In April of this year TSC, a Kuwaiti public retailer that is part of the Sultan Center, had signed an Asset Purchase Agreement (APA) with ADMIC, the owner of the BHV/Geant/Monoprix stores in Lebanon, and this August the handover took place.
Sultan Center was founded in 1976 as a family business, owned by the Sultan family, and two years later moved into the retail sector. In 1996 the company went public and listed on the Kuwait stock exchange, part of a plan to expand beyond Kuwait. In 1999 it moved into Oman and in 2003 bought the Safeway stores in Jordan.
Lebanon had been part of TSC’s expansion plans right from the start. Indeed, in 1997 the company had begun talks with Solidere about a store in the Beirut Souks project, which is part of the Downtown Beirut reconstruction. But the political instability kept delaying the opening of the Beirut Souks and thus TSC looked for other opportunities in Lebanon, and ADMIC was one of them. “We actually started talking to them one month before the July 2006 War, and nevertheless kept going until we signed the APA,” said Abdul Salam Bdeir, Managing Director Retail at TSC.
For ADMIC, the deal was one with both an investment and commercial aspect. “On the investment side, it was a good exit strategy, and out of the offers, TSC presented the best one. On the commercial side, we decided to sell Admic’s food division, but retain the department store division, in line with our plans to continue the business in Lebanon and expand it in the region,” said Michel Abchee, Chief Executive Officer and General Manager of ADMIC, adding that, “we will soon open a Galeries Lafayette in Dubai.”
As with TSC the Sultan Center has its own brand and did not want to get involved in paying royalties for the Geant and Monoprix brands, it only bought the stores without the names.
Now it will have to convince the Lebanese public that the brand TSC is providing at least the same, if not better, service as the Lebanese were used to receive from Geant and Monoprix. Bdeir is very confident that TSC will soon gain the consumer’s trust. “The existing variety will not only remain but we will add to it. With the exception of the Monoprix-branded products, for which we do not have the license, we will carry all the leading brands from Europe and the US. Already before the handover of the stores we ordered tens of containers from abroad, so that we can immediately fill the shelves.” A full PR campaign is also in the works, which will educate the Lebanese customers about TSC.
The company differentiates its stores into four categories. As Bdeir explained it, “TSC Wholesale is like a warehouse-type store, where you have palettes on the concrete floor and a limited assortment at extremely low prices. Today, this chain accounts for 50% of our retail business in Jordan, Kuwait and Oman. TSC Discount is a discount store, which carries the known brands but at discount prices. TSC Express are the stores one finds at gas stations. TSC Plus, our main format in Lebanon, is a premium store with four pillars: service, variety, quality and value, i.e. a very good quality/price ratio. We even have a program called ‘just ask’ where the customers can ask for anything they want, and we will deliver it to them, even if we do not normally carry it. One person even ordered a boat — and we got it.”
In Lebanon, the four ex-Monoprix stores in Ashrafieh, Verdun, Jnah and Baabda will be TSC Plus whereas for the Geant store in City Mall, TSC has come up with a new concept: TSC Mega. As Bdeir clarified, “It will be the same concept as the previous Geant store, but with different branding and color coding. And in the TSC Mega we will have much more competitive prices.”
Eventually, TSC plans to move beyond the Beirut area. “We are thinking of opening TSC Wholesale stores most probably outside Beirut, perhaps in the Dahye, in the South, the North, or the Bekaa,” said Bdeir.
In acquiring ADMIC’s stores in Lebanon, TSC also took all the employees and their contracts, including the end of service indemnities. TSC is at pains to point out that it provides job security and, as a regional company, of course also management training in its regional branches.
TSC’s plans for Lebanon go beyond supermarkets. “As every country operation has a CEO and management, HR management, IT management and so on, the corporate headquarter does not have to be in Kuwait and we are seriously thinking to move it and the 150 people of the corporate team to Beirut,” Bdeir said, adding that, “Lebanon has the perfect location as it is close to our operation in Jordan, and close to Syria and Egypt, into which we want to expand, and close to Europe from where we import, and from the HR and management point of view Lebanon has the best job market in the region so if you want to recruit really good caliber at a good price around the region, Lebanon is it.”
