Raya Trade Company plans to expand in the food sector in the upcoming phase. It also hopes to expand in the electronics sector after acquiring the franchising rights for Lenovo in Egypt.
Bassem Mogahed, CEO of Raya Trade, said during the upcoming period the company will focus its investments on providing payments through instalments through its larger outlets, as well as focusing on online electronic trade.
Mogahed believes mobile sales in 2016 will be lower than the sales recorded in 2015, wherein the total number of sold devices was 17.5m. Raya Trade also targets a 20% market share of mobile devices distribution, compared to 10% in 2015.
What are your plans to expand the company’s megastores?
Home appliances and electronic device retail outlets (megastores) have recorded major success in the past period, despite the unstable economic conditions. Consumers have a clear need to buy devices with payment facilitations (instalments), which has pushed us to continue our expansions in the sector.
According to our current plans, we will launch five new outlets in Cairo and Delta governorates, including Tanta and other cities. We are currently undertaking comparison studies between Zagazig and Mansoura to determine where our next megastore outlet will be. After making the decision, we will have a total of 10 outlets.
Why are you expanding your megastores?
Megastores provide us with the advantage of a larger display area, as well as the opportunity to sell numerous products, whether small electronics or home appliances. These stores also focus on products that consumers consider as essentials, like refrigerators and washing machines, and they allow them to purchase these products in instalments. Currently, there is a great demand for payments in instalments due to the recent economic conditions. The effects of these conditions are very evident in terms of the poor demand, especially in the past six months.
What are your expansion plans of Raya’s outlets for electronics?
We will open two new outlets in the Fifth Settlement and 6th of October City this year.
How do evaluate see the status of the retail market at the moment?
Currently, the market size is shrinking due to the decline in purchase rates by consumers, in addition to some companies reducing their investments. We are working on increasing our investments in order to maintain our market share of retail sales. We will be able to increase our retail sales through focusing on sales in instalments, as well as paying attention to electronic trade through the websites for Raya’s retail outlets.
How do you plan on confronting this slowdown in sales in the retail sector?
We are exerting further effort to increase our market share through acquiring the franchising rights of new product brands. Recently we acquired the franchising rights for Lenovo smartphones. We will begin launching their products within two weeks. As such, we have acquired franchising rights for two brands in the mobile market: Microsoft (Nokia) and Lenovo.
We have also launched our own tablets, named Sary. We also plan to launch televisions under the same name.
We plan to cooperate with our sister company Aman, which operates in the sector of e-payments, by introducing its payment points in our retail outlets.
Moreover, we are working to penetrate new sectors in retail, such as food products. We have already acquired the franchising rights for a Polish pasta company named Macaroni. We also own the distribution right for Nestlé products, and we have our own trademark for tuna products, named Tunato.
Why did you choose the food sector?
The food sector may be less profitable than the electronics sector; however, it is more stable, at least currently. The reason may be because such products are always the least affected by crises, since food products are essential for consumers. Moreover, we have a good infrastructure in the distribution sector, with 15 distribution offices and 10,000 points of sale.
When will you launch the Macaroni products in the market?
Currently, we are working on fulfilling the conditions stipulated by the state for importing. We hope to launch Macaroni’s products within two months. We are also looking into the possibility of acquiring franchising rights for cooking oils.
Why resort to imports, despite the current obstacles?
There were already many import obstacles, but it was necessary to expand our investments in the food sector. This is why Raya Holding is conducting feasibility studies for the establishment of a pasta factory in partnership with a European company, in addition to its partnership in another pasta factory with the European Union (EU).
Is there still a demand for Microsoft mobile phones?
In fact, the company is still the biggest in terms of sales of mobile phones, owing to the sales of its traditional mobile devices manufactured under the Nokia brand, as well as reasonable smartphone sales for devices that run on the Windows Phone operating system.
What is your opinion the government’s decision to increase customs tariffs on some household products?
The decision is positive for goods that have domestic alternative, but there are goods that have no domestic alternative, such as mobile phones. At the same time, it is a major commodity and not a luxury, but the procedures for importing mobile phones must be re-evaluated.
This decision will encourage international manufacturers of home appliances to manufacture products in Egypt, especially as Egypt is an important market for the majority of those companies, such as Samsung. Therefore, creating a positive investment climate through simplifying the mechanisms of transferring corporate profits abroad is necessary.
We are currently in discussions with Samsung over manufacturing household products locally, and we asked that they participate in the factory investments.
What is your market share of mobile phone distribution?
We control almost 10% of mobile phone distribution in the Egyptian market, and we expect that our market share will increase to 20% after we acquire the rights to Lenovo.
What does Raya Trade offer in after-sales services?
We offer maintenance services for many of the brands in the Egyptian market, such as Nokia, Samsung, Acer, Asus, Huawei, and Lenovo. As such, we provide the 60% of the maintenance services in the mobile phone sector, where we provide maintenance for 400,000 consumers annually.
What is the size of mobile phones market sales over the past year? What are the expectations for the current year?
During 2015, 17.5m mobile device were sold in the market. We expect the market sales to register the same number in 2016. This is due to the decline in the value of sales, according to the expectations of numerous research institutions. Moreover, the dollar price of mobile phones has declined, due to the launch of smartphones by other brands at lower prices, while smartphones continue to acquire a larger share of mobile phone sales than traditional devices.
Have you begun to increase the prices of mobile devices?
We have already raised by 4% the prices of 30% of the Microsoft devices that we sell.
What are your expectations for the company’s sales growth during the current year?
Last year we were able to record a 30% growth in sales, having recorded one of our highest profits in years. This year, we expect our sales to increase by 15% compared to last year.
What share of revenues does Raya Trade contribute to Raya Holding?
Raya Trade is comprised of five companies: Raya for Maintenance, Raya for Food, Raya for Distribution, Raya for Electronics, and Raya for Maintenance in Nigeria. These companies contribute approximately 80% of Raya Holding’s revenues.