performer among South Africa’s listed fashion retailers this year, with its shares rising more than 17 percent, against a 6 percent decline for larger rival Mr Price.

Shares in Foschini were up 2 percent at 141.85 rand by 1357 GMT, paring gains of more than 3 percent before the release of its annual results.

($1 = 15.5615 rand)


(Reporting by TJ Strydom; Editing by Susan Fenton and David Goodman)

Read more

A second-hand clothing ban in East Africa?

Comments (5) Africa, Business, Featured

africa second hand clothes

Burundi, Kenya, Rwanda, Tanzania, and Uganda consider ending imports of used garments by 2019 in order to increase domestic production.

Five East African countries may ban sales of second-hand clothing from abroad – a staple of many residents’ wardrobes – in order to bolster domestic garment making.

Burundi, Kenya, Rwanda, Tanzania, and Uganda make up the East Africa Community (EAC), which directed its member countries to phase out textile and shoe imports by 2019. The heads of state of all five countries must agree before the limits could take effect.

The proposal comes as many African countries seek to increase manufacturing and other industries to fuel economic growth.

Charitable donations resold

Second-hand clothing, mostly from Europe and North America, are a mainstay of local clothing markets in Africa, according to Dr. Andrew Brooks, author of Clothing Poverty: The Hidden World of Fast Fashion and Second-hand Clothes.

In Uganda, for example, second-hand garments account for 81 percent of all clothing purchases, Brooks said.

East Africa imported more than $150 million worth of second-hand clothing in 2015. Brooks noted that the used clothing is less expensive than locally produced garments or even inexpensive new imports.

U.S., U.K. are largest exporters

Most of the second-hand clothing sold around the world comes from charitable donations by European and North American residents who are unaware the clothing will be sold, Brooks said.

The United States and the United Kingdom are by far the largest exporters of used clothing.

The United States exported used garments worth more than $685 million in 2013, according to United Nations data. Much of it went to Central and South America, Canada and Mexico but Tanzania and Angola also received major shares.

Uganda imports 1,500 tons of used clothing each year from the U.S. alone, according to the U.S. International Trade Commission.

The United Kingdom’s exports totaled more than $620 million with major shares going to Ghana, Benin, Kenya, and Togo.

Germany was the third largest exporter at more than $500 million, with large shares going to Cameroon and Angola.

Other major exporters are South Korea, The Netherlands, Belgium, Canada, Poland, Italy and Japan.

South Korea and Canada together exported $59 million worth of used clothes to Tanzania while the UK exported $42 million worth of used clothes to Kenya.

Regional industry declines

Garment manufacturing in Ghana

Garment manufacturing in Ghana

Brooks, a lecturer at King’s College in London, said local garment makers employed hundreds of thousands of people in East Africa before the debt crisis hit in the 1980s and 1990s when domestic producers struggled to compete and many factories closed.

In Kenya alone, a garment industry that employed 500,000 people was reduced to only about 20,000 garment workers today.

The East Africa Community pointed to the need to rebuild domestic production as it proposed the ban on second-hand imports.

“The region, like the other developing countries, is ready to transition into an industrial bloc with a higher level of production quality and manufacturing practices,” said Betty Maina, Kenya’s Principal Secretary at the EAC Ministry. “It will benefit industry and increase access to locally manufactured products in the region and create more employment opportunities.”

No ban on new clothing imports

Brooks noted that the ban does not include imports of new clothing, which could also undercut the domestic garment makers. While rebuilding the local garment industry may be beneficial in the long-term, higher prices could hurt local consumers.

In the near term, government would also suffer losses of tariffs collected from clothing importers. For example, Kenya collected $54 million in tariffs on 100,000 tons of imported used clothing in 2013.

Rwanda earlier this year nearly tripled its import duty on imported clothing from 35 percent to 100 percent in order to encourage purchases from the country’s lone textile mill. Two years ago, the factory was producing at 40 percent of capacity but that has dropped to 20 percent.

Comprehensive approach urged

To revive the garment industry, Brooks said, more comprehensive action than the ban must be taken.

These include improvements in transportation and power supplies to stabilize the distribution system as well as tax relief for factories and support for the sustainability of east Africa’s cotton sector.

“A revitalized local market would ultimately boost the (regional) economy by providing more jobs than the second-hand sector while retaining money that currently goes to Europe and the U.S. to pay for second-hand imports,” Brooks said.

Read more

Ambitious Mall of Africa opens to crowds in South Africa

Comments (0) Non classé

Africa’s largest and most high-tech shopping mall has opened with much fanfare in South Africa’s Waterfall city.

Shopping malls are not something new to Africa and they most certainly are not a novelty in South Africa, a nation that boasts the 6th highest number of shopping malls in the world. With just shy of 2,000 malls, in a country where a large number of residents have very limited finances, a new super mall seems ambitious.

Ambitious is not an adjective that the developers would feel reticent to accept however, as everything about the new Mall of Africa aims to set it apart from the competition.

Three and a half years of development

The Mall of Africa may have just opened its doors, but the construction of the bold plans laid out by Atterbury Property Developments began back in October 2012. Atterbury have been responsible for the construction of a project that is 80% owned by another firm, Attacq Limited which has the commercial development rights to Waterfall City. The goal is to build a technologically advanced and prosperous city of which Mall of Africa will be the focal point.

The numbers reflect the determination to create something grand for the Waterfall precinct in the Midrand area. The $340 million development consists of 550,000 square meters that house over 300 shops, a host of restaurants and a cinema complex, all under one roof.

It is not simply a matter of grand scales that defines Mall of Africa as a leap forward in terms of its design. The mall hosts unique attractions, such as a large outdoor play area for children that features an interactive musical fountain. Moreover, in keeping with the move towards greater sustainability in business, the mall features several environmentally sound designs. The roof holds solar panels that will provide 4.8MVA of green energy and its toilet facilities will use gray water harvesting to provide irrigation for the surrounding complex.

mall of africa

Keeping up with consumer demands

In a time where many people are shopping online and in which a day out is deemed incomplete without the ubiquitous “selfie” or status update, Mall of Africa’s developers were very aware of the need to create a destination for today’s world.

Perhaps the most challenging installation was ensuring that all 130,000 square meters of the retail space in the huge 550,000 square meter complex provided strong, fast Wi-Fi. For this, the developers turned to VAST Networks and Ruckus Wi-Fi, which were able to roll out the largest Wi-Fi installation ever seen in Africa. CEO of VAST Networks, Grant Marais said, “A deployment of this scale is a massive undertaking by world standards and an African first which we are very proud of.”

Evidently it was hugely important for both retailers and the expected crowds that Mall of Africa could ensure reliable, quick Wi-Fi across the entirety of the complex, which was why this sole aspect of the development began 12 months ago.

In keeping with this focus on modern demands, Mall of Africa has a dedicated Uber drop-off point to work alongside its 6,500 parking bays and valet service, another first in South Africa.

The response to another mall

The more cynical might argue that malls are not what South Africa needs, but a project that has already created huge amounts of work and if successful will provide thousands of jobs is surely beneficial for local people.

The mall opened on Thursday April 28th and saw 124,000 visitors arrive in flocks as they sought to shop at famous international outlets such as Armani Exchange, H&M and Zara.

For the first 5 days of opening, Mall of Africa has remained a huge attraction, with brand manager Vanessa Fourie stating that by 8pm on Saturday, 79,500 people had been to the mall that day.

Fourie seemed confident that the Monday Bank Holiday would also be a boon saying, “I think the public holiday is most certainly going to work in our favor…many stores would still be running specials, adding to the mall’s attraction.”

Official figures released by the mall suggest that 34% of visitors over the first 5 days were repeat customers. This suggests that the range of attractions accompanying the shops has worked well and while it’s early days, it looks like Mall of Africa’s big ambitions might well pay off.

Read more

South African investment firm RMB Holdings to buy stake in Mall of Africa developer

Comments (0) Africa, Business, Latest Updates from Reuters

JOHANNESBURG (Reuters) – South African investment firm RMB Holdings Ltd. plans to expand its portfolio by buying a stake in unlisted Atterbury, builder of the Mall of Africa, one of the largest shopping venues in the country.

RMB Holdings Limited, which holds a 34 percent stake in FirstRand, the largest banking group by value in Africa’s most industrialised economy as its only major asset, said on Tuesday it will buy 25.01 percent of Atterbury.

Although it did not put a price on the cost of investment for Attebury, RMB Holdings said in the statement it would fund the deal through preference shares.

RMB Holdings said in a statement it aimed to use Atterbury to spearhead its retail and industrial property business.

The Mall of Africa, which opened its doors last week, targets consumers in Midrand a middle-class suburb north of the commercial hub of Johannesburg.

“We thought it was a missing element of our overall portfolio,” RMB Holdings Chief Executive Herman Bosman told Reuters, referring to property investments.

Shares in RMB Holdings fell 4.60 percent on the bourse by 1358 GMT, as stocks tumbled across the board tracking a sell-off in emerging markets.


(Reporting by Tanisha Heiberg; Editing by James Macharia)

Read more

Afroplan: 21st Century Coupons

Comments (0) Africa, Business, Featured


Afroplan is a new online and mobile platform that connects users in Cote d’Ivoire, Senegal and Togo with grocery store chains to learn about discounts and promotions in real-time.

Big-box grocery stores are still a relatively new phenomenon in developing countries. Until just a few years ago, the vast majority of citizens living in even the metropolitan areas of such countries did their grocery shopping in locally-run markets filled with locally or regionally sourced foods. With the increase in chain grocery stores around the world, shoppers are adapting to the “one-stop-shop” mentality, including the concept of discounts and promotions.

Coupon Cutting in the Digital Age

Afroplan is a new mobile and online platform created by Cletus Razakou, a young Ivorian-Togolese digital expert and app developer. Afroplan bridges the gap between retailers and consumers by allowing users to input their personal data, such as location and material interests, and alerting them when a near-by retailer has a discount on a relevant item. While currently present only in three West African nations, a region home to 37 or 13% of Africa’s commercial centers, Afroplan is available on all smartphone platforms.

Users are able to input all varieties of material interests, from specific food items to the latest tablet, and are able to make informed choices about the right time to buy. Razakou was frustrated by the lack of communication between retailers and consumers regarding promotions, and realized that if a platform were created where retailers and consumers could alert one another about promotions, more Africans would benefit from these bargains.

This not only benefits consumers, but benefits retailers: many stores experience financial losses due to the expiry of food-products or to the fast turnover of tastes and preferences in material goods. Stores are now able to inform a broader range of consumers about potential savings while ridding themselves of soon-to-be-obsolete stock.

Benefits for All

The platform works through a two-pronged approach: the first is that supermarkets and other retailers are charged a flat fee to post individual promotions. The second is that sellers can purchase specialized advertising space to reach a broader range of consumers, including those who have not specifically listed a product as one of their interests. This is not only beneficial for the app as a money-making scheme, but is beneficial to retailers: the more specialized advertising they purchase, the more people see their products, and the more people will be interested in purchasing a discounted item, even if they had not listed it as a preferred item. In this way, retailers are able to expand their consumer base by creating a culture of desire while preventing losses incurred from expired and unsold products.

Of course, users benefit as well: they are now able to make informed choices about how to best-spend their hard-earned money. Consumers are able to choose from eight categories of goods: fashion, home decor, electronics, beauty, telephones, infant/baby, food, and overstock items.

Initial Challenges

Creating an app for an emerging industry is not without its challenges. Razakou said that the main challenges during this process were financial. It was challenging, Razakou said, to publicize the platform to potential clients (stores) and users in an efficient manner in all three countries, because they had not yet received investments from clients. Fortunately, Afroplan’s initial success indicates that financial barriers may no longer be prohibitive for expansion.

The Future of Bargaining?

Afroplan is an interesting, innovative approach to discount consumption. Connecting users in real-time to see the latest discounts is a new way to encourage consumption in West Africa, and, for those living in areas with supermarkets that opt to work with Afroplan, could lead to substantial savings on big ticket items. Unlike shopping at a local African market, buyers are not generally able to bargain in a supermarket, which takes the power away from the consumer. Afroplan gives shoppers some modicum of power when supermarkets are growing in popularity and number. No longer do citizens of Senegal, Togo and Cote d’Ivoire have to choose between the convenience of a one-stop-shop and the potentially low prices of shopping at good-specific markets.

Read more

South African supermarket chain Pick n Pay to expand into Nigeria

Comments (0) Africa, Business, Latest Updates from Reuters

JOHANNESBURG (Reuters) – South African supermarket operator Pick n Pay plans to expand into Nigeria next year through a partnership with a local conglomerate, as it seeks to reduce its reliance on its home market, it said on Tuesday.

Pick n Pay already operates in Botswana, Zimbabwe and Namibia and plans to open new stores in Ghana next year. Like many other South African companies it wants to expand further across the continent amid sluggish economic growth at home.

The retailer, which reported a 26 percent jump in annual earnings on Tuesday, said it would take a 51 percent stake in a Nigerian joint venture with conglomerate A.G. Leventis, which runs a food business. It did not disclose the size of the investment.

“We are not suddenly going to explode onto the scene in Nigeria next year but we are going to start the process of looking at all those things,” Pick n Pay’s CEO Richard Brasher told a results briefing, adding that he was aware of tough trading conditions in Nigeria and would not expand hastily.

Nigeria is Africa’s biggest economy but some South African companies that expanded into the west African country, including Dairy products maker Clover Industries and fashion retailer Truworths, have either pulled out or scaled down due to a scarcity of hard currency to import spare parts and raw materials.

Brasher said Pick n Pay was taking a long-term view of Africa’s most populous nation.

“If you’re in the retail business and you are an African business its hard to ignore Nigeria,” he told Reuters.

Gryphon Asset Management analyst Reuben Beelders said he backed Pick n Pay’s conservative approach to Nigeria.

“People have realised that Africa is not just going to be a pot of gold at the end of the road, it’s a lot of graft and it’s going to need long-term investment rather than something that happens quickly,” Cape Town-based Beelders said.

Pick n Pay has lost ground in South Africa to rivals such as market leader Shoprite, after failing to invest in new stores. But Brasher, a former UK head of Tesco who took over in January 2013, is implementing a plan to win back market share.

Pick n Pay said headline earnings per share (EPS) rose 26.4 percent from a year earlier to 224.04 cents in the year to the end of February, helped by cost-cutting measures. Headline EPS, a measure that excludes certain one-off items, is the profit figure most widely used in South Africa.

The company declared a final dividend of 125.20 cents per share, bringing the year’s total payout to 149.40 cents, 26.5 percent higher than the previous year.

Shares in Pick n Pay, which are up nearly 30 percent over the last year, inched up 0.58 percent to 69.89 rand by 1215 GMT.


(By Zandi Shabalala. Editing by James Macharia and Susan Fenton)

Read more

Tough year ahead for South African retailers as Massmart stalls

Comments (0) Africa, Business, Latest Updates from Reuters

JOHANNESBURG (Reuters) – Massmart reported flat annual earnings on Thursday and highlighted the difficulties South African food retailers are likely to face this year as shoppers contend with rising prices, mounting debt and high unemployment.

The retailer, majority owned by Wal-Mart Stores Inc, earns 91 percent of its revenue in South Africa, an economy expected to grow by less than 1 percent this year.

The biggest worry this year is how inflation will affect the lowest income earners, Chief Financial Officer Hans van Lierop told Reuters.

Massmart, which also sells appliances and building materials to wealthier shoppers, supplies staples such as maize and rice in bulk to traders who sell them on to poor urban and rural consumers.

Though retailers absorb some of the cost increases, maize and sugar prices could climb by a double-digit percentage due to a severe drought in southern Africa, said Van Lierop.

Poorer South Africans spend a large part of their income on food and transport, so even when retailers do not pass on price increases they struggle to afford anything but essentials.

Massmart noted a slowdown in general merchandise sales toward the end of 2015 as business confidence sagged and the currency depreciated to new lows.

The rand has declined 20 percent against the dollar since October, offsetting gains for consumers from lower fuel prices.

“People are travelling less, less often and less far to go to shops,” said Chief Executive Guy Hayward in a presentation to analysts.

Basket sizes are smaller than a year ago, he added.

Rival Shoprite also noted the impact of transport costs on customers when it reported an 8.9 percent rise in half-year profit on Tuesday.

In some parts, shoppers increasingly prefer informal retailers to stores because it involves less travel, Shoprite Chief Executive Whitey Basson said then.

Low-income shoppers would struggle, Basson said, adding Shoprite could benefit as middle-income customers trade down.

Pick n Pay, a grocer focused on the middle and upper end of the market, on Thursday piloted a project to supply informal shops, called “spazas”.

The trial could be extended to hundreds of independent spaza owners if successful, it said.

Massmart posted diluted headline earnings per share (EPS) of 508.8 cents for 2015, compared with 504.7 cents in 2014.

Headline EPS is South Africa’s main profit gauge and strips out certain one-off items.


(Reporting by TJ Strydom; Editing by Stephen Coates and Mark Potter)

Read more

Nigerian red tape prompts South African retailer to exit

Comments (0) Africa, Business, Latest Updates from Reuters

JOHANNESBURG (Reuters) – South African retailer Truworths has pulled out of its Nigerian business citing import restrictions, its chief executive said on Thursday, a sign President Muhammadu Buhari’s attempts to boost local industry are hurting foreign investment.

As well as being unable to fill its shelves, the clothing retailer said it was struggling to pay its rent and get access to foreign exchange which has dried up due to a collapse in oil prices. Nigeria is Africa’s biggest crude exporter.

“We were unable to operate the stores properly any longer because we were unable to send merchandise to the stores because there’s regulation preventing that,” Michael Mark told Reuters in telephone interview.

In an attempt to boost local manufacturing and prop up the ailing naira, Buhari has effectively banned the import of almost 700 goods, ranging from rice to toothpicks, bread and soap.

Even non-banned items are difficult to import due to dollar shortages.

Buhari won an election a year ago on promises to end a brutal Islamist insurgency in the northeast and wean Africa’s biggest economy off oil.

However, Boko Haram militants continue to launch regular attacks and economists have questioned the logic of Buhari’s shock therapy reform tactics, particularly because of the knock-on effects of the slump in oil prices.


(Reporting by Tiisetso Motsoeneng; Writing by Joe Brock; Editing by Ed Cropley)

Read more

John Lewis to open in Dubai as retail surges in the UAE

Comments (0) Business, Featured, Middle East

john lewis

UK-based department store John Lewis is set to launch in Dubai as the UAE becomes a top global market for retailers

Taking the middle class favorite across the globe, UK-based department store John Lewis has announced plans to open shop in the Middle East with the launch of a home department in Dubai. Scheduled to open in spring 2017, the shop-in-shop will take prime position in the new flagship Robinsons Department Store in the Dubai Festival City Mall, both owned by UAE-based conglomerate the Al-Futtaim Group. The 15,000 square feet shop will be John Lewis’s largest outlet oversees, and will stock a range of own-brand furniture, cookware, textiles, glassware, and bedroom, bathroom, living, and gifting assortments.

The agreement extends the current partnership between the Al-Futtaim Group’s Robinsons Department Store and John Lewis in Singapore. As part of the announcement, the duo also confirmed the opening of a 630 square feet John Lewis shop-in-shop in the Kuala Lumpur Robinsons store in Malaysia. Both new outlets will be designed by John Lewis’s in-house team.

Andy Street, John Lewis’s managing director, comments: “We’re delighted to be working with Robinsons again on two new ventures. The success of our existing international shop-in-shops has given us the confidence to open in the Middle East and increase both the scale of the space and product assortment. This is an exciting time for Al Futtaim’s Dubai Festival City Mall and we’re pleased that John Lewis will be a part of the next phase of its redevelopment.”

Building a stable home market

The announcement follows a failed Middle Eastern expansion attempt by John Lewis in 2011. Again working with the Al-Futtaim Group, plans had been drawn up to open several stores across the region, including in Dubai and Egypt. But at the time, much of the British high street was struggling, and so John Lewis pulled out, commenting that a focus on the home market was the first priority.

Now the employee-owned John Lewis operates 46 shops across the UK, of which 32 are department stores. And it is performing well relative to the market, posting particularly strong results for the important Black Friday, Christmas, and post-Christmas trading period with total sales of $1.38 billion (£951 million). Its viral “Man on the Moon” ad also triggered a 5.1% jump in online sales year-on-year. Although the company has warned that 2015 profits will be down, it has blamed this on higher pension charges, and on the whole, John Lewis is in good health.

John Lewis has also been busy building a portfolio of overseas stores, including 14 shop-in-shops across Singapore and the Philippines, seven in South Korea, and a further seven shop-in-shops set to launch in De Bijenkorf department stores across the Netherlands.

Booming retail market in the Middle East

But emerging markets are playing an increasingly important role. Reportedly about 70% of the world’s growth is likely to come from emerging markets in the coming years. With a rising population, a growing middle class, and rapid urbanization, the Middle East is a particularly attractive and largely untapped burgeoning market.

According to an Arcadis index ranking of 50 international markets, the UAE is the eighth most attractive market globally for retailers, with the UAE ranked first in the region thanks to strong infrastructure and ease of operation. Dubai is at the center of that market, with the second largest number of global brands after London, rising local purchasing power, a wealthy expatriate community, and a thriving tourism sector with plenty of foreign luxury consumers. Currently Dubai alone commands around 30% of the Middle East luxury market.

Modern retail concepts, including the Dubai Mall which claims around 50% of Dubai’s luxury purchases and hosted a record 54 million visitors during the annual Dubai Shopping Festival, also provide ideal conditions for growth. Developments capitalizing on the successful Expo 2020 bid and new mall openings are also expected to reinforce Dubai’s position at the center of a Middle Eastern retail in the coming years.

But with religion tied so closely to both society and business, the Middle Eastern market does also come with risks. Dano-Swedish brand Arla Foods (owner of Lurpak, Puck, and Arla) is a good example. In the early 2000s it was a major player in the Arab world, dominating the Middle Eastern markets for butter, cheese, and cream. But in 2005, and again in 2008, the publication of cartoons unflatteringly depicting Islam’s prophet in Danish newspapers led to boycotts of Danish goods, and sales plummeted. Arla Foods has never quite recovered.

Good chances of success

This partnership between John Lewis and Al Futtaim has a good chance of success. John Lewis has a strong reputation, voted the retailer with the best reputation in Europe, the Middle East, and Africa in a survey by the Reputation Institute (2013 and 2014). This will make it attractive to the Middle Eastern market. And Al Futtaim has the expertise and knowledge of the local culture. As Paul Delaoutre, President of Al Futtaim Retail, comments: “Al Futtaim’s solid regional retail infrastructure, know-how and reputation seamlessly blend with John Lewis’s global appeal as a renowned retailer in a long-awaited exclusive partnership designed to offer discerning UAE consumers even more choice and options.”

Read more