Circle K Eyes Persian Gulf Growth Plan

LAVAL, Quebec -- Circle K has a firm grasp on cities across the United States and now its parent company, Canada's Alimentation Couche-Tard is hoping to bring the convenience store chain to the Persian Gulf.

Specifically, the retailer plans to open 100 c-stores in the United Arab Emirates over the next four years, according to The National. It has also agreed to a leasing deal in Saudi Arabia that could bring 400 new convenience store/gas stations to that country.

"The convenience sector is seriously underdeveloped in the UAE," said Fahmi Al Shawa, the managing director for Convenience Arabia, the franchise partner for Circle K in the Gulf Corporation Council. "Most small stores do not have a standard offering, branding or unified pricing."

Al Shawa explained Circle K will offer a smaller concept than the major competitors. "The big players are looking at the small supermarket segment," he said. "None are looking at the traditional convenience stores."

Market research firm Euromonitor estimated total grocery sales of US$8 billion (Dh29.38 billion) last year, of which small convenience stores made up $1.3 billion, the news outlet reported. The small grocery retail sector has grown sales 25 percent over the past five years, according to Euromonitor.

Despite the large market in the United Arab Emirates, Al Shawa said convenience stores are mainly independent, family-owned businesses. "There are more than 9,000 traditional, independent grocers in the UAE," he said. "If Circle K can get a 1 percent market share, that's 90 stores, but we eventually should be able to get 2 to 3 percent market share."

The company's plans include 60 stores in Riyadh, with the option of opening up to 400 in Aldrees petrol stations.

Alongside the 100 planned stores in the United Arab Emirates, the total investment in the Gulf will be $30 million to $40 million in the next five years, Al Shawa explained, adding that he hopes to see a return on equity of 15 to 25 percent for shareholders in the long term.