The discounter segment in Egypt is growing rapidly as the industry steadily shifts away from traditional retail towards modern trade and will see up to 47 per cent annual growth in the coming three years, a report said.

Largely recovered from the political and economic instability of 2011 and 2012, Egypt is back to enjoying a fast-growing economy, added the report titled ‘Egypt’s retail market (cautiously) Back in Business’ from A T Kearney, a global management consulting group.

Egypt is an emerging market with an expanding population predicted to reach 100 million by 2020, with nearly half located in urban areas and highly sensitive customer price points. This has created a demand for discount offerings catering for the demand for retail products in the low to medium price bandwidth, the report said.

Shamail Siddiqi, principal, A T Kearney said: “Overall the Egyptian retail sector has always been a key facet of the economy. By meeting the demands of a growing population it has remained largely intact despite several adversities in the macro landscape. Egypt’s retail market is set to further transform over the next decade. First and foremost we see the discount segment at the forefront of this transformation driven by the current socio-economic situation.”

Earlier this year Egypt re-entered the A.T. Kearney Global Retail Development Index (GRDI - a report used to guide global investments since 2002) for the first time since 2011. Its rank on the GRDI indicates an attractive medium-to-long term value proposition, as the modern retail segment in Egypt is much less saturated than other markets. Retail spend in Egypt is expected to rise from around $1,500 per capita in 2015 to more than $1,800 by end of 2017.

“Forward-thinking investors are investing in Egyptian retail, revealing growing confidence in the sector.” said Mirko Warschun, lead partner Consumer and Retail Practice EMEA, A T Kearney. “This year in particular, we can see the return of investors’ appetite and a surge for the first time since 2010. The country has a strong growth potential and is creating an investment-friendly climate to encourage both domestic and foreign investment.”  

The majority of the investments are taking place near the attractive high-growth Greater Cairo residential areas - one of the fastest growing areas with double-digit growth in yearly population rates until 2020.

According to the report, aside from the discounter segment, other areas of Egypt’s retail landscape also offer growth prospects. The country’s grocery retail market grew by 12 per cent nominally and two per cent in real terms between 2009 and 2015. Supermarkets are the largest modern – trade segment with 12 per cent of sales, while hypermarkets make up a small but fast-growing portion of overall retail with three per cent of sales. This segment is expected to double sales from 2015 to 2019.

“An array of stakeholders is already confident in Egypt’s economic recovery and rapid growth. As the middle class expands and private consumption continues to rise, forward-thinking investors can overcome the challenges and find their mark in a country that is back on the rise”, concluded Siddiqi. – TradeArabia News Service