DUBAI - State-owned conglomerate Dubai World’s unit Retailcorp is looking for investors to develop a chain of retail stores in the UAE and other Gulf countries, a senior executive said on Thursday.
The company plans to build 15 hypermarkets and 40 smaller supermarkets of French chain Auchan over the next 10 years, but the expansion is dependent on getting equity partners, Retailcorp World-Hypercorp Chief Executive Officer Graham Dreverman told Maktoob Business.
The Dubai company has a franchise agreement with the French group for developing Auchan in the region.
Retailcorp, the owner of Dubai's Ibn Battuta Mall, has opened its first hypermarket at Dragon Mart, a China-focused retail zone developed by real estate firm Nakheel.
Six Auchan stores will be developed in Dubai in real estate developments of Nakheel, including Jumeirah Village, International City, Discovery Gardens and the Palm Jumeirah.
“Each will be opened with a joint venture partner. We are not going to start if we do not have funds (ready),” Dreverman said on the sidelines of the official launch of Auchan in the country.
The focus on having ready investor funds shows a new approach of business from Dubai World, which accounts for about $60 billion of loans and liabilities in Dubai’s total debt of $80 billion.
Before the downturn last year, Dubai World companies were aggressive borrowers as they sought assets around the world in ambitious expansion plans.
Dreverman said response from potential investors for Auchan stores has been encouraging.
“We’ve just started capital raising. There is enormous interest,” he said, adding that all new stores are “demand-driven” and located in established community developments.
Dreverman did not say how much money Retailcorp needs for the six Dubai stores that are at a design stage.
The focus is on opening smaller and “regional” stores because “there is no room for another mega mall” in the city, which has some of the largest shopping centres in the Gulf.
The store at the unfinished Palm Mall on Nakheel’s Palm Jumeirah Island will be a “regional” shopping covering an area of 100,000 square metres.
After Dubai, Retailcorp is looking at opening hypermarkets in Abu Dhabi, Sharjah and Fujairah, with Qatar, Bahrain and Kuwait being part of the next phase of expansion.
The company is not keen on opening in Saudi Arabia because the biggest regional market already has “a lot of competition (in the retail sector).”
Retail sales are under pressure in the UAE in the economic slowdown, but Jean Marie Teyssedre, chief executive officer of Hypercorp-Auchan, said the group’s discount model will lure customers.
He said the company will try to source goods at lower prices from countries where it is operating, including China and Eastern Europe.
The French chain operates 1,335 stores in 12 countries.