This week the John Lewis-owned, up-market, UK supermarket group Waitrose, against a background of abject Xmas-season failure for middle-of-the-road competitor Morrisons, announced contrastingly good results and adventurous expansion plans for 2014. However, I’m sure the British press missed the story about them pulling out of Bahrain. Its hardly surprising. Bahrain as a market held about as much promise for them as I suspect Bangladesh would, but it is nontheless a lesson worthy of note.
Like most consumer-facing businesses in the Middle East Waitrose was franchised, in this case to the Fine Fare Food Market group who already operate successful Waitrose stores in Dubai. They were handing the day-to-day management of the Bahrain operation to their subsidiary Supa Save Bahrain in a convoluted arrangement that, by definition, guaranteed at least a few glitches. The same business owns Cost Coffee and a few other retail franchises, but is probably most famous locally for the politics of its owner, which almost guaranteed a large proportion of the potential wealthy Arab market wouldn’t be beating a path to their local Waitrose’s door. The other significant consumer contingent, the Indians, would find Waitrose far too expensive and even if they could find the stuff they wanted in a Waitrose, which I doubt, would anyway be shopping at the Indian-owned Lu-Lu supermarket chain. With the French Geant and Carrefour and the home-grown Alosra (who have a really sorted model) well established and only 1.3million people on the island, at least half of whom aren’t economically active, whoever put six stores in the Waitrose business plan was wearing rose-coloured specs.
However, crap businesses are successful every day in these Middle East states, so there’s maybe an excuse for Supa Save’s optimism. Here business acumen is nearly as rare as a work ethic, so you can become the darling of a sector while being very average and it takes something pretty special to actually fail, but fail Supa Save did, and spectacularly. Apart from the number of stores there were innumerable quite obvious daily operational failures like absence of stock that made you wonder what was happening in the supply chain, so I found it typically ungracious and more than a little annoying to hear an anonymous local “senior businessman” state “This is an example of a foreign entity coming to Bahrain, going bust and leaving a trail of destruction behind them that local companies are left with”. I get the impression that he’s probably an unpaid supplier, but someone should point out to him that this isn’t About Waitrose, but Super Save, who are a local business.
There is a point here though that any other Western franchisor might like to note and that is, despite the fact that most of the businesses here are franchises, with the obvious exception of AlShaya who set the world standard in what they do and a few big names like Chalhoub, few businesses know how to make the most of a franchise. I’ve just created a franchise package for a Saudi business who are doing the journey in the opposite direction – A Saudi business franchising to other Gulf countries. One thing that this experience taught me was that to achieve any level of success and to maintain the integrity of your brand, any franchisor operating in the Middle East has to take a straight-jacketed approach. You simply can’t leave even the tiniest detail to chance because believe me if there’s a chance of anything going wrong, it will!
In this respect maybe Waitrose were culpable in the Super Save fiasco. In any other part of the world their franchise model may well be a success, but here, in hindsight, it probably wasn’t prescriptive enough. In fact I wonder how many would-be international franchisors with their eye on developing markets like the Middle East, Far East and India have a model that’s tight enough to succeed. Its one thing to hand a self-assembly business to a knowledgable, experienced Western business, but in these markets nobody is going to fill in the gaps in your do-it-yourself business instructions, they (and you) will just fall into them.
January 31, 2014