To what extent will you be expanding the number of BinDawood Group branches in the coming year?
BinDawood Group expanded significantly in 2018. We have a total of 67 stores, and in the first five months of 2018, we have opened four stores with six more stores in the pipeline for the year. We will open an additional 10 stores in 2019 and eight are currently being planned for 2020. We have an aggressive growth plan, set three years ago. For three consecutive years, we have opened an average of 10 stores per year, and thus far, we are on target. All these are within the territory of Saudi Arabia, though we have explored opportunities in other regions, specifically, the UAE and Egypt.
How do you collaborate with some of the world's largest brands in terms of knowing what to offer in your stores?
Our approach with international markets in terms of sourcing items is based on the premise of seeking out long-term relationships with manufacturers. Quality is number one for us. In any country, we want to see the best it can produce. Each country or region specializes in certain items. We source from all over the world and have products from the US, Canada, different countries in Europe, the Middle East, Asia, and even Australia. Most of our products are highly recognizable in their local markets. In terms of non-food products, the majority of what we sell is sourced from China, India, and Pakistan, especially textile. Again, we always work to control quality to ensure customer satisfaction.
How is consumer behavior changing in Saudi Arabia and how are you adapting to that?
In addition to changes brought about by Vision 2030, the country is going through socioeconomic changes as well. Shopping is changing, the demographics of the population is changing, and when it comes to imposing taxes or depending more on the local workforce and providing opportunities for youth, many of various factors of the sector are changing. One of the major changes we have seen recently is customers with more access to information. That has led us to change the way we do things in supermarkets in terms of sourcing and showing consumers exactly what they may be looking for. We recently launched a department selling food items for those with allergies. In addition, we are the largest seller of organic products in Saudi Arabia. We are also the first organic bakery in Saudi Arabia, with our license depicting that we are number one. We also recently added a superfood section that features products such as quinoa and chia seeds as well as all kinds of foods high in protein. We are heading toward a major transformation in terms of online shopping as well.
In what ways are you implementing e-commerce strategies?
We decided to go online around 2015. However, it took around one year of planning to build our platform in terms of data warehousing and the application itself. It started as a website, though it has since evolved into an app. Now, a major portion of our transactions take place on the Danube app. That is why we have a separate entity to bring our brands online that focuses; that company deals only with the online side of our business, and the team that works there is completely separate from the supermarket. It makes decisions on an analytical basis. We also use different tools to approach our customers. It's been an extremely successful strategy so far. Today, after one and a half years of online operations, the Danube app is the largest e-commerce grocery platform in the Middle East.
How has the implementation of VAT changes impacted your business?
VAT is one of the major changes the country is going through currently. However, we have been blessed with government support before and during its implementation. The timeframe was lenient and the support we received was extremely helpful. The government held seminars and other activities to help companies transition. Historically, even accounting classes here skipped the coursework involving taxes; therefore, all companies come from a starting point of little knowledge. Helping the country's businesses implement VAT was not an easy task. In fact, it was a very challenging at the beginning. The first impact was on businesses, where VAT forced us to change our accounting systems when working with suppliers. The second impact was on consumers; everyone expected prices to climb, and the perception was generally that they would pay more. Of course, that was not the case. In the first and second month, it was difficult for customers to absorb it, though now consumers are back on track and used to the VAT.
What makes BinDawood different from other retail outlets in Saudi Arabia?
Since we established our business, we have always focused on quality. BinDawood Group started as BinDawood, which acquired Danube over 17 years ago. Over the past 18 years, we grew the number of stores from four to 41, with an aggressive growth plan. BinDawood Group and the Danube name are synonymous with quality and providing the best service. Consumers who seek the best selection of products in terms of hygiene and storage standards need look no further. When we talk about sourcing the world for the best quality products, they can find that here as well. The biggest difference between BinDawood and our competitors is the shopping experience. We are completely different. Typically, stores have boxes, shelves, and normal products. We take it to the next level to give shoppers a unique experience. We make sure the experience is exceptional for every consumer.