What’s behind the closure of Carrefour stores in Oman and Jordan?

French retailer Carrefour will no longer operate in Oman, following the closure of its stores in Jordan in November, in a move that could be driven by shifting market dynamics and evolving customer preferences. While Carrefour made the brief announcement this week in an Instagram post, Dubai-based Majid Al Futtaim, which operates the French company's regional stores, did not comment. However, Majid Al Futtaim also said this week that it plans to open its new HyperMax grocery stories across 11 locations in the sultanate. The decision to open HyperMax stores is aimed at catering to local demands, focusing on fresh produce, value-for-money products and greater accessibility for consumers, Majid Al Futtaim said. The HyperMax grocery chain is wholly owned and operated by the Dubai company. Growing competition in the region, with rivals including Abu Dhabi-headquartered Lulu Group and Dubai’s Spinneys aggressively expanding their footprint, could be a reason for the changes, an analyst said. With the Dubai company's agreement with Carrefour Group set to expire this year, it “makes sense that Majid Al Futtaim decides to bet on a regional brand like Hypermax”, Lois Berman, head of research at Euromonitor International, told The National . “Especially considering that direct competitors like Lulu and Spinneys are taking advantage of the capital raised during recent IPOs [initial public offerings] to expand rapidly across the region." Majid Al Futtaim, one of Dubai's biggest private sector companies and the Middle East's largest mall operator, brought Carrefour to the region in 1995 and owns the rights to operate the brand in several countries across the Middle East, Africa and Asia. In May 2013, Majid Al Futtaim Holding bought a 25 per cent minority stake from Carrefour Group in its hypermarket business for €530 million ($546 million). At the same time, the Dubai company extended its exclusive franchise partnership with Carrefour until 2025. Majid Al Futtaim has not announced any updates to the deal since then. Majid Al Futtaim Retail currently operates more than 450 stores in 14 countries, serving more than 770,000 customers daily and employing more than 43,000 people. The Carrefour brand has also come under pressure from the Palestinian Boycott, Divestment and Sanctions (BDS) movement, because of the French corporation's partnership with retailers that operate within illegal Israeli settlements that gained greater attention amid Israel's war on Gaza. The BDS movement claimed that Carrefour's decision to exit from Jordan was predominantly due to its global campaign to boycott the brand, which began in December 2022. The launch of HyperMax in Oman and Jordan was a “strategic decision based on a thorough assessment of distinct market dynamics and a customer centric approach”, a representative for Majid Al Futtaim told The National . The company emphasised the move intends to address the specific needs and preferences of local consumers, including access to locally sourced and cost-effective products. When asked about the future of its other Carrefour outlets in the region, Majid Al Futtaim said it “regularly reviews and assesses its businesses to ensure alignment with evolving market dynamics", but did not disclose any further details. “Our focus now is on the markets where we launched the new brand HyperMax,” the representative said. The retail sector across the Middle East and North Africa is expanding, especially in the Gulf, where sales are projected to grow at a compound annual growth rate of 4.6 per cent to reach $386.9 billion in 2028 from $309.6 billion in 2023, Alpen Capital revealed in a report in September. The growth is expected to be supported by an increase in population, rise in per capita income and boost in tourism activities, Alpen added. This strong growth has led to listings from the likes of Lulu and Spinneys, which are raising financing to fund their expansion. Lulu raised Dh6.32 billion ($1.72 billion) from its initial public offering in November, in what was one of the largest listings in the Emirates last year. The hypermarket chain operator priced its shares at the top of the indicated range, driven by strong investor interest. Lulu, one of the largest supermarket chains in the Gulf, founded by Indian-born businessman MA Yusuff Ali in 1974, operates more than 241 hypermarkets and shopping malls in 10 countries including India, Egypt, Malaysia and Indonesia. Meanwhile, Spinneys started trading on the Dubai Financial Market in May, after an IPO that raised Dh1.37 billion. The supermarket chain, which launched in 1961, operates 75 grocery retail supermarkets under its own brand, as well as the Waitrose and Al Fair brands in the UAE and Oman. Spinneys also entered Saudi Arabia in June by opening its first store in Riyadh. At that time, the company said customers can expect baked goods, meat and meal solutions produced on-site, and locally sourced produce. The wave of retail expansion also includes efforts to foster local talent and entrepreneurship, to boost local start-ups by connecting them with global market opportunities. In September 2023, Majid Al Futtaim introduced the Launchpad X concept store – a collaborative commercial store for entrepreneurs.

What’s behind the closure of Carrefour stores in Oman and Jordan?

Carrefour-operator Majid Al Futtaim set to open new HyperMax grocery stores in both countries