December 31st 1973 is a date that Yusuffali MA, Managing Director of leading retailer, LuLu Group International, will never forget. Having bid farewell to Mumbai seven days earlier, the “Durma,” a small passenger vessel, arrived at the bustling shores of Dubai on the eve of a new year. A land abuzz with pioneering ambitions awaited, personified by a young man from Kerala, south India, as he prepared to step foot in a nascent country where he would one day build not only a life but a retail empire. Forty years on, from modest trading outfit to retail giant with a turnover of $4.5 billion in 2011, Yusuffali and his famed LuLu brand are coming full circle. While securing his group’s Middle Eastern status through expansion and consolidation, the man touted as the most influential Indian in the UAE is taking his country of birth by storm.
A 30,000-strong workforce, 105 stores, and thriving business across 24 countries: the fruits of Yusuffali’s labors speak for themselves. Now, the veteran retailer is exporting his hard-earned Middle Eastern success back to India with a 2.5 million square-foot mall located in the city of Kochi. Built on an investment of over $289 million, LuLu Mall, one of India’s largest, comes equipped with a 22,000 square foot entertainment zone and 5,000 square foot ice rink, reminiscent of some of the UAE’s most loved retail and recreational hubs.
Quenching the retail thirst of a burgeoning population (over 33 million in Kerala alone), the reaction so far to LuLu’s latest offering which opened in March, befits the achievements of a man who has earned his rightful place amongst FORBES’ richest, with a personal net worth of $1.5 billion. “The initial response has been absolutely phenomenal and we are very upbeat about our expansion [in Kochi],” enthuses the 57-year-old tycoon.
However, for a businessman who has spent more of his life blazing a retail trail through the GCC from supermarket to super mall than he has in his country of origin, taking an eye off the Middle Eastern ball is simply not an option. You don’t become a self-made billionaire unless you learn how to juggle. Indeed, those who think taking LuLu to the Indian sub-continent signifies the end to Yusuffali’s Middle Eastern odyssey should think again.
The group may boast a seemingly endless stream of stores across the Arab world, selling goods from groceries to furniture, but true to his entrepreneurial spirit, the managing director’s plans continue full force. “We have 13 projects in various stages of completion to be launched this year,” asserts the MD whose commercial eye was nurtured under the wings of an intrepid, business savvy family.
In addition to new hypermarkets in Sharjah, Fujairah and Abu Dhabi, Yusuffali’s retail juggernaut is poised to open a new mall in Abu Dhabi’s western region. Meanwhile, beyond the confines of the UAE, seven more LuLu hypermarkets are also set to open in Saudi Arabia, Kuwait and Oman, promising to nudge the group’s market share in the organized retail space above 32% this year.
But LuLu’s success has far wider reach. A recent report by Deloitte entitled Global Powers of Retailing 2013: Retail and Beyond identifies the world’s 250 largest retailers. According to the study, LuLu Group International counts as the ninth fastest growing and 213th overall, with CAGR of 30.5% between 2006 and 2011, along with 52.1% revenue growth in 2011. Fellow Indian-UAE hybrid, Landmark Group, stands as the 16th fastest growing and 193rd on the list. More broadly, the Middle East and Africa recorded 29% retail revenue growth in 2011, with the region accounting for 2.8% of Deloitte’s top 250.
Alpen Capital affirms the Middle East’s affinity for retail, particularly where the GCC is concerned. Predicting GCC supermarket and hypermarket sales of $59 billion by 2016, Mahboob Murshed, Managing Director, Alpen Capital (ME) Limited anticipates strong growth for the retail sector at large. “We expect the GCC’s retail sales to grow between 2011 and 2016 at a CAGR of 7.7% to reach $270.3 billion by the end of the forecast period,” he remarks.
According to Murshed, there are several contributing factors including a consistently expanding and young population base, along with growing urbanization. Combined, he explains, “These factors make demographics of the GCC highly attractive for retailers of both essential and discretionary products.”
As retail culture shifts, the drivers of growth are no longer traditional outlets but large malls, hypermarkets and supermarkets—areas where Yusuffali and his team excel.
Even during the lows of global recession, Yusuffali’s retail powerhouse was spreading its wings, opening 23 hypermarkets and shopping malls in the last three years across the major cities of the Gulf. Recalling the tough conditions induced by economic crisis, the MD stresses that not a single project was shelved. The secret to the group’s success in testing times, he explains, is maintaining clear focus, and resisting the lure of quick money—a vice that has led many companies down a rocky road of ill-conceived diversification, to their peril.
“I am very clear, stick to our core business and diversify only into related fields,” remarks Yusuffali. “As I have reiterated many a time, institutions with strong fundamentals and clear growth plans can always sustain the market,” he adds.
That’s not to say that the Indian from Kerala’s Trichur district is all about supermarkets. Starting out at his family’s modest trading center established in 1960s Abu Dhabi—the emirate he calls home with wife Shabira, their three daughters, and eight grandchildren—Yusuffali’s first experience was in imports and wholesale trading of foodstuff. Looking back, he recalls, “We used to do almost all work ourselves right from loading and unloading to driving around and selling.”
Even the most basic infrastructure was absent in the early days; air-conditioning, of course was unheard of. “We used to sleep on the terrace of our home during summers after pouring buckets of water around to make it cooler,” explains the MD.
The face of Abu Dhabi may have changed a lot since then, but the group’s strength in trading has not. LuLu Group International remains a prominent player in the imports and wholesale segment with its own processing and sourcing offices in strategic locations across the globe. “Recently we opened our UK sourcing office in Birmingham and very soon we will be starting operations in Brazil,” adds Yusuffali.
The advantage of operating such independent sourcing offices doesn’t only boil down to eliminating the middle men in pursuit of quality at the best price; it enables the LuLu group to serve the needs of shoppers more efficiently and maintain supply stability—something Yusuffali regards amongst his biggest challenges. But for the devoted MD, overcoming obstacles is all in a day’s work. Quite simply, he remarks, “Challenges keep us innovating.”
Rising to the challenge of supply chain stability, LuLu’s longstanding leader has set up two cutting-edge warehousing and logistics facilities in the UAE, capable of storing dry as well as cold and frozen foodstuffs—a food security measure for any eventuality, he explains.
Far from food insecurities, however, future eventualities look likely to be of a more positive nature if Yusuffali’s recent success is anything to go by. And the man himself is out to keep it that way. “We have just entered India and that’s a totally new, big growth area for us. And, of course markets such as Saudi and Egypt, where we have limited presence now offer huge potential for expansion,” he remarks. Back in the UAE, with presence already in each of the country’s urban centers, Yusuffali is taking LuLu deeper into the Emirates, reaching new and isolated communities in line with the government’s vision of self-sufficiency.
Meanwhile. whether on Emirati shores or Egyptian soil, online shopping is transcending borders. According to entrepreneur empowerment platform, Wamda.com, e-commerce spending across the Middle East and North Africa reached $9 billion in 2012 and is estimated to hit $15 billion by 2015. This is a reality that that LuLu’s managing director is turning into opportunity.
Priming his group to capitalize on the online upsurge, Yusuffali is entering the world of e-commerce with the recently-launched LuluWebstore. Excited by the prospects ahead, the MD sums up, “In a nutshell we will continue to do what we are best at and at the same time add more value by evolving to adapt to new market changes.”
In fact, adapting to change has been a cornerstone of Yusuffali’s success. In 1973, an ambitious young man from southern India arrived on the shores of the UAE, going on to navigate the twists and turns of rapidly changing resources, infrastructure and demands. Four decades, 105 stores and over $4.5 billion later, the early days were the times that the man now synonymous with retailing success cherishes most.
“Those hard days, I think have played a key role in making me more determined and bold enough to face the future challenges. Those were the days of excitement as well as anxiety,” he explains. The anxiety that accompanies new ventures in foreign lands may have dissipated, but excitement is in no short supply as one of the UAE’s most prominent Indians continues to spread LuLu success from the birthplace of a retail empire, to the birthplace of a retail magnate.