Once a Family Tradition, Corner Stores in the Emirates Face Tough TimesPublished September 18, 2012 in Arabic Knowledge@Wharton
For as long as Azaad Ashraf's family has been in United Arab Emirates, they have been small-time grocers. Before he became the owner of the Al Gusais Flour Mill in the Dubai neighborhood of Al Qusais, it was the business of his father, Ashraf Suleman. "For nearly 30 years, my father sat right here," Ashraf motions to a seat nearby. "At that time, it was big business. It was one of the few supermarkets around and everyone living in these buildings around here would order from him."
But that's not the case anymore. The neighborhood built up, and other groceries opened. Then the big chain supermarkets came to Dubai, taking more customers away. His father's health began to ail, and Ashraf came from India to take over the business entirely. But they hardly sell any groceries anymore, and he knows his business will not pass onto his son.
Before the advent of air-conditioned megamalls and international grocery chains in the United Arab Emirates, most locals shopped at family-run small convenience stores in their neighborhoods. Increased competition for customers and recent government measures aimed at modernizing these rustic corner shops, though, have made times tough. They still are a staple of the small- and medium-sized enterprise segment of the country, but most corner store owners wonder about the future and don't expect their children to take over their stores when they retire.
Ashraf, a father of three, explains that he can't just close the shop now because so many years have gone into setting it up, but he is certain that this isn't the future he wants for his children, the oldest of whom is 10-year-old Mohamed, who is currently studying at the New Indian Model School.
"He likes to come into the shop, pretending like he's running it, but this isn't the path for him or the rest of my children," Ashraf says. "It's difficult and even now business is such that we are barely hanging on. I didn't have much of a choice, but [my children] should do something else, something that has more potential."
With a variety of candy and junk food, the corner stores naturally count students among their regular clientele. According to 16-year-old Aamina Arif, it's also the easiest place to pick up a snack before heading to school. The tenth grader says she frequents the Al Nouh Supermarket corner store near her residential building in Sharjah because it is always open when she waits for the bus.
Inside the shop, it's obvious what sells the most. Chips, snacks, and chocolates have all been clustered up in front so it's easier for the children that come in at all times of the day to grab what they want before hurrying back outside to play. Meanwhile, basic necessities such as bread and milk have also been stocked up as close to the front as possible.
According to Fatema Varawalla, a resident who lives nearby, bigger chains can never completely replace stores like Al Nouh. "It's like when you want to have those ice lollies, and I don't mean the fancy ones that come in different shapes and sizes, but rather, just a plain, old orange-flavored lolly," Varawalla says. "You just don't find those anywhere else but in small grocery shops. It's what I used to get as a kid and I still stop by every now and then when I want to have something that reminds me of earlier days."
Young Emiratis associate these corner shops -- known as dekkans -- with their childhoods, and remain some of their most loyal customers. "Dekkans are integral part of our culture," Sultan al Darmaki, an Emirati risk analyst, told The National newspaper. "The dekkan offers chocolate and candy products that are not available in larger stores, the kind we used to have when we were kids. They also sell old fashioned toys that add a retro look to the dekkan."
These corner stores have also played an important part of the UAE's local economy, providing many immigrants with the opportunity to build a new life here. According to figures released by Dubai this March, small and medium enterprises still make up 95% of all companies operating there, and contribute 40% of its GDP.
Al Nouh is one of the few corner shops still left in its Sharjah neighborhood, and looks as if it had seen better times. Over the past few years, three branches of the Al Madeena supermarket chain have opened up nearby, one directly opposite to it, literally outshining the small grocery with its sign.
The shop's owner, Ashraf Madiyan, says his corner shop has learned to survive by cultivating a long-term customer base. "Even though the Al Madeena markets opened, we already had our customers from before," he says.
Another thing that Madiyan's customers like is that his store delivers purchases to their homes, even small orders. People are also drawn to the shop because he allows them to pay at the end of the month, keeping tab on all the spending until then. "Almost 50% of our customers are on credit," he points out.
Ashraf notes that the business has had to adapt to the times. "By the time I came here, an Al Madeena had opened and we lost a lot of the customers. When more places like Talal [another grocery chain store] opened, we could no longer supply groceries because no one was coming to us anymore. Now I only supply flour."
Some of his old customers still call the shop for groceries because they pay on a monthly basis and are just used to ordering from them. "But even this, we need to buy from the Al Madeena or the Talal nearby."
Al Nouh's Madiyan agrees that business has been far from easy, noting that the hardest part of keeping the store running is the fact that so many residents have moved out of the area, either to Dubai or to other parts of Sharjah, closer to the neighboring emirate. "So many apartments in the area are just empty, if there's no one there, how are we supposed to keep going?"
Madiyan supports his wife and three children back in his home country through his earnings here, and he points out that there just isn't enough coming in for them to all stay together. "The eldest of my kids [a 16-year-old], tells me all the time to close up the store and to go back there, but I want to hang on for a while longer, so that they can all complete their schooling."
When asked if any of his children would join him in the business, Madiyan stresses that it isn't likely because their ambitions are quite different from the ones he had when he was their age. "They don't want to sit in a small store like this, they tell me they'd rather work for someone else, because at least it'll be a proper company where they have more chances to grow."
Saif Mohammed's father runs Al Tamwil Grocery in Sharjah, but the 17-year-old admits he doesn't see himself working as a small time grocer. Studying in grade 11 in a school in India, he visited the UAE over his summer vacation, and helped out at the convenience store his father operates. "I told him that he could come here and work here after school, but he told me, 'No, I will work hard in the Board exams and try get into a small college,'" said his father, Mohammed Mansour.
Mansour explains he was relieved by his son's plans, as there doesn't seem to be the scope for making much of a profit in a small store like his, especially as bigger chains open up shop. Just a few minutes away from the grocery is a Geant Express.
The Geant Express is part of a new wave of competition, aimed squarely at corner shop customers. A report last year by Business Monitor International stated sales by convenience stores in the UAE would outpace its larger grocery stores by 50% over the next three years. Seeking to capture those customers, a number of chains are now opening corner stores -- local retailers and international brands such as Geant and Carrefour -- that are all modern and well stocked.
Meanwhile, in Abu Dhabi, tighter regulations have made it harder on the small grocery stores. Earlier this year, the Abu Dhabi Food Control Authority (ADFCA) announced new regulations for the 1,300 corner stores in the city, requiring owners to display prices clearly, have wider aisles, set up a storage room and meet minimum health and hygiene standards.
The government stipulated owners invest roughly US$1,090 per square meter, which many objected to as too much. Mohamed Jalal Al Reyaysa, director of communication and community service at ADFCA, said small stores would not be closed down as long as they met the new standards and regulations.
Ibrahim Shafaat, who runs Khalid Shams Grocery, a small corner store in the capital city, says he plans on closing up shop soon and going back to India soon because he cannot afford to invest so much in the store. "[It] is barely bringing in a profit as it is," he says.
The saving grace for convenience stores, not surprisingly, is their convenience. A study by market research firm Synovate found that UAE residents say they often don't have the time to shop at large supermarkets on a regular basis. A study by the Abu Dhabi government found that shoppers spent Dh1 billion (US$272.2 million) annually at corner stores in the capital.
Synovate's Dubai-based Business Development Director, Per-Henrik Karlsson, says many prefer to shop at their community grocery. "People in the UAE tend to live in 'communities' and shop within these," Karlsson said in a statement. "Large malls are typically for entertainment and leisure rather than more transactional shopping."
Nishant Pillai, a resident in Al Qusais, notes that even though his family has the option to shop at bigger grocery stores nearby, when it comes to buying daily purchases, they still call the Al Gusais flour mill. "We have been living here for a long time, before any of the other groceries came here. They may be bigger, but we're just used to calling Al Gusais for our daily groceries."