Dubai: Emirati hypermarket operator Lulu ensures its supply pipelines run smoothly. This time it has opened a food processing and export center in Milan, Italy, as the retailer expands its supply arrangements across Western Europe.
It previously opened bases in the UK and Spain, to accompany all the other centralized sourcing arrangements Lulu has in place in Asia and elsewhere.
The Milan base is located at the Malpensa Airport of the World Trade Center and will focus on the sourcing, processing, storage, packaging and export of food products from Italy to “more than 255 Lulu hypermarkets spread across the GCC countries, Egypt, India, Indonesia and Malaysia.” ‘.
“As a key food security partner in the Middle East, our continued strategy is to establish our own food sourcing and processing units around the world to ensure uninterrupted supply,” said Yusuffali MA, President- general director of the Lulu group. “And guarantee competitive prices by eliminating middlemen.”
In the near future, the retailer is considering options to expand its base in Europe by adding Germany, Greece and France. (No firm deadline has been set.)
Lulu recently categorically rejected any suggestion that Western Europe represents the next big opportunity for a retail presence through its hypermarkets. Instead, the focus has been on creating food sourcing and processing centers to feed the store networks it operates elsewhere. This remains the case even with the move to Italy.
For the moment, we do not plan to launch Lulu hypermarkets in Europe. That’s not the same as saying we’ll never do that.
– Yusuffali MA from the Lulu group
“We will initially export 50 million euros and hope to reach 200 million euros within 2 years,” Yusuffali said. “We are partnering with Italian agricultural cooperatives to source our fruits and vegetables, which will surely have a very positive impact on the Italian agricultural sector.
“In addition, this project will also generate significant jobs in Italy.”
Italian business focus categories
The main categories of supply to Lulu’s Italian base will be cheeses, chocolates, jams, sweet and flaky pastries, organic pastas, infused extra virgin olive oil and high quality sea salt sourced from “well-known Italian brands”. Apart from packaged foods, the center will also source and export fruits and vegetables.
The Emirati group is strengthening its retail and supply networks ahead of a planned IPO, the first steps of which have been taken. No specific timeline was provided, but indications suggest that early 2024 could be a good move to make for planning the IPO.
“There are still some markets, like Saudi Arabia, where Lulu could strengthen its retail presence,” one analyst said. “When it comes to Europe, integrating strong supply chains and food processing facilities is an ideal move. In the medium term, Lulu will focus on creating higher revenue streams in markets beyond as the United Arab Emirates and India.”
The Group has a turnover of $8 billion and employs more than 65,000 people across its network. Deloitte ranked it among the 50 fastest-growing retailers in the world.