Retail in the Middle East
Introduction
Global retail has in the recent year's experienced expansive growth. Eventually, the worldwide retailing sector is eventually growing rather rapidly similar to other sectors. While the leading markets in terms of developments continuously attract most of the prime global retailers, a significant number of the unexploited nations are currently acquiring a secondary venture. Africa and the Middle Eastern regions are still considered to be the leading in possessing the untapped markets globally with only a record of about 30 retailing hypermarkets in operation as per today (Jones, 2012). Technology has modified the way that retailers are performing their operations in all their markets and with changes in consumer’s conduct and expectations which are mainly driven by increased information access and favorable economic surroundings retailers have been forced to approach global markets with differentiated strategies (Jones, 2012). This paper will be analyzing the strategic prospects over the next five years in the Middle Eastern region particularly for Carrefour and Lulu supermarkets. Finally, strategic implications and recommendations for Lulu will be offered.
Lulu supermarkets are among the largest retail hypermarkets both in the Middle East and Asia owning about 103 retailing outlets (Lulu, 2016). On the other hand, Carrefour which means Crossroads is a multinational retailer corporation from France. It is one of the biggest and efficient hypermarkets globally being the second biggest globally in reference to revenue and third position in reference to profit generation headed by Wal-Mart and Tesco. Primarily, Carrefour operations in the Middle East are currently based in UAE and Saudi Arabia. Given that Lulu is based in the Middle East where it was founded it has a much better market share in the region. In addition, it has the advantage of acquiring cheaper workforce from India which ensures that its operating expenses are low. The retailer is well accepted by the region’s populace which has been essential in the development of strong bonds in acquiring a competitive advantage (Jones, 2012). Being a locally made company has helped the corporation in leading the market based on the sensation it has created on the larger populace.
On the other hand, Carrefour is authoritative given that it is a well-recognized and positively reputed organization. The corporation unlike, Lulu caters for a broader and diverse populace by focusing on retailing supermarkets staffs as well as a grocery. However, when equated to Lulu there stock ranges is rather low given that Lulu operates based on the consumer’s needs and preferences (Jones, 2012). Lulu is primarily focused on groceries and food which is driven by the idea that most of the retailing consumers are family individuals a segment that values both food and family simultaneously. The retailing business has in the recently acquired significant changes ranging from the rapid expansion of competition, technology progression and globalization evolution. These changes have in turn offered many entrepreneurship opportunities the retailing firms which have driven their urge in participating in globalization (Pradhan & Pradhan, 2009).
Carrefour expanded initially the Middle Eastern boundaries the moment that it got in Saudi Arabia. In the initial stages, the corporation experienced stiff competition from the local operators who are well established in the region. Among all Lulu, is categorized as the most popular and authoritative retail amongst the local populace which has led to its desirable expansion (Pride & Ferrell, 2017). Currently, the Middle Eastern economy is performing well and this provides more retailing opportunities. However, based on the significant forces that drive business in the region there is a need of being strategic. Both Lulu and Carrefour strives to be the leading providers of unique and differentiated consumer experiences with quality that cannot be matched in regard to their services and good while consistently exploring fresh markets opportunities and creating maximum value (Jones, 2012). However, based on the changing consumer demand and expectations it is apparent that achieving strategic success necessitates more than standard operation.
The major forces that affect retailing effectiveness in the Middle East both for Lulu and Carrefour are political, economic, social and cultural. In that, the cultural influence in reference to economic progress in the region is relatively high. Individuals tend to accept and uphold corporations that are locally founded such as Lulu with the idea that foreign corporations tend to take the acquired revenue to their headquarters (Pride & Ferrell, 2017). This is, therefore, an advantage for Lulu while it is a challenge for Carrefour. The economic forces are rather favorable in the context that consumers are characterized by more disposable revenue to utilize in retailing consumption. In addition, the market in the region is not highly exploited which provides more opportunities for attracting a wider consumer segment than before. Socio-economically, it is right to state that the status is favorable and therefore Lulu should take advantage and seek to sustain its domination through embracing diversity, differentiation and cost leading approaches (Pride & Ferrell, 2017). Operating as an affordable, quality and dependable option is one of the strategic approaches that can be utilized in domination.
Carrefour has acquired a competitive advantage by strategically positioning itself by the aspect of quality. However, its major weakness is grounded on the fact that despite the diversity and superiority of products its stock range is outweighed by that of Lulu which is crucial in affecting consumer’s satisfaction (Lulu, 2016). On the other hand, Lulu has the prime strength based on consumer’s brand loyalty, significant share in the market, extensive and large variety. However, despite the strengths that provide the corporation with opportunities for growth the corporation lacks qualified staffs with poor consumer relation given that it does not pay attention to the responses of the consumers. This is contrary to Carrefour which has ventured in the region using unique services and differentiated products in creating an appealing sensation (Lulu, 2016).
Due to the extensive and rapid changes, it is apparent that in the next five years Lulu will face even stiffer competition from Carrefour which is acquiring a favorable position in the Middle Eastern region based on its strategic positioning (Lulu, 2016). The possibility of these retailers growth will be driven by differentiation and being oriented on consumer’s needs. Carrefour currently owns about 24 percent of the market in the region while Lulu owns 32 percent which shows that the margin is even likely to grow smaller with time (Lulu, 2016). Strategic positioning that is more objected on diversity and the needs of the consumers will help Lulu in acquiring a sustainable positioning in the region. It is rather apparent that Lulu and Carrefour will be the dominating hypermarkets in the Middle Eastern regions in the next five years. This is because they have acquired a significant segment of the market by positioning themselves as the quality and unique options (Lulu, 2016).
It is right to state that the economic world is currently, changing in a dynamic and rapid mode resulting in the growth of globalization. In this context, consumers mainly expect to purchase from an extensive variety of services and goods where they can make their selection. Lulu Hypermarket should, therefore, adopt a diversity of both its services and products to accommodate the changes and demands (Jones, 2012). In that competition, in the Middle Eastern retailing region is rapidly intensifying with the domination and established of popular and well-reputed corporations such as Carrefour which is mainly influences by the consistent changes in economic, social as well as technological developments. In that Lulu, should focus on expanding its options and services to more nations to learn how to accommodate diversity within the region and beyond. In addition, given that consumer relation accounts as one of an essential aspect of conducting business staff training should be given a priority in developing authoritative consumer relations (Jones, 2012). This is because consumer loyalty is not an adequate competition option because the competitors like Carrefour are well positioned due to their extensive resources and the global reputation.
Conclusion
Carrefour and Lulu hypermarkets are similar but different in regard to their strategic approaches and positioning. However, it is clear that both retailers hold the highest potential of dominating the Middle Eastern region in the next five years. Therefore, due to the rapid changes that are consistently occurring in the Middle Eastern region, it is apparent that Lulu should be positioned strategically in sustaining its competitive edge. It is, therefore, suggested that Lulu should utilize its strengths in increasing its possibilities in general. In this context, it is apparent that the most strategic positioning that the retailer should take is to embrace diversity, differentiation and be oriented to the general needs of its consumers. In addition, the retailer should lower the turnover rate and generally improve consumer relation.
References
Pradhan, S., & Pradhan, S. (2009). Retailing management: Text and cases. New Delhi, India: Tata Mcgraw-Hill Education Pvt. Ltd.
Jones, R. (2012). Game on as Géant and Carrefour battle for supremacy. Retrieved from https://www.thenational.ae/business/game-on-as-g%C3%A9ant-and-carrefour-battle-for-supremacy-1.386790
Jones, R. (2012). Rich Pickings in Land of the Hypermarket Giants. Retrieved from https://www.thenational.ae/business/rich-pickings-in-land-of-the-hypermarket-giants-1.437649
Lulu. (2016). Hypermarkets tighten grip in Gulf. Retrieved from http://www.lulugroupinternational.com/recent-news-detail.html?id=31
Pride, W. M., & Ferrell, O. C. (2017). Foundations of marketing. Stamford, Conn: Cengage learning.
