On The Cover: How Mohammad A. Baker restructured the GMG family business

“It was all sand”, I recently heard from yet another Dubai resident who spent more than two decades in the country reminiscing about the old days when Dubai Marina, Burj Khalifa, or even the metro were perhaps just seeds in the heads of the makers of this incredible city. With pride in her tone and a glimmer of boastfulness in her speech, she goes on to talk about how the city has built itself to become the futuristic enigma that it is today. But the phrase is fundamentally flawed, isn’t it? A city doesn’t just build itself up. It is the people whose blood and sweat; the businessmen whose vision and ideas; and the government whose leadership that come together to build something from scratch (or from sand, in this case).

As I sat in the lobby of the swanky Gulf Marketing Group (GMG) offices, my attention gets drawn to a wall, which carries the timeline of GMG – the story of its evolution from 1977, which is when the journey of this company began. After Dubai first discovered oil in the 1960s, the Emirate embarked on a journey of rapid economic development and modernisation, which attracted expatriates from around the world. Abdul Aziz Baker, a young and enterprising entrepreneur saw the opportunity and decided to open a butchery in order to cater to the needs of the expatriate population, who were demanding premium cuts of meat, steak, and other meat products, which weren’t available in the market then.

While he was running the business from his single shop in Jumeirah, he would watch men playing football right outside the store. On one such day, while he was watching a game, he witnessed a player’s shoe flying off while attempting a free kick. While at first, he had a bit of a laugh, soon enough his entrepreneurial mind began working. He saw another opportunity. Back then, affordable sportswear wasn’t available locally. People would either bring along sports kit with them every time they’d travel back to their home countries or purchase it at exorbitant rates from the very few options available here. And thus, in 1979, the first Sun and Sands Sports store was born, offering international sporting brands to Dubai’s customers.

Just as I finished reading about that milestone on the wall, the communication team at GMG came to me at the lobby waiting area to take me up to “MAB’s” office on the fifth floor of the building. MAB a.k.a Mohammad A. Baker is the son of Abdul Aziz Baker and the CEO of GMG, who has taken on the reigns to build, expand and revolutionise the business. As I enter his office, he walks towards me with a warm smile and firm handshake and before I could start my interview, he started asking me a bunch of questions about the retail ecosystem, where I see the future of the industry heading, what other retailers have been up to, and more. The man certainly knew how to keep people engaged and interested, but has GMG cracked the code for keeping its young and fickle customers engaged and interested?

Family Business – challenging the norms

When I asked him about the journey of the company, referencing the wall in the lobby, he said, “We are a family business and family businesses need to grow at a certain rate to expand and sustain for the future. My father has built it from nothing to an empire in the region. My job is to take it to the next level and make it a global company.”

Family businesses have been the lifeblood of the Middle East’s economic landscape weaving culture and business seamlessly for decades now. Many of the largest businesses in the region remain family run, having grown over the course of several generations from small enterprises into conglomerates spanning sectors and geographies.

However, today, the mantle of family businesses that have long had a strong foothold and a comfortably profitable run is being challenged.

GMG acquires Geant supermarkets in the UAE from Urban Foods by Dubai Holding

A recent conversation I had with the President and CEO of Dubai Chamber of Commerce and Industries H.E Hamad Buaimim highlighted how the retail sector specifically needs to brace for a shake-up where the legacy players will no longer have a monopoly in the market – as it has for generations – with technology and the companies spearheading technological innovations to sell their products directly to consumers in a creative, data-driven, and info-taining way finally winning this tug-of-war.

“Technology will accelerate the death of some of the old companies and propel the growth of the new ones. We think there will be new players that will either come into this market (from outside the region) or will establish freshly in this market and flourish to become a huge influence,” said H.E Hamad Buaimim.

As much as these comments pointing towards this new era of retail must worry GMG, Mohammad isn’t just unconcerned, but has been prepared for this wave for years now. “The industry has long talked about the perceived strengths of family businesses in the region as being shared values and long-term perspective. Nonetheless, these values are constantly being challenged as the economy transforms, and not all businesses have committed to the open communication needed to rally their people around a long-term perspective,” said Mohammad.

“While GMG has grown into new territories and expanded beyond even our wildest imagination, our attitude is still similar to that of a young business. We still operate like a large startup despite our global footprint. When we see an opportunity, we go after it,” he added.

Over the years GMG has grown drastically to become a retailer that has introduced over 120 brands into this market and expanded geographically to have a presence in 12 countries with a potential to reach 700 million consumers. Recently, the Group announced the restructuring of its existing business units and the unveiling of a new brand identity, reiterating its objective to promote healthier and more active lifestyles through its products and services. As part of the restructuring, the company is now focussing its investments in four business verticals: GMG Sports, GMG Food, GMG Health, and GMG Consumer Goods.

Employment Reforms in the face of ‘Great Resignation’

Now, a key element of the restructuring was the emphasis on its people. GMG currently employs around 7,000 people in across the Middle East, North Africa, and Asia and aims to double its global workforce by 2025 as it implements its new corporate strategy. This comes at a time when ‘”the great resignation” is the reality of the retail job market, with the retail industry globally being massively affected by it.  According to Willis Towers Watson’s 2022 Global Benefits Attitudes Survey, 44% of employees are “job seekers”, with 33% of them being active job hunters who looked for new work in the fourth quarter of 2021. In the GCC, 56% of professionals have stated that they intend to change their jobs in the next 12 months. In the U.S., the retail sector suffered from the second highest rate of quits, with reasons ranging from long hours, random schedules, inability to take time off, low pay, and difficult customers.

The notion of ‘customer is always right’ and the expectation from the staff to push products aggressively to close a sale is being challenged and retailers that aren’t responding to the concerns of the employees or placing their people first are struggling.

When I asked if the restructure was done keeping in mind the fears of the great resignation, Mohammad said, “It is not a shift in mindset. We are a family business and I see my own people and colleagues more than I see my own family. We share the good and bad times. So we need to take care of our people to be happy.”

“Globally, everyone is seeing a mass resignation post Covid-19. We are not really seeing it because I know people are happy being in GMG,” he added. “Open communication sits at the crux of engaging and inspiring talent. By keeping team members regularly updated on the issues at hand, and responding promptly, we create trust and deepen relationships. While top-down communication is essential, the importance of lateral communication modes cannot be gainsaid. This cohesion of values and direction is what is most important to us at GMG, irrespective of where people physically work or when.”

While job titles and roles have reigned supreme for decades, technology and digital transformation at organsiations has led to a significant blurring of job responsibilities as conventional titles become obsolete. Today, employees are often expected to work collaboratively with different teams, both horizontally and vertically, and this has made retailers reimagine their employee structure and job functions.

“We have seen people’s roles changing a lot. Before, everyone was restricted to one area but that restriction is starting to fade. People are expected to do more things across functions,” he said. “As GMG embarks on an exponential growth trajectory, one of the most critical aspects is the transformation of people processes, policies and strategy. Hence in 2021, we initiated the redesigning of the entire people organisation and structure enhancement to support the GMG vision.”

GMG has used the Korn Ferry Hay methodology to evaluate new roles across the group, introduce new grading structures, and infuse technology across the employee lifecycle, working towards performance-culture immersion. Without getting Into the details of the methodology, Korn Ferry Hay helps evaluate jobs against a set of common factors that measure inputs required (knowledge, skills, and capabilities), throughputs (processing of inputs to achieve results), and outputs (end result expectations). These three factors are defined as ‘know-how,’ ‘problem-solving’ and ‘accountability.’ During the evaluation process, a job’s content is analysed relative to each factor and assigned a numerical value.

Versions 1.0, 2.0, 3,0

However, the recent restructure isn’t the first time that GMG has undergone a transformation. Mohammad believes that it is paramount for leaders to take a step back, review their performance, and rethink their strategies to keep abreast of the changing retail landscape and ever-evolving customer expectation.

“We looked at our concept in 2015 and it clearly needed a change. We worked with multiple agencies and rethought our customer journey. We started mapping their journey from the point they enter the store to the point they leave it. We saw a massive success then when we launched our 2.0, but we didn’t stop there. Every 5 years, we continue to invest and rethink our store strategies. Last month we opened our latest multi-brand store as our 3.0 in Dubai Mall,” he said.

With experience being the name of the game, retailers are coming up with innovative concepts to introduce within their stores in order to encourage people to spend more time, engage with the brand and its people, and build a community. Globally, Nike has been lauded for having created immersive experiences within its physical spaces as well as building a strong community of athletes and sports enthusiasts around its brand. With concepts including Nike Rise, House of Innovation, and Nike Live, the brand has set a benchmark in curating personalised shopping journeys that connect consumers to sports, their communities and one another. Complete with basketball courts and digitally-enabled playground, personalisation bar, and a rotational events calendar, Nike stores don’t fail to amaze and amuse its customers.

Having been the retailer for Nike in the region for the last 42 years, GMG is the oldest and largest distributor of the brand worldwide. “Our Dubai Mall store has a basketball court in a corner, but that doesn’t stay as a basketball court. The customer doesn’t want to see the same thing over and over again. So we should be adaptable and able to provide the latest technologies, latest trends etc. within the store. So we have that rolling every month,” he said explaining how important it is for retailers to evaluate how their store space and real estate is used in the most effective and efficient ways.

“When a retailer opens a brick-and-mortar store, it stays as is for a long time until it actually goes through a refurbishment. The ‘dotcom’ allows us to understand that the consumer expectation is different and therefore the store should be equally flexible. Today if you walk into one of our stores and tomorrow you walk into the same store, it will look completely different. And that is facilitated by data and the dotcom world,” he said.

It’s not either/or.. it’s And

When the world was talking about a retail apocalypse back in 2015, marked by the surge in e-commerce coupled with store closures, bankruptcies, and scaling down of in-store operations, there was an urgency for retailers to rethink their strategies. However, what a lot of them did wrong, was to treat their physical and digital operations in silos, without implementing an integrated strategy. This reflected in the tone and essence of the different platforms of the retailers, where consumers would be offered a different experience in-store and a whole other experience on their e-commerce platforms. This led to a disconnect in the brand’s identity, messaging, and purpose, as a result of which many of the digital transformation plans failed. What also became apocalyptic for these businesses, was the fact that they fell for the media hype around ‘death of brick-and-mortar’ and reduced their focus on innovating their physical stores and giving it the energy and attention it deserved.

“In GMG we started the digitisation back in 2014. At that time everyone was talking about how brick-and-mortar is dead but we did not believe that. We invested in our customer journey in our stores, but also started our dotcom division. In 2017, we realised that it isn’t two separate divisions, but one division, which is when we started our omnichannel journey,” he explained.

Riding the wave of health and wellness

GMG realised the importance of investing in the right technologies and people with technical know-how, which allowed them to merge the digital and physical worlds seamlessly. What also worked for them, was the niche they chose for themselves, which proved especially beneficial during Covid-19. “We do quality food, sports, pharmaceuticals – the three main pillars to promote wellness. During the pandemic, people were becoming more health conscious, and we were there to support their needs. People were working out and were looking for athleisure and sportswear. Everyone had to eat food, and we were there. Everyone was taking vitamins, wearing masks and gloves, so we were there,” he said.

However, the supply chain challenges that are associated with food cannot be denied.  Less than 2% of land in the GCC is used for farming and it contributes between 1% and 2% to GDP. This means that a huge chunk of the food distributed here is imported. In fact, the GCC food import bill was estimated to exceed $53bn by 2020, with imports accounting for as much as 90% of food consumption, according to the Economist Intelligence Unit.

Addressing this, he said, “Food has been our oldest division and we wanted to start exporting rather than importing everything and the pandemic has only allowed us to speed the process up. We are working with local suppliers and producers but we have some limitations as this region isn’t an agriculture region. But we are trying to procure locally and work with some of the most reputable producers across the globe.”

“In our food division we are currently building 6 new manufacturing plants in DIP and Jafza with fully automated facilities,” he added.

Need for speed

However, Mohammad doesn’t see supply chain as his biggest challenge. “For me, it is about how we can deliver faster to our consumers. When Covid-19 hit, all our consumers moved online all of a sudden and to keep up with that demand was quite difficult. We moved warehouses during the lockdown but we managed it well,” he said.

Speed and being ahead of the game seems to be a huge priority for Mohammad. But can one blame him? In a world where people are spoiled by q-commerce that promises delivery in 15 minutes and convenience at the click of a button and at your doorsteps, retailers don’t have any room for lags.

“We created a program to serve a consumer while the sales assistant doesn’t leave another customer even in the busiest stores. We have introduced technologies that allow us to serve the customer in less than 25 seconds. That is part of our KPIs. Apart from that there’s conversions, customer satisfaction, delivery times,” he said.

Eyes on Egypt

Among the many expansions the company is focusing on currently, includes its entry into Egypt, with bold plans of opening 100 outlets in the country in the next five years. With Sun & Sands Sports slated to open in City Centre Almaza as well as Mall of Egypt, it plans on introducing its sneakers-focused concept, dropkick, and its Nu Athlete concept catering to a youth demographic in the country.

“People have been waiting for us to enter the Egypt market. There is a need for quality retail in Egypt. It is the largest retail economy in the Arab world and it is great for us to showcase our experience in Egypt. We believe it will transform the industry over there,” he said confidently.

“The Egyptian consumer has been neglected for a very long time in terms of the different technologies and trends, as no one is providing them to the market. There is a clear need from the consumers to have the same level of retail you see in Dubai, New York, London etc. If we take a moment, listen to our consumers in Egypt, they tell you exactly what they need,” he added.

The entry into Egypt follows a major expansion into Asia in December 2020 when it acquired multi-brand sports retailer Royal Sporting House (RSH). In April 2021, the conglomerate also expanded its footprint in Saudi Arabia with a new headquarters and mega-warehouse located in Riyadh.

“This is just the beginning,” he says. “We have something planned for every month for the rest of the year.”

Mohammad is proud of going from 50 million to 700 million customers in a short span, but as I walk back to my car after the interview passing the same timeline wall, for me, it is the story of how GMG has grown from understanding the need of that first customer with the flying sandal on the makeshift football ground on the sands in Jumeirah, to now catering to the needs of 700 million people globally.