Kazyon, a brand of the Egyptian joint stock company Tawfeer for Food Products, is a supermarket chain that is considered one of the largest hard discounter supermarkets in Egypt. Kazyon has been present in the Egyptian market since November 2014 and has quickly been able to spread across Egypt, reaching a large number of customers. With its motto “Less than wholesale price, and close to your home”, Kazyon’s competitive prices and proximity to customers almost everywhere in most Egyptian governorates and neighbourhoods have made it easy for it to have a strong presence in the market in a very short time span. Daily News Egypt sat with the marketing head of Kazyon, Ismail Hafez, who stressed that Kazyon is characterised by its ongoing offers and relatively low prices almost all year long, helping it grow. He expressed his optimism about the size of his business and the promising stability of the economy.
When and where was the first Kazyon store inaugurated?
We opened our first store on 30 November 2014. The first branch was in Cairo on Ahmed Orabi Street in the neighbourhood of Mohandessin.
What is the current number of your branches? Where are they located?
We are now present in 14 governorates across Egypt, including Cairo, Alexandria, Qaliubiya, Gharbeya, Sharqeya, Menoufiya, Daqahleya, Fayoum, Beheira, Beni Suef, Minya, Suez, and Ismailia. Until late 2016, we had 175 branches. Currently, we have 185 opened branches.
What is your plan to further expand your business?
We have a plan to continue to inaugurate a large number of branches over the next five or six years, to reach a total of 1,000 branches or more. This year alone we plan to open 100 new branches.
We are also seeking to double the capacity of our warehouses to be in line with the store expansions. Kazyon currently has two warehouses in 6th of October and 10th of Ramadan cities, and we are currently looking to open new warehouses in the Delta and Lower Egypt.
Do you have a plan to increase your capital or offer shares in the stock exchange?
Increasing capital is never off the table. We have already increased our capital before and that resulted in total investments worth EGP 800m, and the amount is constantly increasing.
Regarding offering shares in the stock exchange, we do not have a plan to do this now.
What makes Kazyon distinctive amongst other hard discounter supermarkets?
First, Kazyon is present almost everywhere now with its large number of branches. This means that we are close to our customers’ homes, workplaces, and basically any place they regularly go to. We serve about 500,000 customers monthly, and customers pay us visits within the range of 1.5 million to 2.5 million visits every month. The quick spreading of our branches has enabled us to create a large customer base.
Second, Kazyon offers its customers the main commodities they look for, but for relatively low prices compared to our competitors in the market. We always aim to have the lowest prices all year long, not just during certain seasons, and this has certainly attracted a large number of customers over our three-year presence in Egypt.
How have the fluctuating economic conditions affected your business?
It is really difficult to tell exactly how much we were affected. Kazyon has only been present in the market recently. Moreover, Kazyon is becoming popular and recognisable over time, which means that the number of our customers increases every day. The opening of new branches often makes it difficult for us to feel any negative impacts.
Additionally, we sell basic commodities, so even under recession consumers will still purchase these basic commodities. This really put us on the safe side. While it is really hard to tell whether or not we have declines in the number of consumers, we know that we are generally growing, not declining, given our expansions.
Sometimes, however, we try to accommodate the changes of prices without making any increases to our products’ prices. Perhaps we can say that this is our contribution to social responsibility. Sometimes we know that a price increase can be too much for consumers to deal with—this is when we decide not to make consumers suffer this increase even if it means a loss for us. This is part of our strategy and system to continue to deliver value to customers—value meaning good quality and good prices, in addition to proximity. This actually helps us maintain our market share.
What are the most prominent challenges and opportunities you see for your business?
The majority of our challenges involve obstacles in the way of our expansion plans. Often we do not find spaces with the specifications required for our stores, such as the location. We need a location where entrance and exit of both customers and goods is not a troublesome matter. We also need a location that is visible and close to homes. We need it to be at least 250 meters wide. Then of course there is the step of obtaining permits and licenses, which requires time. All of this affects the speed at which we open our branches. We mainly depend on our pervasiveness in terms of profits, given the fact that our profit margin is very low, so it is essential for us to spread as quickly as possible, but this is often a challenge.
However, we are very quick in terms of preparing the place we rent for its inauguration. From the moment we sign a contract, we start with preparations and it takes us two weeks at most. This happened twice in 2015 and 2016 where we managed to open 18 branches in just one month.
For us in Kazyon, with the expansions of branches, we learn more about what causes problems and how to overcome and deal with them. We understand that some areas may be difficult to inaugurate branches in compared to other areas for example, or that the branches should be designed in a certain way at a specific area to get the most benefit out of them, and so on. Now, more than ever, we are starting to make better choices in terms of choosing the locations and areas of our branches.
The various governorates represent a great opportunity for our business. We already cover geographically large areas and we are the most widespread supermarket. This, in turn, helps us understand the needs of people, and this gives us an advantage over our competitors because we are always present before they are, making us more popular with customers.
We also get comments from customers, saying that they may have lived somewhere and moved out elsewhere, only to find Kazyon near their new home. Kazyon is always there, and we carry pride in that.
Moreover, many companies communicate with us and seek partnerships with us, encouraged by our spread.
What are the challenges facing the entire retail sector in your opinion?
The shortage of specific products represents a large issue for the entire sector. The prices of these products are usually very high once they are available for consumers as a result of the previous shortage, and this puts pressure on customers.
What is your opinion of the current investment climate in Egypt?
I believe it is improving, which has already been proven to be true by many international institutions that issue reports noting that investments might be flowing more steadily into Egypt. There is relative stability, and the reports are more positive right now, sending assuring messages to investors. After all, investors want to make sure their investments are not in danger. There were predictions over the past period that the dollar will increase, but the rate the dollar is currently standing at is actually good in my opinion. While this might not be the most suitable rate the dollar can reach for businesses in Egypt, I personally believe it will continue to improve over the upcoming period.
Dollar rate fluctuations affect importers and manufacturers the most when it comes to pricing, and makes any decision-making difficult for them. This repeatedly happens now with the constant changes of the Egyptian pound’s value.