‘Our sourcing policy creates opportunities for small businesses and farmers’
Umer Lodhi is the Country Manager of Carrefour Pakistan at Majid Al Futtaim Retail. He has over 26 years of management experience in various capacities and assumed his current role in August 2021. Lodhi has been associated with the Utility Stores Corporation, Metro Cash & Carry, Daewoo Pakistan, Fatima Fertilizer, Unilever Pakistan and Shell, to name a few.
Following are the edited excerpts of a recent conversation BR Research had with Umer Lodhi:
BR Research: What is the retail landscape like in Pakistan? Can you touch upon the current trends, growth and benefits of modern retail trade to the country?
Umer Lodhi: According to the Federal Board of Revenue (FBR), the retail market accounts for an impressive 18 percent of Pakistan’s national GDP. Furthermore, a recent report published by the Chain Store Association of Pakistan revealed that the retail sector makes up 33 percent of the service industry and approximately 16 percent of the local labor market share. Looking at these figures, it is safe to say that the retail sector has significant economic importance. The retail industry not only has a critical role to play in the modernization of the services industry, it also has trickle down benefits such as supporting small to medium sized local businesses and importantly, enabling job creation.
BRR: How has the pandemic affected modern retail practices and the digital grocery market particularly in Pakistan?
UL: The Covid-19 pandemic has catalyzed significant change in the modern retail ecosystem. Notably, we saw a rise in consumer demand which shed light on ineffective supply chains.
In Pakistan, we witnessed a massive surge in digitalization during the pandemic. Most retailers tried to catch up with demand rising out of restricted mobility from lockdowns, and promptly tried to expand their e-commerce solutions to maintain consumer engagement.
At Carrefour, we have always known that technology has the potential to completely transform our industry. That’s why we’re investing in products and services that allow us to combine the physical and the digital while keeping in mind that the needs of our consumers are our top priority. The pandemic has accelerated digitalization and has helped shift the mindsets of retailers and consumers.
In March 2020, during the first wave in Pakistan, we were able to launch our online shopping app. Our online orders increased by more than 70 percent in the first few weeks, reflecting the strong shift to online shopping. It was evident that shoppers prioritized their safety and enjoyed the convenience that online shopping offers.
Two years into the pandemic, we can conclude that customer orientated services that prioritize safety and convenience, tend to yield the most success. Carrefour Pakistan was ready to jump on the e-commerce revolution and was able to tailor services in response to consumer requirements, delivering products efficiently and without disruption.
BRR: Can you tell us about Carrefour’s presence in Pakistan and the region?
UL: We are fully owned by UAE-based Majid Al Futtaim, who holds the exclusive franchise rights to operate Carrefour in the Middle East, Africa and Asia. Today, our 37,000 colleagues serve customers across 17 regional countries. We pride ourselves on being from the region, for the region.
BRR: How do you define Carrefour’s vision and objectives in Pakistan? What is your retail model?
UL: Our vision for future expansion is to introduce more standalone stores across all major cities in Pakistan, and to offer international standard shopping experiences to all Pakistanis. The progress of this vision was recently celebrated during the grand opening of our tenth standalone store in Gujranwala, which also received overwhelming support from the local community.
Our pricing model is focused on creating unbeatable value for our shoppers and offering a range of local and internationally sourced products that cater to their everyday needs. We focus on supporting local and source 99 percent of our fresh produce in Pakistan from farmers and suppliers within the country.
Our value driven approach has helped us expand our customer base while attracting new shoppers from many different communities.
BRR: How much has Carrefour invested in Pakistan?
UL: Our current investment portfolio in Pakistan stands at Rs10.5 billion which was recently updated due to an additional investment of Rs1 billion, and the inauguration of our 10th store in Gujranwala city.
We plan to further our investments in the near future by opening more hyper box stores in other major cities of Pakistan; increasing our local supplier’s base; and creating more job opportunities for the local community. Despite the uncertainty that the pandemic brought, Pakistan’s economic revival has enabled us to keep investing more in our expansion.
BRR: How much global/regional strategies dictate Carrefour’s strategies in Pakistan and what level of localization exists in the model?
UL: Our approach, whether regionally or in Pakistan, has always been to support small businesses, suppliers and farmers associated with retail operations. Our intention is to provide suppliers and farmers with the platform to jump-start their commercial activities and create a direct connection between modern retail practices and local industries to boost economic value for communities.
We wish to share our prosperity, and trade with farmers and suppliers who can sell their products through Carrefour. We continue to uphold high standards and create valuable partnerships. Many of these practices have been applied across the region, and specifically in Pakistan.
BRR: What are Carrefour’s plans over the 5-year horizon for developing countries including Pakistan especially in the digital era? Where do you see modern retail heading in the post pandemic era?
UL: The influx of foreign direct investments (FDI), especially those that revolve around exports and commodity-linked investments, offer a great opportunity for developing countries to achieve economic growth and stability. For a country like Pakistan that in dire need for FDI, there is a need to keep up with changing trends, develop new product offerings, and drive implementation of positive economic change by increasing its regional exports.
Carrefour plans to stay competitive and continuously work towards refining the shopping experience. Supporting and uplifting local businesses to improve their product quality as per Carrefour’s international quality standards is also a priority. This is so they are able to export their products throughout Carrefour’s regional network and consequentially expand their business.
In Pakistan, we source 99 percent of our products from more than 700 local suppliers. Carrefour strongly believes in establishing local partnerships and the value it brings to accelerating economic growth. Our sourcing policy has a direct impact on our local supply chain which creates growth opportunities for hundreds of small-scale businesses and farmers. On a regional level, we’ve developed a wide range of over 1,300 products manufactured in the UAE, Egypt, Pakistan and Lebanon under our Carrefour brand. By enabling communities and creating new employment opportunities, Carrefour is a key player in the country’s retail market and continues to go from strength to strength.