Interview: Nabil Chaibi, CEO, Ulysse Hyper Distribution – Carrefour Tunisie
How can grocery retailers adapt to changes in consumer behaviour and expectations?
NABIL CHAIBI: In these times of rampant inflation and declining purchasing power, Tunisian consumers are now, more than ever, in search of lower prices and an optimum price-quality ratio. The development of private labels is essential for offering quality products at competitive prices. Also, grocery retailers must deploy marketing initiatives in collaboration with its suppliers to allow both targeted price reductions and price suppression. This kind of operation must focus on basic, everyday products to maintain the purchasing power of more disadvantaged populations.
Additionally, the authorities will need to work on shortening the distribution chain of fresh products to reduce the number of intermediaries related with large distribution companies. Lastly, fighting speculation, which often causes price spikes, will ensure the affordability of must-have fresh produce in particular.
What measures are necessary for encouraging the development of hypermarkets in Tunisia?
CHAIBI: The authorisation required to open a store in a single-level surface of more than 1500 sq metres is complicated to obtain. Bureaucratic processes should be simplified and expedited to encourage the development of hypermarkets throughout the country. Also, Article No. 5 of the Urban Planning Code should be revised. The code limits the distance of hypermarkets by at least 5 km from the limits outlined in a city’s development plan. Although constraints on land use have already lessened to some extent, other efforts related to delays still require further work.
How will the 2018 Finance Law affect retail?
CHAIBI: The 2018 Finance Law will impose a value-added tax (VAT) increase and other tax increases on individual products. As a result, the law will contribute to fuelling already significant inflation, while draining purchasing power. Since informal trade has a strong presence in the Tunisian economy, the VAT increase will not facilitate the growth of modern trade and will instead favour the parallel market.
The new law also introduced a mandatory employer contribution for social funds of around 2%, which will not only affect the sector’s overall results, but will also slow down new job creation.
What are the challenges hypermarket retailers face in developing online businesses?
CHAIBI: Although there are already a number of new initiatives devoted to the development of online sales in Tunisia, the hypermarket retail segment remains in its infancy, and e-commerce has significant room for growth. Logistics currently represent one of the major challenges for online retailers.
The existing network of supermarkets across the country’s territory will serve as posts for the pick-up and distribution of merchandise. However, in the years to come it will be necessary to establish strategic partnerships with logistics specialists and phone operator to leverage these posts. With the exception of some upscale areas, low purchasing power is also a challenge. Therefore, the development of a stronger middle class will also stimulate e-commerce.
Furthermore, greater market penetration of bank cards and mobile payment methods will result in an increase in the number of online payments. However, it is necessary to first dispel consumers’ fears about security when using credit cards online.
Although malls and supermarkets will remain destinations for shopping, recreational activities and family outings, e-commerce still has a significant opportunity to grow, particularly when it comes to purchasing large products or bulk purchasing. All in all, online retailers need to work on making online purchases accessible and cost-effective for the general population to ensure growth in the years to come.