Dennise Williams, Staff Reporter
Douglas Orane (left), chairman and chief executive officer of GraceKennedy, hugs Rafael Diaz, retired chairman/CEO, at the company's annual general meeting at the head office complex on Harbour Street in Kingston on Monday. Mr. Diaz is retiring from the GraceKennedy board but is still a director for a number of companies within the group including the Jamaica General Insurance Company Limited and First Global Financial Services Limited. - WINSTON SILL/FREELANCE PHOTOGRAPHER
OPERATORS ARE playing for high stakes in Jamaica's tough supermarket business, said Douglas Orane, GraceKennedy's (Grace) chairman and chief executive officer and John Mahfood, chief operating officer (retail & trading).
"What is really happening in Jamaica is a rapid consolidation in the industry over the last few years," Mr. Orane explained. He was speaking at the company's annual general meeting held at their corporate offices on Monday.
"We have made a strategic decision that when that consolidation is completed we will be one of the major players in the industry," he said. "But to get there is a long haul; it's a tough haul. It's hard working in that
situation where you are attempting to grow while managing a business that has millions of transactions."
Looking back, the HiLo brand has had a long history of continued evolution to meet the consumers' needs.
CONTINUOUS EXPANSION
Mr. Orane said, "Hi-Lo was acquired in 1984 and we have continued to expand the company into a much larger entity than it was before from four stores to now seven."
Grace will be opening new Hi-Lo branches in Ocho Rios, St. Ann and Port Maria, St. Mary.
Mr. Orane added, "We continue to expand now, not just in terms of the number of stores, but in terms of renovation of existing stores."
And with the evolving sophistication of the Jamaican shopper, supermarkets have launched the trend in which their retail spaces resemble those of First World countries. And Grace has answered with its Hi-Lo Manor Park outlet.
"I want to tell you that the response to our redesign has been very, very satisfying in terms of meeting our customers' needs," Mr. Orane said. "People tell me that it is a pleasure to shop there. They say they love the feeling of abundance and a sense of tranquility at the store. That is important because tranquility is something rare in Jamaica. People like to go to places where they feel safe and secure."
But all is not rosy within the sector. For despite the expansion drives and renovation activities of the major players, margins are razor thin and must be harvested carefully.
"I would caution and say that I don't think that there are many supermarkets right now, including the very largest one, that are very profitable in Jamaica, because of the speed at which they are growing," Mr. Mahfood stated.
CAREFUL STRATEGISING
And that means careful strategising is required. Mr. Orane summed it in this manner, "Investing in retail is a long-term proposition. This industry really is in flux. What you saw a few years ago was an industry where it was fragmented where individual families ran hundreds of supermarkets and the nature of the industry began to change for several different reasons.
"The main reason was being able to buy in bulk and utilise technology. That is why you find Wal-Mart growing dramatically to become the largest company in the world. In the United Kingdom, basically four companies control 85 per cent of the supermarket trade. We face the same trend taking place in Jamaica."
Mr. Mahfood expanded on Hi-Lo's future, "Until recently, Hi-Lo was a restively small retail structure. For our supermarkets we aim to achieve a return on equity of 20 per cent and profits of five per cent of sales pre tax. To do so, we have to improve our efficiency and sales.
Right now our Hi-Lo stores do a turnover of $3.5 billion. We see other supermarket chains in the Caribbean that are profitable on larger sales and this is something we are striving for. Not necessarily to have more stores, but to have better stores, more efficient stores. In time we will see the profit from that."
