How the private sector powers fashion and retail in Cairo
Much of the world might not feel like Egypt is booming, but you don’t have to force yourself to see the country changing fast …
From the large infrastructure projects the government is investing in, Egypt is on a new path of vast growth. And it’s not just government, the private sector is fueling growth in fashion, retail, and food and beverage. Marakez, real estate developer; Platform, a commercial and retail project management company, and the European Bank for Reconstruction and Development are such entities that power retail in Cairo.
A factor that also contributes to the growth of retail is that Egyptian law requires that for every real estate complex or project there is a shopping area. Egypt is a high consumption market where Egyptians like to go out shopping and eating, so this law is beneficial for the private sector. With a mix of pure Egyptian brands, to international brands already present in or entering the country, this creates healthy competition.
With population growth of 2% per year in Egypt, the middle class is emerging, there is a displacement of the population from different places in Cairo, secondary cities are increasing and consumer preferences are changing. “Globalization is really having an effect; The Internet really has an effect on people’s preferences ”, says Basil Ramzy, CEO of Marakez.
Maria Muñoz, co-founder of Maison Pyramide also sees growth in the country. “The private sector really helps these talents to develop by investing in them, giving them visibility, or giving them a platform to present, organize their retail business, give them access to information and secondary markets. she says.
Marakez is one of the Middle East’s real estate developers, owned by Fawaz Al Kokair, the largest mall operator in Saudi Arabia and the region. When they arrived in Egypt, they wanted to open a mall in Cairo and they quickly realized that the development of shopping malls in Egypt is very different from that in Saudi Arabia. Building a local team that knows the market to manage what they do was key. “What we’re trying to do is create places where there’s a lot of energy and where people are drawn. We see ourselves as a mixed-use development developer.“, says Ramzy.
Shopping and retailing are at the heart of engaging people. “A city center is not a city center without commerce. What we are trying to do is create places where there is a lot of energy, where people are drawn ”, Ramzy notes.
The Covid era has affected their economic model, a model based on bringing people together in offices, shops or communities. “We feel how powerful our business model is because we are limited to applying it as we wish. ” But, Marakez’s director of marketing and innovation, Ashraf Makiad, is hopeful. “Corona’s recovery was shocking and it was really quick. We are now above last year at the same time.
“We have a great regional shopping center, the Mall of Arabia in the 6e October and we have a mall in Tanta, we have another regional mall that we are building in New Cairo that is about to launch, and we have an upcoming mall in Mansourah, ”Ramzy shares. “We are the only developer to create regional shopping centers in the secondary cities – Tanta and Mansoura. When it comes to our regional malls in Cairo, we have the highest percentage of local retailers than any other developer in the region. We love the mix of international and local retailers.
After the Egyptian revolution of 2013 and 2014, the company believes in the underlying macroeconomics of Egypt, “We strongly believe in the country and we are on an expansion project,” says Ramzy. Cairo is a competitive market, but Egypt as a whole has many growth opportunities. We are also developing key locations with small retail destinations. We still have a long way to go when it comes to Egypt ”, he says.
Ahmed El Badawy, co-founder and CEO of Platform for Project Management, is proud of the growth of Egyptian and international brands. “The best I can see now is that there are a lot of Egyptians creating their own brands and they really have a mastery of it, whether it’s food or drink or retail. Our latest project, Capital Promenade, has been running for 2.5 years, I can tell you that 70-80% of the brands there are purely Egyptian (local) brands and they are very successful. said El Badawy.
It is growing thanks to 30 North, a cafe and Mo Bistro, an Italian dining experience started by an Egyptian of Italian descent with experience in food and drink. “The financial cost of building the local brand is cheaper than having an international franchisee to come and operate for you here. We now have a mix between local concepts and international brands that they operate themselves or through a franchisee. The local brand always wants to update and encourage local staff to match international standards. As a result, it makes competition in Egypt healthy.
The revolutions turned things upside down in Egypt, but the retail industry exploded. The Covid era has affected in-store shopping, but online retailing is very good for the economy as people have expressed their frustrations while shopping. “Online retail sales for small and medium-sized brands have maintained 60-70% of their sales while for large brands, online retail has maintained an average of 40-50% of their sales. sales. “
Food and drink have taken a hit this year, but according to El Badawy, “We are now seeing an upsurge in restaurant and retail trade. Retail was back 60-70% and F&B 80-90%, but it depends, there are shisha-related F&B businesses dependent on those sales that get 70% of their sales. , but those that are not that depend on it are back 80-90% on their sales. Because offering shisha in cafes is still prohibited because of the Covid. ”
The European Bank for Reconstruction and Development (EBRD) is a force supporting the development of retail trade in Egypt. “Our mandate is to deliver 2 things which we believe are the challenges facing small and medium enterprises (SMEs) – access to know-how and access to finance. With the right knowledge and the right money, any business could grow, ”says Reem El Saady, EBRD’s senior regional director in Egypt.
The 1,000 SMEs in Cairo, Alexandria and the Delta that they support have 100 to 250 employees, with a turnover not exceeding 250 million euros. Next year, they plan to expand to help SMEs in Upper Egypt known as Aswan. “Almost 75% of the companies we advise have recorded an increase in their turnover. Some of them even reach an increase of 89% ”, said El Saady.
Twenty-five percent of their businesses are run by women. One of these successes is the Egyptian brand Okhtein. “Okhtein is a young company. They tick all the boxes and when they came to us they were lost but growing. We did a diagnostic study with them and today we are very proud of their success.
Their offer is tailor-made and adapted to each SME with which they work. “We don’t have a one-size-fits-all solution for businesses. And over time, we develop strong relationships with our clients and they come back to us for recommendations, consultations and advice, ”explains El Saady.
As the private sector fuels retail in Egypt, it’s important for brands to do their homework and learn how things are done in Egypt before settling here. “A lot of big brands come into Egypt and don’t understand the cultural sensitivities and disappear after a while,“, says Muñoz. The EBRD Egypt and Maison Pyramide provide the business advice businesses need to be successful.”You have to be smart in the way you approach this type of retailing ”, she goes on to say, “Sometimes it’s not the right strategy to give them independent stores, but rather to give them a little space so that they can have a presence. “ With the right team behind a brand, any retail brand can thrive as a private sector business in Egypt’s growing ecosystem.