Strategy Bites: Marwan Moukarzel, CEO, Alhokair Group Fashion Retail

"Alhokair is the only listed business of its type in the Middle East, and we currently represent around 85 brands, spanning from womenswear, menswear, kids and babies, department stores, shoes, and accessories, and a series of restaurants and quick service restaurants."

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Strategy Bites is a series of interviews that LIRA Strategy Partners founder and Managing Director Raffaella Campagnoli is conducting with some of Saudi Arabia's most notable business executives for In this edition, she talks to Marwan Moukarzel, CEO, Alhokair Group Fashion Retail.

Fawaz Alhokair Group Fashion Retail
Marwan Moukarzel, CEO, Fawaz Alhokair Group Fashion Retail

Can you start by giving us an introduction to your enterprise and its operations in Saudi Arabia?

Since the opening of its first store in 1991, Alhokair has grown considerably and now trades in circa 1,684 stores across 100 shopping malls in 11 countries, with a retail platform operating on a total gross leasable area of more than 470,000 sq.m. All of this is managed by a workforce numbering more than 10,500 dedicated employees. Today, we continue to build our position as the leading franchise retailer in the markets we operate in, and to position ourselves as the first choice for regional and international brand partners seeking exposure to strategic markets.

This is demonstrated by the exciting new franchise agreements we finalized during the past couple of years alone, which included Subway (the world's largest restaurant brand), Decathlon, Fnac Darty, Alo Yoga, and Flying Tiger, but also by our transformation into an integrated omnichannel model. Our digital initiatives are supported by the acquisition of Vogacloset, and the establishment of FAS Lab to drive our digital initiatives. This approach will ensure that we provide our customers with tailored experiences that run seamlessly between the physical and virtual worlds.

Internationally, our operations span across 10 countries, and we have seen an impressive rebound in performance, while we continue to migrate some of our existing brands to these markets. Similar to Saudi Arabia, the top-down dynamics in the countries in which we operate, notably countries belonging to the Commonwealth of Independent States, Egypt, and Jordan, are conducive for growth and value creation, with rising income levels, and young population bases.

Alhokair is the only listed business of its type in the Middle East, and we currently represent around 85 brands, spanning from womenswear, menswear, kids and babies, department stores, shoes, and accessories, and a series of restaurants and quick service restaurants. From our current base, we will drive the growth of our F&B network alongside beauty, electronics, and sports to deliver long-term growth and realize our vision to build a true lifestyle brand.

As an enterprise with a heavy focus on Saudi Arabia, how are you and your entity embracing the Kingdom's Vision 2030?

Alhokair is contributing to the agile and sustainable Saudi business landscape by aligning the Company's mission with that of the nation's 2030 agenda. Our approach is threefold:

- We are driving our digital strategy, and deploying our omnichannel model. We see synergy between traditional retail and online, and we know this is what works for our markets. To this end, we are:

- Integrating Alhokair brands on Vogacloset, supported by optimized marketing efforts and a "buy pay later' functionality

- Accelerating the virtual roll-out of all our partnerships with 19 KSA monobrand platforms, and seven international sites set to be live by the end of March 2022, having launched the Decathlon online platform in late 2021

- We are committed to contious talent onboarding, professional development, and career opportunities. Our support towards Saudization goals also continues, and we have now reached a 72% rate, which is equivalent to the Platinum status on Nitaqat. Today, 70% of our colleagues are women, with two senior members reporting directly to me.

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- We partner with governmental and semi-governmental entities to support the SME sector in Saudi Arabia, especially in the F&B sector.

What are the key changes you are seeing when it comes to the business landscape in Saudi Arabia?

Saudi Arabia's retail and F&B sectors enjoy strong fundamentals that are underpinned by favorable demographics, evolving lifestyles, low e-commerce penetration, and the government's ambitious transformation plans. 62% of Saudis are between 15-49 years old, with internet penetration standing at just about 65%. F&B spend of about SAR220 billion in 2021 is expected to grow by 6% per annum over the next five years, supported by a growing tourism sector and a rise in the share of household spend on entertainment.

Saudi Arabia's business landscape is evolving and thus introducing a myriad of opportunities, as the Kingdom drives its Vision 2030 agenda to diversify the economy. We are witnessing a new era of growth and transformation, and I encourage businesses across all sectors to participate in the country's economic development. The recent reforms that have been introduced by the country for different sectors like education, digital transformation, and sustainability enables businesses to engage with these promising sectors. The country is developing fast as a residential, touristic, and entertainment hub with an agile workforce.

What impresses you most about Saudi Arabia's plans for the future, and how are you and your business taking advantage of them?

I love the dynamic nature of our sector and the continuously evolving trends driving it. The ability to bring fresh and new concepts to the Kingdom is really exciting, and you can feel the consumer response that encourages us to constantly look for the next opportunity. Successful businesses also require entrepreneurial leadership. I enjoy developing strong and multiskilled teams from the executive level, right across to our customer-facing colleagues. Great products and services alone can't make you thrive, you need great people too, and I am particularly grateful for our colleagues' continued dedication, especially considering the enormous economical and human pressure that we have all experienced during the COVID-19 pandemic.

We have been agile and innovative during the past two years of major disruption, launching multiple complex and multifaceted projects to execute on our turnaround strategy. We have made great progress in a difficult environment, as demonstrated by our financial and operational performance. I believe that the decisions we took to ensure the company's survival have set us well to drive growth and profitability into the future, and we are on track to deliver revenues of SAR6 billion for our financial year ending 31 March 2022. Of course, external factors beyond one's immediate control add to the challenge of leading a complex international business such as Alhokair. Socio-economic stability as well as reliable supply chains are important factors for a consumer business such as ours, and I look forward to seeing a normalization in the global trade and shipping during 2022.

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