Bid to redefine shopping with Dh1bn venture

Whether or not we need another chain of supermar-kets in the UAE is a moot point. However, Riyaz Korath believes not only is there scope for a strong value-added chain of department stores and hypermarkets, but that his new KM concept will "redefine what shopping is all about in the region".

The economic slowdown notwithstanding, the CEO of Korath Holding is ploughing ahead with KM Retail, a new Dh1 billion venture unveiled yesterday. The group has been in business in Kerala, India, since 1961 and in the UAE since 1973, when Chairman Korath Mohammed started a small wholesale unit in Abu Dhabi. It now straddles such diverse sectors as manufacturing, logistics, software development, construction, interior décor and retail, employing 5,000 people. It was consolidated into Korath Holding in 2007.

The group's KM Trading arm already operates a chain of department stores and supermarkets under the names KMT and Al Safa. KM Trading is the third largest retailer in its category in the UAE, Korath says, and posted a turnover of Dh1.6 billion last year, with the entire group aggregating Dh2.45bn. Emirates Business talked to him at the launch.

How many stores are you looking to launch with your new retail concept?

The plan is to open 100 KM retail format stores over the next three years. These will include convenience stores, under the brand KM Daily, supermarkets called KM Value, more trendy department stores stocking fashion and lifestyle products under the KM Experience brand. The DNA of the stores is the same, but each has been named after its core competency. All of them come together in all-encompassing hypermarkets that are simply called KM.

And how far away are we from the first store?

The first KM Daily store opens on May 17 in the Abu Hail area in Dubai, and will be followed by two others within a month, while the first KM Value store opens next month in one of Dubai's prime catchment areas. Both our other brands should be up and running by the end of the year. As we go along, we will add specialty stores such as coffee shops and spas. These will be separate entities, operating under a different brand name.

Your group currently operates across the region as well as in the Indian Subcontinent, so what operational footprint are you looking at for the new brands?

We will be operating 30 stores across the UAE by the end of this year. The first stores outside Dubai will be in Abu Dhabi and Al Ain this July. We are already working on projects outside the UAE; next year we want to open in every country across the GCC. And we will definitely be in India [with these brands] within the next three years.

For the UAE, what does that work out to in terms of retail area?

We are looking at adding around one million square feet by the end of the year, including a new mall in Al Ain.

How is this expansion being funded?

It will cost us Dh1bn over the next three years. It is all self-funded with investments from within the group. We've never taken external financial support.

Obviously the recession hasn't hit you, then?

The slowdown is a fact of life all over the world. And in these times, consumers need value offerings more than ever, which is why we're launching a store for ordinary people. We only began work on the new concepts after the recession hit.

However, to answer your question, we've done fantastically well in recent times and business has increased dramatically over the past three years. We've seen a CAGR of 24 per cent.

Who are you aiming at with the new brands? Where do you position them in what is already a fairly busy and well-segmented marketplace?

We're aiming at everyone who wants fresh food. Our business model is focused on appealing to the middle class, to the ordinary people by combining trend and tradition, by bringing together today's technology with the fresh produce that traditional stores offered and underscoring that with great customer service. You''ll be able to walk into our stores and feel that the oranges, for example, have literally just been plucked off the trees.

And we're not going to sell any products at premium prices; the idea is to be a brand that offers added value. Having said that, the stores are designed to meet international standards in retail experience. They are stores anyone would want to walk into. It's important for me that the people developing the stores want to shop there – if I don't want to go into a KM Daily store, why should anyone else? The biggest challenge is not finding the right products, but getting the ambience right, making the stores destinations in their own right.

The aim is to target the multi-ethnic requirements the Middle East residents.

Does that mean you are not going to stock high-end lines such as organic produce?

On the contrary, organic products are most definitely part of our offering and are being sourced for our stores by our team at Korath Brands.

We're also going green with a vengeance. We've been able to cut electricity consumption by 30 per cent.

Aside from the mall in Al Ain, what else can we expect?

PROFILE: Riyaz Korath CEO, Korath Holding

Riyaz, 27, has been tasked with building on his company's strengths and reaching out to a larger market segment. The diversified conglomerate based in the UAE was founded by Korath Mohammed – Riyaz's father.

Armed with BS degrees in marketing, finance and economics from Boston University, Riyaz has a global MBA with graduate certificate in finance. After a year and a half as an assistant business analyst at JPMorgan in the United States, he returned to the UAE to join the family business.

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