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Biggest Gulf grocery retailer LuLu prepares to enter Malaysia market

By RJ Whitehead , 14-Apr-2014

Biggest Gulf grocery retailer LuLu prepares to enter Malaysia market

The Middle East’s biggest supermarket chain will open for the first time in Malaysia when Abu Dhabi-based LuLu opens six hypermarkets in the country. 

The first outlet will open its doors in Kuala Lumpur later this year, with the remainder due to start business in different locations starting from 2015. In the long run, LuLu—which operates 110 outlets in the Gulf, Egypt and India—could open up to 10 outlets in Malaysia and employ around 2,000 Malaysians.

The company has grown since it opened its first hypermarket in Abu Dhabi, in response to the arrival in the UAE of Carrefour, to have an annual turnover of $5bn and some 30,000 employees.

Two-way business

LuLu’s local business partner is Malaysian agro-business conglomerate Felda Holdings which will contribute the land bank for the stores and Malaysian products, including sweet potatoes and organic vegetables, to the hypermarkets' Middle East portfolio

The group had agreed to invest US$200m in its hypermarkets in Malaysia,” said Malaysia’s deputy prime minister, Tan Sri Muhyiddin Yassin. 

They will also help market more Malaysian products at their hypermarkets, including those produced by our small-and medium-sized industries.

It is indeed a good opportunity for us as LuLu International is the biggest operator of hypermarkets chain in the [Middle East] with an annual turnover of more than $5bn.”

The group has also agreed to sign contract farming deals with local farmers and entrepreneurs to help supply fresh vegetables and fruits to their hypermarkets.

[LuLu is] interested in buying in bulk highlands vegetables and we may promote the produce from the Cameron Highlands and Sabah,” added Muhyiddin.

Government assistance

Muhyiddin and LuLu Group’s founder, MA Yusuff Ali, have had a long relationship together, going back to the time when the former was domestic trade and consumer affairs minister. 

The politician said Malaysia’s Federal Agricultural Marketing Authority would help identify and promote local fruits and vegetables, while Malaysia Airlines would be asked to provide competitive freight services to transport perishable items to the Middle East.

The authority will also open more collection centres to help buy fruits and vegetables from Malaysian farmers and smallholders. 

Asked whether the opening of the new hypermarkets would affect the existing retail and wholesale industries, Muhyiddin said: “The government had always promoted healthy competition as this would eventually benefit [consumers] with better choices at reasonable prices.” LuLu hypermarkets would only sell halal products in Malaysia.