Retail

Starting from a single supermarket in the UAE in 1982, the Al Maya Group has become one of the the Middle East’s leading supermarket chains. Today it has 33 supermarkets and hypermarkets in the UAE, as well as 5 supermarkets in the Sultanate of Oman. “We continue to expand and plan to open 12 new stores in Dubai, Abu Dhabi and Al Ain this year,” said Kamal Vachani, the chain’s managing director. Current Al Maya shop formats are very diverse, ranging from 3000 to 50,000 square feet. “A new design and concept is being implemented in all our stores,” he said.  Headquartered in the UAE, the Al Maya Group has strengthened its regional presence across Oman, Bahrain, Kuwait and Qatar in the past two decades. The group has also been fortifying its global spread with stores in India and the UK. Its successful strategy has been to maintain high quality standards of fresh food supplies all season and covering 97% of the market, with formats ranging from small grocery stores to large hypermarkets. Fruit is the top-selling category in fresh produce. Apples and pears come first and represent 9.44% of turnover, second are bananas with 8.66%, then exotics with 6.46% and citrus with 6.03%. “We deal direct with most of the leadings suppliers of fresh produce around the globe, in order to provide our valued customers with the best quality.” Taking the apple category as an example, 45% of Royal Galas come from New Zealand, 40% from France, and 15% from Chile, Spain and Brazil. Red Delicious mainly come from the US (60%), France (25%), and Chile and Spain (15%). About 45% of the Granny Smith apples are from France, 15% from Spain, 15% from the US, and the rest from South Africa, Chile and New Zealand. The US supplies 35% of Goldens, France 25%, and Chile, Spain and South Africa the rest. As for pears, we handle D’Anjou (60% from the US and 30% from South Africa), Forelle (60% from South Africa), as well as Packhams from South Africa and Ya Pears from China.  Tomatoes are the top vegetable item, representing 8% of total fresh produce sales. A third of its volumes comes from Jordan, 25% from Oman, 12% from India and 5% each from Egypt, Malaysia and Holland. Potatoes make up 6% of fresh produce sales. About 30% come from Lebanon, 20% from Jordan, 10% from Egypt, and also some from China, India, Pakistan and Bangladesh. “Our organic product sales achieve their margins and are tending to improve, forming about 2% of total fresh produce sales this year.” Local organic farms are developing new growing technologies like hydroponics and making more products available on the market. With the largest distribution centre in the UAE, the Al Maya Group holds the sole GCC rights to distribute a spectacular variety of FMCG products across the region. This ranges from foodstuffs to apparel and luxurious salon treatments. All brands are completely synonymous with the Al Maya Group vision of high quality standards. BS

Premium supermarket chains like Spinneys have opened 50% more shops and are investing in new logistics operations

Spinneys’ CEO Jannie Holtzhausen confirms a 15% annual sales increase and the continuous expansion of the chain in the Gulf. Spinneys stores have increased from 40 to 66 units over the last 3 years, with formats of 10,000-40,000 square feet. The chain also includes a few convenience formats between 2,500 and 4,000m2. Its estimated food retail market share in the UAE is between 7 and 8%. 
“Due to our strong focus on fresh produce, our sales of fruit and vegetables have grown 17%, above the average for the other food categories,” Holtzhausen highlighted. The pre-packing of specific categories has helped stimulate sales, particularly for berries, cherries and grapes.  “The growing interest in healthy habits is helping boost fruit and vegetable sales in all consumer categories,” Holtzhausen said. This global trend of increased health consciousness is also seen in the GCC countries, inducing consumers there to buy fresh rather than processed products. When asked about Spinneys’ approach of customer profiling, Holtzhausen said it preferred to focus on stores and categories to improve sales and performance as: “We manage products, not customers”.

“Ready-to-cook” vegetables successful
The chain has successfully developed a full line of pre-cut, “ready-to-cook” vegetables over the last 4 years which now has more than 15 items. Among the popular ones are baby potatoes (microwavable), cut beans, baby cabbage, squash, peppers and mixed vegetables. Each item comes in two sizes: smaller packages for individuals and larger formats for families. The microwavable potatoes product has become the most successful, due to its convenience, and enjoyable taste and firm skin on eating. “Surprisingly, the smaller and baby potatoes outperform the standard potato line in the medium and higher consumer segment,” Holtzhausen pointed out.
“But pre-cut fruits are now our fastest growing range,” he said. Most of the items are made at the farm and sourced from various African countries (Tanzania, Kenya, Senegal and Zimbabwe). Holland remains the main supplier for vegetables though in general its origins have become more diversified. 
Berries continue to enjoy strong sales. Strawberries and blueberries dominate but a full assortment is offered. About two thirds are sourced from North and South America, 25% from Europe (still very seasonal), and some also from Australia and New Zealand. “We believe the most successful suppliers will be Egypt and Peru,” Holtzhausen predicted. Lettuces come mainly from Europe (85% from Spain and Holland), with still only 5% from Africa. “We hope Africa, being closer, will become a major supplier of lettuce as it has a more predictable climate and better political milieu.”

Tasty, Fresh and Healthy
“We have a quite large team of 10 food scientists, looking closely at our suppliers with regular audits at their farms and packing houses, particularly for fresh cuts items.” GlobalGAP protocol is required as much as possible. US and European items are naturally all certified, the other origins are audited by Spinneys’ own quality managers.
Logistics is an essential part of the a total control of the foodchain. Over a third of fruit and vegetables are directly imported and most are stored and handled within Spinneys’ own facilities. The group is now busy constructing a new logistics centre for dry, frozen and chilled products which will be located in Kizard, Abu Dhabi. “Our plan for the next three years is to continue to expand as fast as the economy will allow,” Holtzhausen said.
PE

When sourcing fresh fruit and vegetables, Ahold European Sourcing always takes quality and taste as the starting point, explains Leon Mol. He is an agronomist with Ahold European Sourcing and responsible for ensuring delivery conditions to suppliers. “Behind the quality and taste there are many uncertainties.  In food safety we cover those with GlobalGap and the add-on module, ‘Albert Heijn Protocol’. We are also very attached to good working conditions with our suppliers.” In many countries outside the EU, Ahold covers those aspects with extra certification or social audits.  “And we look at sustainability. This is a set of requirements that is invisible to the consumer but leads to the starting point: that the product should meet customers’ demands. We must never lose sight of quality and availability.”
Communication and trust in long term supplier relationships
Ahold is an international retail group based in the Netherlands, with strong local consumer brands in Europe and the United States. Supermarkets are their core business and Ahold is the number one retailer in the Netherlands, with 936 Albert Heijn supermarkets and a market share of 33.7 percent according to Nielsen.  Supplying all those supermarkets both in the Netherlands and abroad with fresh fruit and vegetables naturally calls for a lot of programming and location is one of the focal points in this. Leon Mol: “What is available nearby will be sourced nearby. What we need to get from further away, will be sourced further away.” Distance always plays a role in the quality of fresh produce. As much as possible we source close to home, but we also need to satisfy the consumers’ need for year-round product availability. For instance, citrus is sourced as much as possible from Spain and the remainder mainly comes from South Africa. Tomatoes are sourced for most of the year from the Netherlands and the rest comes from Spain and Morocco. A differentiation in assortment is a clear trend signalled by Albert Heijn. ” We need to offer products for all our customers.” This includes the more basic products and the specialities such as limes, minneolas or a good tasting tangerine. Although developments in citrus are not so fast due to the long time it takes for a citrus tree to come into production, clear trends are visible. “One is to better secure the mainstream. It is a challenge to supply an orange all year round with good taste and good quality.” New citrus varieties are developed to smooth the transition from one citrus season to another in terms of taste and quality so that the consumer does not really notice the difference in origin throughout the year. Developments in tomatoes are much swifter, as the production time for tomato is short. Leon Mol:” With tomatoes too, the first goal is to provide continuity in quality and availability.” In this process, long-term relationships and extensive communication with suppliers play a key role. “The structural relationship with our suppliers is very important to us.” Direct contacts with the suppliers, long-term relationships and company visits are part of Ahold’s supplier policies.  It is our guarantee of quality and availability and enables us to assess risks. “In addition to the certificates, trust does play a large role too. To know each other’s demands is very important.”
Exploring opportunities that lead to win-win situations
Ahold expects its suppliers to take a pro-active approach where it comes to pointing out possible issues. Among the difficulties to be tackled are delivery problems. Due to weather conditions it may happen that deliveries cannot be in time or quality cannot be provided as agreed. This may also lead to food safety issues, because extra crop protection may be needed in these situations. “The better we know these issues, the better we can allow for it when planning our inventory.” This goes for specific local production circumstances too.  Such a process leads to extensive communication and intensive cooperation. “If both parties can realise that enormous progress can be made on all fronts, which may range from minimising waste to optimising production, water use or inventory management and creating a true win-win situation.” Sustainability is evidently an issue with Ahold and the topic is mainly looked at in terms of opportunities. “Our approach is not to impose rules but to see where the problems of our producers are and where progress can be made. Every product has its own story to tell.” In every situation the specific circumstances for production are taken into account. “In areas where plenty of water is available, it is no use to impose limitations on the use of water, but for instance producers in South Africa will have to deal with limitations in water use, due to its restricted availability.” Ahold’s sustainability policies are not a question of risk management but much more of exploring opportunities together with the producers in order to create a better, more efficient and more sustainable product. Profitability also plays a role in this process. “Only when a producer makes money on his products can they innovate and invest. We are careful not to make requirements that do not have a clear effect.”
Programming ahead
Knowing the needs and planning ahead to satisfy those needs is one of the leading principles for Albert Heijn. “This leads to efficiency and transparency throughout the chain.” This also means that every link in the chain is looked at critically and when it offers no added value, it has no place in the chain. The fresh produce market is a volatile one and occasionally additional purchases need to be made. Leon Mol:  “Even then, we turn to trusted and well-known parties with the same requirements as the products in our programmes.” This goes for both conventional and organic products. Organic producers have become larger and more high-tech.  “The organic produce sector is professionalising, so we are able to provide a more consistent organic product.” Leon Mol is convinced that over the years organic farming has had great influence on conventional farming. “Conventional farmers have watched the organic producers closely and picked out elements to improve their own production. Many products are now available where no chemical crop protection has been used. Specifically in greenhouse crops, giant steps have been taken in the use of natural solutions to combat pests.”
Changing consumer needs
Ahold signals that fresh produce is increasingly sold via internet. Expectations are that these sales will further increase. That brings a different type of challenge. “The customer will not pick out their own lettuce; instead we will do that for them. Aspects like predictability and quality have a different dimension and will require attention from different links in the chain. ” In this process, communication with the consumer is becoming even more valuable. Ahold has various ways to map the needs and requirements of the end-consumer, ranging from internet panels to feedback from the supermarkets. This information is used as input for the producers’ programmes. One definite trend is that consumers are buying their products more consciously. Origin and ingredients are important. Another trend is health. Leon Mol expects that the content of a product will become increasingly important. “We note increasing attention to nutritional values and taste, which offers fresh fruit and vegetables a very good base.”

The UK-based retailer is seeking to strengthen its position as the number two supermarket and has begun its largest ever discounting campaign
Asda has come out fighting in 2014 and has pledged to slash £50m from the cost of essential food items in the first three months of the year. As part of its £1bn five-year price cutting strategy, Asda is lowering the prices across a range of categories including fresh produce and frozen foods. Prices for broccoli, tenderheart cabbage, cauliflower, iceberg lettuce and spring onions have been reduced to just 50p. The £50m price overhaul is part of a £200m investment in pricing this year and is part of Asda’s strategy to take on discount supermarkets such as Aldi and Lidl.
“It’s more clear than ever that UK shoppers’ priorities are well and truly focused on price,” says Barry Williams, Asda’s chief merchandising officer for food. “This January, we are offering more value than ever before across our stores on the products that people actually week in, week out. With hundreds of products at 50p, we’re even making the pound shops and Aldi look expensive.” The price cuts are being funded by Asda’s savings programme ‘We Operate For Less’, in addition to the price bargaining power it enjoys with parent company Walmart. Though Asda won’t realise its trading figures for the fourth quarter until late February, the retailer says it enjoyed a strong performance at Christmas, both in its stores and online. On December 23, a record 4.8 million customers passed through Asda’s stores. The UK retailer also enjoyed its biggest ever online Christmas,  and grocery home shopping sales on December 21 and 22 topped £5 million (U$$8.2 million) for the first and second time.
Though other retailers such as Tesco and Morrisons struggled during the fourth quarter, Asda said it was confident the strategy it adopted for Christmas was the right one.
Asda is going on the offensive and in late 2013, it announced plans to invest £1bn in prices and £250m in improving product quality over the next five years. Convenience store formats are also on the agenda.
Furthermore, Asda is keen to strengthen its customer base in London and the south east of England, where traditionally it has been weaker. According to recent figures from Kantar Worldpanel, Asda has a 17.2 per cent market stake of the UK grocery market, compared to Tesco’s 29.8 per cent, Sainsbury’s 16.8 per cent and Morrison’s 11.5 per cent.
There are 573 Asda stores in the UK, including 318 superstores, 188 supermarkets and 32 supercentres.
Asda has been owned by Walmart since June 1999  
Headquartered in Bentonville, Arkansas, Walmart is the world’s largest retailer and operates more than 11,000 stores in 27 countries around the world, employing 2.2 million associates. Approximately 1.3 million of these are in the US alone.
Walmart is the seventh largest company in the world, with a market value of US$242.5billion (£158.3 bn). The retailer enjoyed total global sales of US$496.16bn (£290.17bn) in 2012.
Walmart is working towards three aspirational sustainability goals and these aims are: to be supplied 100 per cent by renewable energy, to create zero waste and to sell products that sustain people and the environment.
Similarly to other retailers, Walmart is trying to drive down its fuel consumption and costs. As part of the project Operate for Less, Walmart Canada recently announced that it is entering the second phase of its pilot Supercube project.
The Supercube is a 60-foot, 6-inch trailer combined with a snub-nosed truck and drome box. It allows the retailer to ship up to 40 percent more merchandise compared to a standard 53-foot tractor-trailer combination.
Over the past year, Walmart Canada has made 100 deliveries using this Supercube truck, and found it reduces transportation costs by 24 percent and greenhouse emissions by 14 percent.
For the second phase of the project, Walmart Canada is making improvements to the existing truck to decrease load and unload times and has begun work to extend the Supercube fleet.