After a two-year hiatus, Admic, the $100 million retailer that brought us BHV and Monoprix, is making its next move. This month sees the opening of a third 2,250m2 Monoprix in Zouk, while in November, Monoprix number four, with 3,600m2, will open its doors for business in Hazmieh’s Baabda Plaza. But why the wait, especially with its main competitor Spinneys opening roughly 18,000m2 in Beirut, Tripoli and Sidon? A case of the tortoise and the hare, maybe?
“We have been conservative in our expansion strategy,” explains Michel Abchee sitting in his Jnah office. “We wanted to make sure it was underpinned with a solid financial plan.” With Lebanon’s supermarket sector shaping up like a chess game, it is easy to see the strategic reasons behind Admic’s latest moves. Firstly neither Monoprix nor Spinneys have ventured into the Zouk, Kaslik, Jounieh area, and although Spinneys’ flagship is located in nearby Dbayeh, retailers admit that Keserwan shoppers cannot be counted on to venture beyond the Nahr el Kelb tunnel. Secondly, Admic’s presence in Hazmieh will pre-empt a 15,000 m2 Spinneys in the same area, slated for Spring 2004. The big guns however, remain in reserve. This month also sees the beginning of a marketing campaign for Admic’s $70 million, 175,000m2 indoor shopping mall at Nahr el Mott near Dora, which is due to open at the end of 2004. Furthermore, Admic still intends to bring French department store Les Galeries Lafayette to Beirut, where it is hoped it will eventually anchor the long-awaited Souks project in the BCD. Potentially the jewel in the Admic crown, Les Galeries Lafayette should have opened, had the Souks shopping mall not stalled over the issuing of building permits. “It is a shame, but these things are out of our hands,” shrugs Abchee. With 60,000m2 of gross lettable area (GLA), the Nahr el Mott mall is the biggest retail project in Lebanon, outstripping the Souks, which is expected to have around 55,000m2 of net retail space and dwarfing ABC’s 30,000m2 Ashrafieh mall and the Metropolitan City Center, which has allocated 25,000m2 for shopping. Admic’s Nahr el Mott mall will house an 11,000m2 Geant Casino hypermarket and an 18,000m2 BHV department store as well as 90 other retail units.
“It will be a genuine regional mall,” says Abchee, who insists that the issue of location has been thoroughly studied. “Look at the map and tell me that all roads do not lead to Dora,” he says, pointing to an architect’s model of the project. “The immediate catchment area is still Beirut, as the mall’s sheer size should ensure that it generates traffic from outside the immediate and primary catchment zones.”
Theoretically, his choice of location makes sense. According to what figures are available from the Lebanese statistics bureau, Greater Beirut and its northern suburbs represent Lebanon’s biggest spenders with 45% of the nation’s residents earning 60% of its income. Still, Abchee is used to flying in the face of conventional wisdom. The original pitch for the Jnah complex was met with skepticism. “No one believed people would travel to Jnah to shop, but it has become one of the most accessible areas in Beirut.” At $70 million, the project has gone over budget by around 10%, but Abchee is philosophical. “It is unfortunate that we got caught by the strengthening Euro, the introduction of VAT and a load of other new laws that have levied us at every turn.”
Admic began revolutionizing Lebanese retail in December 1998, when it opened BHV, the home furnishing and appliance-driven department store in Jnah. The store was the first phase of the one-stop-shop formula envisioned by Abchee and his two brothers Pascal and Gaby. Monoprix opened upstairs in early 1999 and the rest is history. “We used to come here on holidays and notice that there was no organized shopping,” says Abchee. “We felt we could change all that.”
It was a bold assumption, but the “BHV effect” has changed the way the Lebanese shop and the three stores – a Monoprix branch opened in Ashrafieh at the end of 2000 – turn over $100 million annually.
“We wanted to create Lebanon’s first one-stop-shop and in doing so, we also tapped into latent or unconscious demand,” says Abchee. “People suddenly decided they liked to spend on DIY and this led them to look at shopping in terms of lifestyle.”
More significantly, however, is that the BHV/Monoprix alliance in Jnah has seen the area begin to develop into a thriving – albeit shambolic – retail hub. “One of the main problems is the lack of planning,” says Abchee. “Jnah is evolving. Tahan and Homeline are here and soon Spinneys will open, but the planning is non-existent. It will be a while before we meet the international norms but this is what is needed.”
Nonetheless, Abchee is determined to bring new standards to a market that he sees as brimming with potential. “There is a shortage in quality retail units,” he says. “We have to respect certain trends and standards of the international retail market if more global brands are going to open here. This is what Admic is trying to do with the Dora mall.”
He has a point. For years the consultants have been preaching larger developments, increased car-borne shopping, better designs, scientific tenant mix, longer and more uniform opening hours, accessibility and parking. Despite the numerous malls that have sprung up over the last decade, only the BHV/Monoprix stores, Dunes in Verdun, the Spinneys (and presumably the new ABC mall in Ashrafieh) outlets currently come close to meeting these criteria.
One area where international standards are being met is the $350 million supermarket sector, where Monoprix, along with Spinneys, are consistently setting new benchmarks in service, professionalism and, most importantly, pricing.
“We [Monoprix and Spinneys] have spearheaded a revolution that has seen the price of fresh food come down,” says Abchee. “The consumer price index has seen prices increase by up to 5% in recent years but food has not even hit 1%.”
Supermarkets make up around 35% of the food spend in Lebanon. However, in most major European countries and the US and Canada it is around 70%, so there is room for a bit more growth. Abchee concedes that Lebanon will probably not hit the 70% mark any time soon and compares it to Italy, which has not embraced supermarkets with quite the same enthusiasm as its northern neighbors. He also scoffs at those who claim that the little (and not so little guys like Bou Khalil) are being squeezed by the big two. “Yes, others have suffered,” he says. “But if you don’t invest or reinvest in your companies, then you will face difficulties.”
As the tortoise might say.
