In response to strong demand for bricks-and-mortar retail, UAE-based retail conglomerate Landmark Group has revealed plans to open hundreds of stores in the upcoming years.
However, it will largely depend on internal funding for expansion with no plans to list any time soon, according to a senior executive.
“We continue to open 150 stores a year, so on an average, we will probably end up opening 200 to 250 stores [globally] every year for the next three years,” CEO of the Group, Kabir Lumba, chief executive of Landmark Retail, told The National.
The brick-and-mortar expansion comes alongside a focus on e-commerce, which accounts for around 20 per cent of the conglomerate’s overall business, although some categories perform better than others, Mr Lumba acknowledged.
“We feel that e-commerce will grow faster … it is still a very, very large part of our business,” Mr Lumba clarified, but the “stores are not going to disappear.
“We continue to expand, and we continue to renovate our stores. There’s an immense belief in the store channel as well. And it’s not just in the Middle East, we continue to expand in other parts of the world – we have a strong business presence in Malaysia and Indonesia, as well as India.”
The group, which has a presence across the GCC, will focus on the UAE and Saudi Arabia, the Arab world’s two largest economies.
“My belief is that some of the countries in the Middle East will have an increase in population … and Saudi Arabia and the UAE are the two largest markets from a population and consumption standpoint. I think that will continue to grow.
“From a Landmark Group standpoint, I think we will continue to get a larger share of wallets because of our diverse portfolio … We are cautiously optimistic – one should remain so because competition is very, very high. So, we pride ourselves on remaining grounded.”
Founded in 1973 with one shop in Bahrain by businessman Micky Jagtiani, the company has expanded into one of the largest retail and hospitality conglomerates in the Middle East and India.
It operates more than 2,200 outlets, covering more than 2.7 million square metres in 21 countries, employing over 50,000 employees across brands including Centrepoint, Babyshop, Splash, Lifestyle, Max, Home Centre, Shoemart and Emax.
The retail sector in the GCC is forecast to have grown by 15.7 per cent annually, outpacing pre-lockdown levels last year with revenue reaching $296.8 billion, according to a report by Alpen Capital.
GCC’s retail sales are poised to increase at a compound annual growth rate of 5.7 per cent till 2026 to hit $370 billion, the report said.
Landmark also has a presence in Egypt, although it is facing challenges from currency devaluation, Mr Lumba said.
“We’ve also seen a challenge to sort of export into Egypt because dollars are not freely available. So while we feel there is potential in the country, [with the population at more than 100 million], we definitely feel some of the macro factors in Egypt could have been a little bit more favourable than they currently are,” Mr Lumba said.
All things considered
There are several key factors to bear in mind when it comes to retaining customers, including product, quality, experience, price, convenience and sustainability, said Mr Lumba.
“I think if you leave even one box unchecked, you are getting into a zone of consumers feeling a certain level of disservice. We do a combination of essentials as well as on-trend. And I think if we didn’t have that mix, probably we wouldn’t be where we are today.
“The one thing that I definitely feel is that consumers are very, very optimistic and buoyant about the future, specifically in this part of the world, in the Middle East. India is one of the fastest-growing economies, so I think double-digit growth is almost par for the course.
“In Southeast Asia, we’ve just kind of started so I would say we are in a start-up phase that will take us some time to build.”
IPO is not on the horizon
While the GCC region has seen a surge in initial public offerings recently, Landmark is not currently considering one, Mr Lumba said.
The company remains “financially sound” and profitable, he added.
“We don’t have significant leverage with banks. So overall, we use our organic cash flows to expand … We have strong relationships with the banks that we operate with here. But it’s more for support and not so much because we are in need of funds,” said Mr Lumba.
In the foreseeable future, the Group intends to open another business segment, with the move expected to be clarified in the next 12 months.
“We prefer to strengthen our strengths. I think we have a very strong retail and hospitality focus. So, it’s all about consumers, we are about value products, great quality, FMCG [fast-moving consumer goods] in nature,” Mr Lumba said.
For now, the Group’ will be concentrating on building brands in-house rather than acquisitions.
“We don’t lack the hunger, we don’t lack the ability to invest, it’s just that we want to go and seek out the right kind of opportunity. And that’s a lot to do with the DNA of the organisation. We prefer building rather than buying and that hasn’t changed for some time … Never say never, but right now, honestly, there isn’t anything on the cards.”
