Algeria: A growing appetite for retail
As Algeria’s economy has continued to sidestep most of the global turbulence, domestic consumption has strengthened, attracting an increasing amount of interest in the country. Alongside a shift away from informal retailers, increasing demand for international brands and medium to high-end retail outlets, supported by rising purchasing power, has been a boon for new mall projects.
One such project is being carried out by Swiss-owned Société des Centres Commerciaux d’Algérie (SCCA), which is developing a retail centre in Oran. The project was announced following the success of SCCA’s first large-scale shopping centre in Bab Ezzouar, on the outskirts of Algiers.
SCCA has laid out plans for a 32,000-sq-metre retail and entertainment complex in the community of Es Sénia, located on the south-western edge of the provincial capital. Spanish architectural firm L35 was chosen to develop the facility on a recently acquired 5-ha plot, and construction is expected to begin by the end of 2012. The choice of the site in Es Sénia, located near the University of Oran and the province’s Ahmed Benbella airport, should help to funnel traffic into the shopping area.
The Es Sénia centre will include roughly 20,000 sq metres of retail space, including a 7500-sq-metre anchor store. Another 10,000 sq metres will be dedicated to leisure facilities. The complex’s mix of retailers is expected to be similar to that of SCCA’s Bab Ezzouar shopping centre, which combines a handful of local retailers with international brands.
The centre will be one of the first large-scale, high-end shopping centres outside of the capital when it opens in 2015. This marks a distinct shift in consumption habits by Algerian consumers, given that the informal retail market is estimated to account for roughly 40% of all retail and trade activity in Algiers, with an even higher percentage in other cities.
This is attributed to a variety of factors. In addition to rising purchasing power over the past few years, the population is increasingly “exposed to foreign retail standards through the internet, television and other media, and is demanding high shopping standards,” Alain Rolland, the general manager of the SCCA, told OBG last year.
While Algeria has a variety of shopping areas and markets, Bab Ezzouar was one of the first to feature a large number of international brands and entertainment areas. In the months following its aggressively hyped opening in August 2010, the shopping centre saw an average of 60,000 visitors per day, with a peak of 90,000 people per day during the first few weeks, which coincided with Ramadan, a key shopping period.
Visitor numbers have since levelled off at an average of 25,000-30,000 individuals per day, with roughly 55-60% of all visitors making purchases, according to SCCA.
The steady footfall figures will likely be reinforced by recent government measures to increase purchasing power and stimulate spending. The government raised public sector salaries in 2011 for the second time in two years and introduced subsidies for household goods. In 2010, the IMF predicted a 4% annual increase in household spending through 2013.
While Bab Ezzouar, and in the future, Es Sénia, fit into the higher end of the retail market, Algeria also has a number of current and planned retail facilities aimed toward the mid-range market. The Algerian company Arcofina Holdings is developing a large mixed-use retail and real estate project on the Bay of Algiers, named Alger Médina, which includes a large shopping mall and a hypermarket and should significantly increase formal retail opportunities in the capital’s city centre in 2012.
In addition, Sidar Algeria, a subsidiary of the Saudi-based real estate developer, manages the Al Qods shopping centre in Algiers, which has been a key outlet for the mid-range retail market since 2008. Sidar is currently developing several new retail projects, including a 62,000-sq-metre commercial and business centre in Oran and the development of four shopping districts and centres in the Algiers area.
As long as economic growth and household expenditure hold steady in the face of continued economic trouble in Europe, the Es Sénia project and others will help to capitalise on the expanding retail market in Algeria.