Spinneys CEO sets out Saudi retail growth plans after flagship store launch in Riyadh

RIYADH: Dubai-based supermarket chain Spinneys has made its debut in Saudi Arabia by launching its first store in Riyadh’s La Strada courtyard.

The outlet of 43,520 sq. ft. of the new mixed-use development in Riyadh marks the start of Spinneys’ expansion strategy in the capital and Jeddah, aiming to meet the growing preference for high-quality food choices in the Kingdom.

The company said its first store aims to offer a “premium shopping experience” with a wide range of imported products, locally sourced products, international brands and an exclusive private label selection.

This comes as Spinneys’ initial public offering on the Dubai Financial Market, at an initial price of $375 million, was oversubscribed 64 times to $19.33 billion last month.

“At the time of our IPO, we were explicit about our ambitions in the Kingdom, and these are now being realised. We see a massive white space opportunity in Saudi Arabia with sectoral growth supported by favorable macroeconomic and consumer trends,” Spinneys CEO Sunil Kumar told Arab News.

He pointed out that the local grocery market is experiencing a rapidly growing demand for a fresh, high-quality offering that perfectly suits their experience.

“By entering Saudi Arabia now, we believe we are getting an early advantage in establishing Spinneys as the pre-eminent premium grocer,” he said.

Kumar revealed that the company has ambitious goals for its inaugural store, aiming to achieve performance levels similar to one of the UAE’s key community stores.

“As our first store, we expect Spinneys La Strada to benefit from attracting customers from a wider geographic base than it would in a city where we have an existing footprint,” said the CEO.

He added: “Our immediate goals are to offer customers in these areas a truly differentiated shopping experience with a focus on premium fresh food, convenience and outstanding service.”

He highlighted the company’s on-site manufacturing capabilities at La Strada, which are designed to enhance economies of scale and are crucial to its fresh food offering and profitability.

“These facilities will play an important role in supplying fresh food to other locations in Riyadh as we expand across the city,” Kumar added.

Sunil Kumar, CEO of Spinneys. Provided.

Spinneys operates a total of 79 stores in Saudi Arabia, the United Arab Emirates and Oman, with a combined sales area of ​​880,000 sq. ft. in all markets.

The company aims to open three additional locations in Riyadh and Jeddah by the end of the year, positioning itself to operate up to 12 stores in Saudi Arabia by 2028.

After the flagship location at La Strada Riyadh, Spinneys’ next project will be an 11,636 sq. ft. store. ft. in Riyadh’s King Abdullah Financial District.

The company also aims to open 25 new stores in the UAE between 2024 and 2028, with recent launches and expansions underway.

Kumar explained that their strategy includes growing similar stores, exploiting white space opportunities and introducing the Kitchen by Spinneys concept, as well as expanding their hyperlocal e-commerce channel, Spinneys Swift, and optimizing operational efficiency.

Saudi market

In terms of locations, Spinneys wants to focus on establishing a robust presence in Saudi Arabia’s wealthiest and most populous cities, namely Riyadh and Jeddah.

“There are several reasons for this. Primarily, they are economic powerhouses and population centers, with Riyadh comprising 27 percent of the national population and Jeddah 25 percent,” Kumar said.

He further highlighted the Kingdom’s significant expatriate population, currently at 42 per cent and expected to reach 50 per cent by 2040, which he sees as an “important factor” for Spinneys’ market proposition.

“Secondly,” he continued, “the levels of disposable income in Riyadh and Jeddah are compelling, around $13,300 and $12,250 per capita in 2022, respectively.”

He added: “With an estimated CAGR of 6.4% for the UK’s affluent population between 2022 and 2028, and particularly given our premium positioning, the purchasing power of families and individuals is important.”

Looking at the Saudi market more broadly, Kumar noted that disposable incomes are rising, inflation is relatively low, and transformational initiatives such as Saudi Vision 2030 are driving long-term diversification.

“All this creates a very attractive environment for business growth,” said the CEO.

With its leadership in the UAE, Spinneys plans to replicate and adapt its offerings in the Kingdom’s burgeoning premium food segment. “Our core store concepts will not deviate radically from other GCC (Gulf Cooperation Council) markets, but we have carefully tailored the in-store experience and product assortment to align with distinct Saudi preferences,” explained Kumar.

The company says it has done in-depth market research to understand unique Saudi tastes, consumer behaviors and cultural traditions, which will be reflected in its stores. Kumar said the aim is to provide “a truly localized shopping experience” that combines global sourcing with authentic local flair.

Spinneys entrance to The Villa Community in Dubai. Shutterstock

Supply chain

The UAE firm recognizes the importance of establishing a robust supply chain infrastructure and local manufacturing capability. It aims to capitalize on its “vertically integrated” sourcing model, which Kumar notes has been a key competitive advantage in other GCC markets.

“We are already making sure that they play the same role for our business in Saudi Arabia,” Kumar said.

The facilities at La Strada will supply other stores in Riyadh as they open, and Spinneys plans to set up in-house manufacturing facilities in Jeddah as well. “Our local production model allows us to optimize our supply chain, reduce food miles and maintain the exceptional standards of freshness and quality for which our brand is known,” said the CEO.

The company has “well-established” relationships with more than 870 suppliers in 44 countries, facilitated through its own subsidiaries in major supply centers such as the US, UK and Australia. “Our Saudi customers will benefit from this supply chain in the same way that our customers in the UAE and Oman did,” explained Kumar.

Spinneys insists that its diversified global network, together with close proximity to manufacturers, enables significant cost efficiencies. “It is also a key driver of our commitment to sustainability, minimizing food waste while meeting the highest environmental and social standards. Replicating the Spinneys supply chain model in Saudi Arabia is critical to maintaining our competitive advantage,” he emphasized.

White space opportunity

Spinneys sees a significant white space opportunity in the food market in Saudi Arabia, which Kumar describes as “too compelling to ignore”.

Citing third-party research, Kumar pointed out that the Kingdom’s retail white space will reach 86 million square feet by 2033, adding: “To put that in perspective, that’s the equivalent of almost 1,200 stores Spinneys. As of today, we’re opening a much smaller number of stores than that, but we have a lot of room in what we see as a vast, underpenetrated market that’s ripe for a truly premium offering.”

Kumar points out that it’s not just about white space; he points to a strong confluence of structural winds driving growth in the Saudi retail landscape. “The affluent population that belongs to our ‘target market’ is projected to expand at 6.4% CAGR to 2028. This means that Spinneys’ target market is growing at a rate that is outpacing the wider grocery market,” he said .

In Riyadh and Jeddah, Spinneys anticipates its target market to grow at a CAGR of 6.7% from 2022 to 2028, outperforming the wider food market in Saudi Arabia, which is expected to grow at a CAGR of 4.8% during the same period.

Spinneys outlets in Saudi Arabia are operated through a joint venture formed in 2022 with Abdul Mohsen Al Hokair Holding Group.

Kumar pointed out, “Our respective interests are closely aligned and we share the same ambition to make the Spinneys brand a champion in the premium food segment of Saudi Arabia.”

He added that their partner plays a crucial role in navigating the local business and regulatory landscape, as well as identifying and securing the most attractive locations to open stores.

“This is a partnership we are very excited about and have every expectation that it will continue to flourish in the years to come,” Kumar concluded.

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