French hypermarket wows Egyptian shoppers

By James Whittington BBC World Service business reporter in Cairo

Carrefour is the world's second largest and Europe's largest retailer

On the edge of Cairo, where the sprawling city meets the Egyptian desert, a revolution in retail is taking place.

Sixty-five thousand square feet of shopping space and parking for over 1,500 cars has been attracting enormous crowds since it was built last December.

Along with a massive Carrefour hyper-market, there are shops selling Timberland shoes, Radioshack electronics equipment, up-market jewellery, and there are plans to open a Virgin mega-store.

During the weekend, the mall attracts over 34,000 customers on a good day and they spend between three and four hours in the building.

The businessman who has brought the Carrefour hyper-market to Cairo has tapped into the enormous demand for a western-style shopping experience.

He has replicated his success in the Gulf with the first venture of its kind in Egypt.

Majid al Futtaim, from the United Arab Emirates, owns 75% of the holding company which has built and runs the mall.

The French retailing giant Carrefour owns the balance.

Traditional market

Egypt has been a late developer in the world of modern retail.

This is strange because although the majority of the 70 million or so nationals are extremely poor, there is a growing and sizeable middle class in the main cities of Cairo and Alexandria.

The general manager of Carrefour in Egypt, Mohamed Galal, says that one of the reasons for the lack of big malls until now is that Egyptians' old world shopping habits die hard.

"We are still in a very traditional market where people are used to - the term is 'hang their baskets on their balconies' - and just ask the salesmen passing for the things they need," he explains.

Failed attempts

Other foreign retailers have tried to break into the Egyptian market before and have not succeeded.

The most recent attempt before Carrefour was the UK supermarket chain J Sainsbury whose Egyptian adventure ended in a spectacular failure.

In 2001 it withdrew from the country after failing to win over Egyptian shoppers and suffered a loss of $150m (£89m) in the process.

Sainsbury entered Egypt in 1999 when it linked up with a local partner and bought 50 existing stores across the country.

Its plan had been simple - to roll out traditional supermarkets with joint branding and marketing budgets and similar product ranges.

But it soon went wrong when the British chain became an indirect victim of the high feeling that exists in Egypt over the Israeli Palestinian conflict.

False rumours that J Sainsbury was a Jewish owned company with links to Israel were printed by local newspapers and spread like wildfire.

The company became a target of demonstrations, and in some cases its stores were stoned by demonstrators against Israel.

More malls

Mr Galal is diplomatic in his analysis of why Sainsbury failed to tap into the kind of demand his malls are attracting.

"I think other groups went a bit too quickly in penetrating the market," he said.

"Egyptians are very picky. They would like to know very much who they're dealing with before they deal with them."

And the group is building more malls in other parts of Cairo and one in Alexandria.