Riyadh, June 9 - Saudi retail chain Abdullah Al-Othaim Markets Co is eyeing expansion abroad, with Egypt its first target, and will add 20 outlets in Saudi Arabia by the end of 2010, its top executive said.
Othaim will also announce this year a plan to tap into traditional no-frills grocery stores, which account for 80 percent of the kingdom's retail market, Othaim Executive President Yousef Algafari said.
The firm, which owns hypermarkets, supermarkets and convenience stores, is Saudi Arabia's second-biggest retail chain by sales behind Panda Azizia, affiliated to Savola Group and also competes with France's Carrefour .
"We are considering expansion to the Middle East and North Africa," Algafari told Reuters in an interview late on Monday.
"Egypt, we will give it our first priority but we don't think anything will happen in 2009." He declined to elaborate. Egypt is the Arab world's most populous nation.
Othaim plans to increase the number of its shops in Saudi Arabia to 103 by the end of 2010 from 83, Algafari said.
Algafari said supermarket chains in the kingdom account for 20 percent of the Saudi grocery market and the rest is held by about 50,000 small neighbourhood grocers.
Othaim is seriously looking to expand its reach to these shops. "We see a huge opportunity for us to grow. If 10 percent of these grocers are under one company then you will have the purchase power and the negotiation power," he said.
"We are in a very advanced stage of developing something ... You will hear something in the next three months," he added.
Algafari declined to elaborate but said that a retail chain can either acquire some of these grocery shops or even establish a company to operate a chain of convenience stores.
Othaim also rents commercial space within malls it develops. The firm is building two giant malls in the capital Riyadh and the eastern city of Dammam.
Algafari said investment in the two projects will be more than the 350 million riyals ($93.3 million) Othaim spent on a mall in Riyadh which opened this year.
"They (Riyadh and Dammam malls) are bigger," he said, adding that Othaim's grocery retail business was benefiting from some effects of the global financial crisis.
"Grocery retail is the only sector that has not been impacted by the financial crisis in fact it is enjoying the benefits of the crisis because of the decline in inflation and the decline in the global prices (of commodities)".
Othaim's turnover rose by more than 50 percent in 2008 to 3.46 billion riyals ($923 million). Net profit rose 29 percent to 77.1 million riyals.
After peaking at more than 11 percent in July, annual inflation in Saudi Arabia fell to a 19-month low in April, with food price posting the strongest declines.