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RIYADH: Dubai-based supermarket chain Spinneys has made its debut in Saudi Arabia, opening its first store at La Strada Yard in Riyad.

The 43,520 sq ft flagship outlet in an upcoming mixed-use development in Riyad marks the beginning of Spinneys’ expansion strategy in the capital and Jeddah, which aims to meet the growing demand for high-quality food products across the Kingdom.

The company said its first store aims to provide a “premium shopping experience” with a wide range of imported goods, locally sourced products, international brands and an exclusive private label range.

This comes after Spinneys’ initial public offering on the Dubai Financial Market, initially valued at $375 million, was oversubscribed 64 times, reaching $19.33 billion last month.

“We made our ambitions in the Kingdom clear at the time of our IPO and they are now becoming a reality. We see huge white space opportunities in Saudi Arabia, where sector growth is supported by favorable macroeconomic and consumer trends,” Sunil Kumar, CEO of Spinneys, told Arab News.

He emphasized that the local food market is seeing a rapidly growing demand for fresh, high-quality offers that perfectly match their expertise.

“By entering Saudi Arabia now, we believe we will gain an early-stage advantage and establish Spinneys as a leading premium grocery company,” he said.

Kumar revealed that the company has ambitious goals for its inaugural store, with the aim of achieving a level of performance similar to one of its key community stores in the UAE.

“We expect that Spinneys La Strada, as our first store, will benefit from attracting customers from a broader geographic base than would be the case in a city where we already have an existing presence,” the CEO said.

He added: “Our immediate goal is to offer customers in these areas a truly differentiated shopping experience, with a particular focus on fresh, premium food, convenience and exceptional service.”

He highlighted the company’s on-site production capabilities in La Strada, which are expected to increase economies of scale and are key to its fresh food offering and profitability.

“These facilities will play an important role in providing fresh food to other locations in Riyad as we expand across the city,” Kumar added.

Spinneys operates a total of 79 stores in Saudi Arabia, the United Arab Emirates and Oman, with a total sales area of ​​880,000 square feet across all markets.

The company aims to open three additional locations in Riyad and Jeddah by the end of the year, which will allow it to operate up to 12 stores in Saudi Arabia by 2028.

Following its flagship La Strada location in Riyad, Spinneys’ next project will be an 11,636-square-foot store in the King Abdullah Financial District in Riyad.

The company also aims to open 25 new stores in the UAE between 2024 and 2028, with new launches and expansions underway recently.

Kumar explained that their strategy includes developing look-alike stores, leveraging white space opportunities and introducing the Kitchen by Spinneys concept, as well as growing the Spinneys Swift hyperlocal e-commerce channel and optimizing operational efficiency.

Saudi market

In terms of locations, Spinneys wants to focus on strengthening its presence in Saudi Arabia’s richest and most populous cities, namely Riyadh and Jeddah.

“There are several reasons for this. First, they are economic powerhouses and population centers, with Riyad accounting for 27 percent of the country’s population and Jeddah 25 percent,” Kumar said.

He further highlighted the Kingdom’s significant expatriate population, which currently stands at 42 percent and is expected to reach 50 percent by 2040, which he said is an “important factor” for Spinneys’ market offering.

“Second,” he continued, “disposable income levels in Riyadh and Jeddah are attractive, at around $13,300 and $12,250 per capita, respectively, in 2022.”

He added: “With a projected 6.4% CAGR for the Kingdom’s affluent population from 2022 to 2028, especially in light of our premium position, the purchasing power of families and individuals is important.”

Looking more broadly at the Saudi market, Kumar noted that disposable incomes are rising, inflation is relatively low and transformation initiatives such as Saudi Vision 2030 are driving long-term diversification.

“All this creates a very attractive environment for business development,” said the President.

With a leading position in the UAE, Spinneys plans to replicate and adapt its offering in the growing premium grocery segment in the Kingdom. “Our core store concepts will not differ radically from other GCC (Gulf Cooperation Council) markets, but we have carefully tailored the store experience and product mix to align with Saudi Arabia’s clear preferences,” Kumar explained.

The company says it has conducted in-depth market research to understand Saudi Arabia’s unique tastes, consumer behavior and cultural traditions, which will be reflected in its stores. Kumar said the goal is to offer a “truly localized shopping experience” that combines global sourcing with authentic local style.

Supply chain

The UAE-based company recognizes the importance of establishing a robust supply chain infrastructure and local manufacturing capabilities. It aims to leverage its “vertically integrated” sourcing model, which Kumar notes is a key competitive advantage in other GCC markets.

“We are already ensuring that he plays the same role for our Saudi business,” Kumar said.

The La Strada facilities will supply other stores in Riyad once they open, and Spinneys plans to open its own manufacturing facilities in Jeddah as well. “Our local production model allows us to optimize our supply chain, reduce food distances and maintain the exceptional standards of freshness and quality for which our brand is known,” said the CEO.

The company has “established” relationships with more than 870 suppliers in 44 countries, supported by its own subsidiaries in major sourcing centers such as the US, UK and Australia. “Our customers in Saudi Arabia will benefit from this supply chain in the same way as our customers in the UAE and Oman,” Kumar explained.

Spinneys emphasizes that its diversified global network, combined with its proximity to manufacturers, enables significant cost savings. “It is also a key factor in our commitment to sustainability, minimizing food waste while maintaining the highest environmental and social standards. Replicating Spinneys’ supply chain model in Saudi Arabia is essential to maintaining our competitive advantage,” he stressed.

Possibility of white space

Spinneys sees a significant opportunity to capitalize on the vacant space in the Saudi grocery market, which Kumar describes as “too compelling to ignore.”

Citing third-party research, Kumar highlighted that the total vacant grocery store space in the Kingdom will reach 86 million square feet by 2033, adding: “For comparison, this is equivalent to almost 1,200 Spinneys stores. We’re opening a much smaller number of stores today, but we have plenty of room in what we see as a huge, underpenetrated market that’s ripe for a truly premium offering.”

Kumar emphasizes that it’s not just about white space; points to a powerful confluence of structural factors driving growth in the Saudi retail landscape. “The affluent population within our ‘target market’ is projected to grow at a CAGR of 6.4% to 2028. This means Spinneys’ target market is growing at a rate that outpaces the broader grocery market,” he said.

Spinneys expects its target market in Riyadh and Jeddah to grow at a CAGR of 6.7% from 2022 to 2028, outpacing the broader Saudi grocery market, which is expected to grow at a CAGR of 4.8% over the same period.

Spinneys facilities in Saudi Arabia are operated through a joint venture established in 2022 with Abdul Mohsen Al Hokair Holding Group.

Kumar emphasized: “Our interests are closely aligned and we share the same ambition to make the Spinneys brand a leader in the premium grocery segment in Saudi Arabia.”

He added that their partner plays a key role in navigating the local business and regulatory landscape, as well as identifying and securing the most attractive locations to open stores.

“This is a partnership that we are very excited about and have every expectation that it will continue to grow in the years to come,” concluded Kumar.