How would you describe your hypermarket concept in Kurdistan?
Our job is to answer the needs of the people to bring them into our concept. We sell everything (75% food and 25% nonfood) under the same roof. Our first store in Mega Mall is 5,500 square meters, but we have not been able to replicate our concept exactly with this size. Today, we are able to offer everything we want for the food business, but for the nonfood business we do not offer what we expect to offer because of the size. For example, we do not sell products like appliances in Mega Mall. We will open our second hypermarket in Airport Mall. The size of the store in Airport Mall will be 10,000 sqm. The number of units that we will sell in Airport Mall will be double what we are currently offering at Mega Mall.
These hypermarkets are a new concept in Kurdistan. How does that affect your strategy?
Opening in a new country is always a challenge. We challenge the habits of the consumers. In Kurdistan, the local people are used to traditional ways of shopping, so it is a new thing for them. There is a cultural aspect– you do not work every country in the same way. If we offer only 100% French products, we know it will not work. Offering 100% local products is almost impossible. Our job is to find a good mix for local people between imported products and the local products to which they are accustomed. Unfortunately, local production in Kurdistan is really limited. Our desire is to work with the maximum number of local producers, because it is in our interest to reduce the logistics chain.
How has the recent turmoil affected your logistics?
For us it is clearly something we need to manage day to day. It has really strengthened links to Turkey. Today, we are naturally looking more and more to Turkish products, even if that was the case before. If the rest of them are closed off, we do not have many choices.
Do you see room for other retail giants in both the food and nonfood sectors here in Kurdistan?
For the food business, we believe that the current players will be the players in the future. A new entrant can come at any time, but the market is not mature for some types of brands. We are seeing more and more middle market brands. Being here and having opened our first hypermarket, with other hypermarkets in the pipeline, we are gaining market share. Kurdistan is an emerging market and, in time, other brands will come. We are here. Carrefour is here. A lot of Turkish retailers are here and have aggressive expansion plans. We are positive on what we are doing with hypermarkets, and we believe that new brands will come in the future.
Kurdistan is an emerging market and, in time, other brands will come. We are here. Carrefour is here. A lot of Turkish retailers are here and have aggressive expansion plans. We are positive on what we are doing with hypermarkets, and we believe that new brands will come in the future.
How do you assess the transformation of the market since you started your operations here? What were the initial challenges, and do you see that those same challenges exist today?
Today there are two main challenges. The first is that we are in a country where 90% of what we sell is imported, so you need to set up your operation with distributors and there can be importation issues. The second is that this is a new market, so we need to drive people into our hypermarkets. We need to change their mentality towards shopping, and, for that, we need to bring them the right products at the right price. Other people in this business tend to sell some products at a loss– with either no margin or a negative margin– and compensate by selling other products. We want to try to sell all the products in the store at a low price– not just bakery items or special products. We prefer to have ten clients spending $10 each rather than one client spending $100.
How many items do you stock in your hypermarkets? How many people have been visiting your stores?
Today, our hypermarkets are divided into 100 different product families. On average, we target 30,000 stock keeping units in a hypermarket. Regarding the number of customers, it is a little below the target we were expecting, but we believe we have more people coming than our competitors when they started operations. We knew that the beginning would be slow, especially with Mega Mall.
How do you address issues of hiring local staff?
Staffing is a real challenge for the country. When we started operations, we had to bring talent from outside because there was very limited competition at the time. We currently have a lot of local people working with us in the head office as well as in the hypermarket. It is not easy and we do not say that we will recruit 100% local people, but we have more and more local people giving us résumés and our goal is really to bring up local people as well. We aim to recruit a lot of people and develop locally, because our business is a real local business. We will have a strong local presence by selling products to local people, recruiting local people, and creating jobs. We are trying to target mostly people that are freshly graduated for management and office positions. They are eager to learn the business, and we will teach them as we go.