Alsaif Gallery gains larger market share on unchanged prices; targets 27 new branches in KSA, GCC

Muhammad bin Suleiman Alsaif, CEO of Alsaif Gallery

Al-Saif Stores for Development & Investment Co. (Alsaif Gallery) boasts high profit margins, which are rarely found in the retail sector. It created a unique and distinguished business profile, thanks to its proven track record, CEO Muhammad bin Suleiman Alsaif told Argaam in an exclusive interview.

As of 2021, the company’s market share reached 27% in the small home appliances sector and 39% in the kitchenware and serveware sector. It believes that the Kingdom’s clampdown on commercial concealment will positively contribute to market organization and Alsaif Gallery’s higher market share going forward.

Alsaif Gallery targets opening 27 branches across the Kingdom and the GCC region in the next four years.

The company has broadened its scope of work and products, besides geographically expanding across all regions inside the Kingdom. Accordingly, its branches were brought to 61, with spaces ranging between 1,000-3,000 square meters, according to the top executive.

Most of the companies operating in the field of the retail segment deal with local distributors or wholesale suppliers which are associated with other brands that deal with the producing factories. Meanwhile, Alsaif Gallery has succeeded in creating its owned brands and the company works with the producing factories directly and under its brands, Al-Saif said.

Alsaif Gallery is still reducing its dependence on local suppliers, with regard to products and small household appliances that carry international and local brands that are not owned by it. Revenues from owned brand products rose from 77% of the company's total revenues in 2019 to 82% in the fiscal year (FY) ended in March 2022, he added.

He also pointed out that the decline in sales was the result of the general market downturn. This was particularly in the second quarter, which coincided with Eid and summer vacations, during which many families travelled after the pandemic shutdowns the past two years.

Al-Saif attributed the decrease in profit margins to the surge in shipping costs due to the global supply chain disruption amid the pandemic. Pre-COVID shipping prices were at $700-1000 per container, but during the pandemic and until the end of last August, prices varied between $6,000-8,500 per container. Such an increase caused a rise in freight costs, which was reflected in sales costs.

Al-Saif also confirmed the company's decision not to raise prices due to the temporary increase in shipping costs. This was deemed a strategic move to maintain prices and gain a larger market share in the small household appliances and utensils segment.

Freight prices began to ease last September and are still on the decline. They are expected to return to normal during the first quarter of 2023. This will be reflected in an increase in profit margins in 2023, the CEO stated.

He indicated that the factors that continue to support the growth of the household appliances and utensils segment are: raising income levels of individuals, government support to expand the real estate sector and addressing consumer preferences, which are reflected in the soaring demand for appliances.