RIYADH: Dubai-based supermarket chain Spinneys has made its debut in Saudi Arabia with the opening of its first store at La Strada Yard in Riyadh.
The 4,000 sqm flagship store in Riyadh’s upcoming mixed-use complex marks the start of Spinneys’ expansion strategy in the capital and Jeddah, with the aim of catering to the growing preference for high-quality food across the Kingdom.
The company said its first store aims to offer a “premium shopping experience” with a wide range of imported goods, locally sourced products, international brands and an exclusive selection of private labels.
This comes after Spinneys’ IPO on the Dubai Financial Market, originally priced at $375 million, was oversubscribed 64 times, raising $19.33 billion last month.
“At the time of our IPO, we made our ambitions in the Kingdom clear and these are now bearing fruit. We see a huge opportunity in Saudi Arabia for new markets as industry growth is supported by favourable macroeconomic and consumer trends,” Sunil Kumar, CEO of Spinneys, told Arab News.
He stressed that there is a rapidly growing demand in the local food market for a fresh, high-quality offering that fits their expertise perfectly.
“We believe that by entering Saudi Arabia now we can gain a first-mover advantage and establish Spinneys as the leading premium grocer,” he said.
Kumar said the company has ambitious goals for its opening store and aims to achieve a similar level of performance as 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 wider geographic area than would be the case in a city where we already have a presence,” the CEO said.
He added: “Our immediate goals are to provide customers in these areas with a truly differentiated shopping experience, with a focus on premium fresh food, convenience and outstanding service.”
He highlighted the company’s on-site production capabilities in La Strada, which will lead to greater economies of scale and are crucial to the company’s fresh food supply and profitability.
“These facilities will play an important role in supplying fresh food to other locations in Riyadh 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 selling area of 81,400 m² in all markets.
The company plans to open three more locations in Riyadh and Jeddah by the end of the year, enabling it to operate up to 12 stores in Saudi Arabia by 2028.
Following the La Strada flagship store in Riyadh, Spinney’s next project is a 11,636 square meter store in the King Abdullah Financial District in Riyadh.
The company also aims to open 25 new stores in the UAE between 2024 and 2028, with current openings and expansions already underway.
Kumar explained that their strategy includes like-for-like store growth, leveraging white space opportunities and launching the ‘Kitchen by Spinneys’ concept, as well as expanding their hyperlocal e-commerce channel Spinneys Swift and optimising operational efficiencies.
Saudi market
In terms of locations, Spinneys aims to focus on building a strong presence in Saudi Arabia’s most affluent and populous cities, namely Riyadh and Jeddah.
“There are several reasons for this. First of all, they are economic and populous centers. Riyadh is home to 27 percent of the country’s population, and Jeddah is home to 25 percent,” said Kumar.
He also stressed that the proportion of foreigners in the Kingdom currently stands at 42 percent and is expected to rise to 50 percent by 2040. He sees this as an “important factor” for Spinneys’ market offering.
“Secondly,” he continued, “the disposable income levels in Riyadh and Jeddah are compelling, at around $13,300 and $12,250 per capita, respectively, in 2022.”
He added: “Given a forecast compound annual growth rate (CAGR) of 6.4 percent for the Kingdom’s affluent population between 2022 and 2028, and especially given our premium positioning, the purchasing power of families and individuals is important.”
Looking at the broader Saudi market, Kumar noted that disposable incomes are rising, inflation is relatively low and transformative initiatives such as Saudi Vision 2030 are driving long-term diversification.
“All this creates a very attractive environment for business growth,” said the CEO.
As the market leader in the UAE, Spinneys plans to replicate and adapt its offering in the Kingdom’s emerging premium grocery segment. “Our core store concepts will not be radically different from other Gulf Cooperation Council (GCC) markets, but we have carefully tailored the shopping experience and product range to suit the distinct preferences of Saudis,” explained Kumar.
The company claims it has conducted extensive market research to understand the unique Saudi tastes, consumer behaviors and cultural traditions that will be reflected in its stores. Kumar explained the goal is to offer “a truly localized shopping experience” that combines global sourcing with authentic local flair.
Supply chain
The UAE-based company recognises the importance of building a robust supply chain infrastructure and local manufacturing capabilities and is looking to leverage its “vertically integrated” sourcing model, which Kumar says is a key competitive advantage in other GCC markets.
“We are already making sure that it plays the same role for our business in Saudi Arabia,” Kumar said.
The facilities at La Strada will supply additional stores in Riyadh once they open, and Spinneys plans to build its own production facilities in Jeddah as well. “Our local production model allows us to optimise our supply chain, shorten transport routes and maintain the exceptional freshness and quality standards for which our brand is known,” said the CEO.
The company has “well-established” relationships with over 870 suppliers in 44 countries, supported by its own subsidiaries in key sourcing hubs such as the US, UK and Australia. “Our Saudi customers will benefit from this supply chain just as much as our customers in the United Arab Emirates and Oman,” Kumar explained.
Spinneys stresses that its diverse global network, together with its proximity to producers, enables significant cost savings. “It is also a key driver of our sustainability commitment as we minimise food waste while maintaining the highest environmental and social standards. Replicating Spinneys’ supply chain model in Saudi Arabia is critical to maintaining our competitive advantage,” he stressed.
White space opportunity
Spinneys sees the Saudi food market as a significant new frontier opportunity, which Kumar describes as “too compelling to ignore.”
Citing third-party research, Kumar stressed that the Kingdom’s total grocery retail vacancy will reach 86 million sq ft by 2033, adding: “To put that in perspective, that’s the equivalent of nearly 1,200 Spinneys stores. To date, we are opening a much smaller number of stores, but we have a lot of scope in what we believe is a huge, underpenetrated market that is ripe for a really high-value offering.”
Kumar stresses that it’s not just about empty space; he points to a strong confluence of structural tailwinds driving growth in Saudi retail. “The affluent population, which is part of our ‘target market’, is expected to grow at an average annual rate of 6.4 percent through 2028. This means that Spinneys’ target market is growing faster than the broader grocery market,” he said.
In Riyadh and Jeddah, Spinneys expects its target market to grow at an average annual rate of 6.7 percent from 2022 to 2028, outperforming the broader Saudi grocery market, which is expected to grow by an average of 4.8 percent over the same period.
Spinneys stores in Saudi Arabia are operated through a joint venture with the Abdul Mohsen Al Hokair Holding Group, established in 2022.
Kumar stressed: “Our respective interests are closely aligned and we share the same ambition to make the Spinneys brand a pioneer in the premium food segment in Saudi Arabia.”
He added that their partner plays a crucial role in navigating the local business and regulatory environment, as well as identifying and securing the most attractive locations to open stores.
“We are very pleased about this partnership and are firmly convinced that it will continue to grow successfully in the coming years,” Kumar concluded.