On the Cover: Ashraf Ali MA on scripting a success story

Exactly 11 years ago as a freshly minted expat in the UAE I first saw the massive, hard-to-miss, eye-catching Lulu Hypermarket signage enroute to my first apartment in Dubai. I made a quick mental note to find out more about Lulu. The short and sweet name resonated immediately.

“That’s exactly why we decided to call our business ‘Lulu’. We wanted the brand name to have a great recall,” said Ashraf Ali MA, Executive Director, Lulu Group International with a smile.

As a brand born in the region the name Lulu has a deeper significance too. It means pearl in Arabic. The Lulu story is, indeed, compelling. A UAE-based homegrown brand that has expanded across the GCC, Middle East and beyond. A brand that contributes significantly to the regional economies with an annual turnover of $8 billion.

A journey that began 50 years ago

In 1973 a person called Yusuffali MA – Chairman and Managing Director of Lulu Group International – landed in the UAE to join his family business of foodstuff trading. He started managing the family business in Abu Dhabi. Being an astute businessperson, he slowly started identifying untapped growth opportunities. One opportunity that he spotted was high demand for various imported food products due to a surge in the number of expatriates in the UAE driven by large-scale oil exploration activities at that time.

“Sure enough, seeing this as business opportunity my brother and our Chairman and Managing Director decided to import food products and non-essentials to be sold through retail stores. By the early 80s he had set up a cold storage facility to store large quantities of imported goods for a longer period and set up basic distribution system to cater to the burgeoning market demand. That’s when I joined him in the UAE soon after completing my studies in India.”

“At that time there was a small, close-knit team that handled everything from importing products to port clearance, bank clearance, getting orders, delivering them and everything in between,” Ashraf Ali recollected. He was made in-charge of Sales and Marketing while supporting other functions. “So, I had to go out to the market and build strong relationships with bigger retail formats and cooperatives – those were the days of Emsons and such other entities – to supply imported food products and ensure orders were fulfilled.”

As Lulu sought to introduce more imported products – mostly poultry, meat and dairy items at that time – the obvious next step was to build a robust sourcing network, which saw both brothers travelling extensively across international markets, particularly in Europe.

“In those days communication wasn’t as easy as it is today,” Ashraf Ali observed. “We had to maintain close communication with suppliers to ensure smooth fulfilment of goods to retail stores, serve the HoReCa [hotel / restaurant / catering] industry and supply to ships that would be docked at ports for an extended period.”

In addition to procurement and operations, due to keen interest in the technology side of cold storage facilities Ashraf Ali also got involved in infrastructure, equipment and quality control related areas of the business. “Innovation and high-quality have always been cornerstone of our business,” he added.

Another key focus area for Lulu is its people. An area that Ashraf Ali started focusing on towards the mid of 80s (from 1984-85). “We wanted to recruit talented people to be part of and grow our business and my contacts in the industry came in handy,” he shared. “And I must mention ever since the early days we strongly believe in not only recruiting but also doing our best to retain people by offering them growth opportunities.”

From B2B to B2C

As the distribution business grew, the Lulu team decided to expand its food sourcing and distribution business in Dubai with investments in cold storage, warehousing, fleet management and people.

“That was in the late 80s and with it began our geographical growth,” Ashraf Ali said. “A couple of years from then a thought struck us – if we are already sourcing and supplying food products to the market, why don’t we set up our own stores?”

The thought soon took shape as the first Lulu Centre came up on Hamdan Street in Abu Dhabi in 1992. “But you must remember that it was the tumultuous time of the first Gulf War when many people decided to leave the region,” Ashraf Ali pointed out. “However, driven by our leader’s vision, we decided to stay, opened the first Lulu Centre marking our foray into the B2C segment of the market, and I must admit that the decision did us well. There was no looking back since due to the support we received from the UAE leadership, consumers and businesses.”

By the mid-90s the Group had set up three-four Lulu Centres in Abu Dhabi, the first Lulu Centre in Karama, Dubai in 1995 and continued expanding across the Emirates.

2000, a massive turning point

The year 2000 was a turning point for the UAE grocery retail landscape as large format hypermarkets were introduced. Around this time grocery retail brands started entering malls as anchors tenants with better design aesthetics, smart layouts, new services, fun events, attractive promotions to offer shoppers a different and delightful experience. That was also the year when the first Lulu Hypermarket opened in Al Qusais in October 2000. It was in the making since 1999, Ashraf Ali shared.

“It was massive investment for us at that time. When we discussed our plan, some stakeholders dissuaded us saying that the location was in the middle of nowhere. But we felt it was a strategically located place between Dubai and Sharjah with easy access, a large space with a big parking lot.”

Sure enough, soon the Lulu Hypermarket brand gained traction and popularity. However, pointing towards a hurdle, Ashraf Ali said, “There was no benchmarking available in the market at that time, so we had to hire the right people from around the world who understood procurement, warehousing, designing, branding as well as the art of relationship building with customers.”

Thus began the phase of unprecedented growth for Lulu Group as business expanded beyond the UAE to the GCC markets followed by MENA, Far East and India. For perspective, Lulu Group currently operates in more than 22 countries with its portfolio of hypermarkets, supermarkets and shopping malls and employs over 60,000 people.

“To keep pace with massive growth we established robust systems across departments. The scale became bigger and bigger, but one thing remained constant – we stayed hands-on with every aspect of the business. I still look at procurement reports, brainstorm digital transformation initiatives and focus on people side of the business, which is a big priority for us,” Ashraf Ali stated.

Continued multidirectional growth…a journey that continues to evolve Along with expanding brand presence the Lulu Group also established several sourcing offices across the world including China, Hong Kong, Thailand, India, the US, the UK, Italy, Spain, Turkey and the GCC to ensure uninterrupted supply of high-quality goods and price stability.

“This came in handy especially during the pandemic. We also invested heavily in developing our private label products as well as tech-driven innovations,” Ashraf Ali added.

“Also, being aware that the demographic in each market is different we consciously steered away from a one size fits all approach while planning design and layout, merchandising and offerings at our stores.” “E-commerce is another epic disruptor further accelerated by the pandemic. It has compelled us to be mindful to not cannibalise our audience while offering them a seamless experience. While excitement and engagement are crucial in the offline environment, convenience is pivotal online, and we continue to put concerted efforts in making the shopping experience as friction-free and delightful as possible.”

What’s more, Lulu Group has appointed investment bankers Moelis & Co as advisor for a planned IPO in 2023 as the brand’s growth story continues to unfold.

Up Close & Personal

What kind of legacy are you creating for the future generation?

“Business isn’t only about money, products and services. It’s about people” – that’s what our Chairman and Managing Director and my brother Yusuffali MA always says. His words have been the guiding light for our organisation, a principle that we live and breathe. And that’s the legacy we have created and will continue to strengthen.

What would you define as your biggest achievement, so far?

I think being able to play a part in the success story that Lulu is today is my biggest achievement.

Being a people-centric business what is that one thing that you are most proud of?

A few things actually, starting with the fact that our staff turnover ratio is less than 1% much lower compared to the industry standard in the region. It gives me tremendous joy to see our people rise through the ranks and grow professionally as the business grows. And also the fact that we have been able to create a diverse and multicultural team that truly understands the importance of delighting shoppers.

What is your secret sauce behind being able to retain people at a time when attrition is a huge problem?

I believe it is our culture to hire the right talent and then invest in every possible training, tools, programmes and above all develop a conducive workplace culture.

Finally, what would be your message to budding entrepreneurs trying to build a brand to last?

If you had asked me this question five years ago, I’d say hard work and dedication. But today I’ll say along with hard work and dedication you must innovate constantly to build a brand to last. Never base your business model on current market demand and currently available technology. Instead dig deep to understand future demand, what the market will look like with newer demographics, evolved expectations and resources that will be available to create a futureproofed business model.

Rupkatha B