That mould-breaking character can even be seen inside BinDawood stores. The past few months have seen the company doing prominent Valentine’s Day and Easter promotions, a move unthinkable just a few years ago in a country that has historically adhered to a strict Wahhabist interpretation of Islam. Prince Mohammed’s commitment to reshaping the economy isn’t all working in BinDawood’s favour. A sudden decision to triple value added tax last year hit consumer spending. Higher customs duties and fees on expatriates are driving up costs for Saudi firms, too. And all at a time when the Covid-19 pandemic has been stoking unemployment.
“We remain cautious of near-to-mid term growth across the consumers space as market size shrinks on potential expat depopulation,” said Mehwish Zafar, a senior equity analyst at Arqaam Capital in Dubai who has a “hold” recommendation on the shares. Like-for-like sales growth will probably be negative until at least 2022, he said, with growth only coming from new store openings or acquisitions.
Shares in BinDawood jumped more than 30 per cent in the days immediately after the sale. They have since slipped back, showing as of Thursday a gain of about 11.5 per cent from the listing price.
It’s a performance that has helped buttress the family’s bid to diversify into other assets while strengthening the core business, a goal identified by Ahmad BinDawood as key to avoiding the kind of strife his father feared might undermine the business as it passed to a new generation. “The majority of family businesses don’t survive the transition to the third generation, and that’s something that concerned my father a lot,” BinDawood said. The rise of the BinDawood business has been some 40 years in the making. Once a small-time vendor of Arabian perfumes and groceries to pilgrims visiting the Islamic holy sites of Mecca and Medina, it is now a nationwide concern spanning supermarkets and hypermarkets, hotels and distribution centers. The grocery business alone employs more than 10,000 people across 74 stores.
Ahmad BinDawood’s own destiny was sealed as soon as his father, Abdulrazzag BinDawood graduated in the 1980’s from the King Fahd University of Petroleum and Minerals in Riyadh. Instead of following his peers into the oil industry, he decided to join his brothers Ismail and Abdullah in their burgeoning retail trade.
Which is why Ahmad found himself on the front line at such a young age. At just eight, he was helping to sell items to the pilgrims during his school holidays, envious of friends who were away avoiding Saudi Arabia’s scorching summers. “Our friends were travelling and off enjoying themselves and sometimes we would ask: why not us?” BinDawood said. “But that experience built the passion in us to stay in the business that our father and our uncles built.” A decision to push into online shopping and delivery helped prepare the firm for lockdowns during the pandemic, but couldn’t outweigh the hit from the absence of religious tourists who were prevented from entering the kingdom for much of the year. While profit climbed almost 7 per cent last year, it had slumped more than 53 per cent in the fourth quarter as Saudi Arabia
reimposed travel restrictions. BinDawood is still optimistic that shoppers will return as travel resumes, though how quickly pilgrims come back to Saudi Arabia
in anything like their previous numbers remains uncertain.
Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.
As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.
Support quality journalism and subscribe to Business Standard.