How Majid Al Futtaim is getting to grips with the coronavirus ‘tsunami’

The cinema is one of many owned by Majid Al Futtaim (MAF) across the Middle East, Central Asia and Africa. (Supplied)
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Updated 05 May 2020

How Majid Al Futtaim is getting to grips with the coronavirus ‘tsunami’

  • Alain Bejjani, MAF’s chief executive, discusses the state of business in era of coronavirus
  • Conglomerate committed to its target of opening a total of 600 Vox screens in Saudi Arabia

DUBAI: Alain Bejjani is in no doubt about the destructive power of the “tsunami” that has swept over the world with the coronavirus pandemic.

The chief executive of Majid Al Futtaim (MAF), one of the biggest and best-known conglomerates in the Middle East, told Arab News: “This is beyond business. This will change how we live on this Earth as human beings in societies. The coming 10 years will be marked by the reverberations of this crisis.”

MAF is at the sharp end of the interface between consumers and business that has been transformed by the pandemic.

Its malls and Carrefour supermarkets provide life-sustaining supplies for millions of people; its Vox cinemas, hotels and other leisure facilities provide the rest and recreation they need in what passed for a “normal” life before the lockdowns.

MAF’s CEO Alain Bejjani. (Supplied)

The malls — 27 of them across the region — have been at the front line, both as a business and as an essential service.

Bejjani pledged early on in the crisis that workers in the Carrefour business would not be laid off, nor have their pay reduced. He also announced a rent freeze for trader tenants in the malls. He is sticking to both commitments.

Staff from locked-down areas such as cinema and leisure businesses have been retrained and redeployed in the supermarket operations, and nobody has been laid off so far for anything other than normal employment issues.

On the pay promises to staff, he said: “They’ve been there for us, and we’re there for them.”

While some bonus payments and travel allowances have not been met in the economic downturn following government lockdowns, basic salary and benefits such as housing and insurance have been, and will be, met for as long as is necessary, he said.

On rents in the malls, he said that these would be suspended as long as malls were closed.

“When people are not trading, we help them. But now that the malls are opening again, we will go back to charging rent,” he said, pointing out that MAF is both landlord and tenant in many of its properties.

While malls were closed, and even when access is being partially restricted under newly relaxed guidelines in Saudi Arabia, the UAE and Egypt, there has been a dramatic increase in e-commerce across all of MAF’s operations.

UAE online business has risen 300 percent over the past year, most of that in the last quarter, while Egypt is up 735 percent. MAF’s online business in Saudi Arabia is up a staggering 1,400 percent, year on year.

“We think this business will continue to be there,” Bejjani said, pointing to the Online Marketplace launched recently in the UAE.

Carrefour’s online business, notably from the gigantic store in the Mall of the Emirates, had some early problems fulfilling orders and delivering produce in the last mile, but Bejjani said these have been resolved by upgrading capabilities and more efficient use of technology.

In Saudi Arabia, new fulfillment centers have been opened, and delivery problems in curfew conditions ironed out.

“There was a surge in demand, and we had to adapt to it as fast as possible,” he said.

There has been little panic-buying along the lines of many stores in Europe and elsewhere, and MAF’s policy of holding a three-month stockpile in reserve is helping to keep supply lines open, even if a rise in airfreight costs risks causing higher prices at some stage.

“Governments are aware of that risk,” Bejjani said.

Malls in the Middle East are more than just shopping venues, however, and a good deal of social and recreational activity has been effectively put on hold by the pandemic, with cinemas, restaurants and other forms of entertainment — such as the big indoor ski runs in Dubai and Cairo — closed for the past month.

Inside Vox Cinema at Riyadh Front. (Supplied)

Restrictions on food and beverage outlets have been at least partly relaxed as the malls have reopened, with appropriate social distancing and protective wear requirements. But the cinemas remain closed, which is something Bejjani feels strongly about.

“I think cinemas are less risky than restaurants, for example, with lower levels of interaction between people. I don’t see why governments that are allowing malls, stores and restaurants don’t allow cinemas.

“I’d advocate reopening them, with the right measures like social distancing, protective wear and frequent sanitizing. Governments are doing a lot to support the economy, jobs and payrolls — why not just let people work where they can?” he asked.

MAF has led the way in the entertainment revolution in Saudi Arabia after cinemas were legalized two years ago, and Bejjani said that the group remained committed to the target of opening a total of 600 Vox screens in the Kingdom to eventually become its biggest movie operator.

“From a timetable point of view, that might be affected by the closures and project delays because of the pandemic,” he warned.

The crisis has affected the movie business in other ways too.

The big studios in Hollywood and elsewhere have put back the release of blockbuster films until the end of the year at the earliest.

Cinema-goers have become more accustomed during the lockdowns to television entertainment at home, streaming movies and series from the likes of Netflix and others.

Does Bejjani think that will be a permanent trend when the restrictions are lifted?

“The pandemic will accelerate trends, and expose strengths as well as weaknesses.

“There will be more streaming at home, I’m sure, so cinemas will have to be even more experience based.

Cinema-goers have become more accustomed during the lockdowns to television entertainment at home, streaming movies and series from the likes of Netflix and others. (Supplied)

“We’re already well advanced with our Dreamscape Immersive virtual reality venture, and we’re working on other things for later this year.

“We’re evolving our entertainment business into something that can accommodate customers wherever they are, at home or wherever,” he said.

Amid the global debate about when to fully open up economies and when businesses such as MAF will get back to some post-coronavirus normality, Bejjani takes a long-term and philosophical view.

“There will be a post-COVID-19 world, but it is still in the making. The response of governments will shape the behavior of consumers going forward. But it has to be based on science and medicine,” he said.

“I think the new post-pandemic world will be here when we have all had a vaccine shot and we all feel safe again.

“We will have an idea of how it will be for businesses like ours in six to nine months after we’ve had to vaccine. It could take two years or more from now to come back to a new normal.

“MAF is committed to sustainability, and a sustainable business must be able to withstand more than a month or two, or even a year, of crisis.

“The litmus test for us is if the business can go through a storm of bad weather and keep itself afloat.

“And this is more than just bad weather — this is a tsunami.”

Oil surges on hopes of new deal on output cuts

Updated 02 June 2020

Oil surges on hopes of new deal on output cuts

  • Brent price has doubled in five weeks
  • OPEC talks may be brought forward

DUBAI: Oil prices surged toward $40 a barrel on Monday as hopes rose for an early agreement to extend the big production cuts agreed by Saudi Arabia and Russia under the OPEC+ alliance.

Brent, the global benchmark, jumped by more 9 percent to nearly $39, continuing the surge that has doubled the price in five weeks — the best performance in its history. It recovered after record supply cuts agreed between the 23 countries of the OPEC+ partnership, and enforced cuts in US shale oil.

DME Oman crude, the regional benchmark in which a lot of Saudi Aramco exports are priced, rose above $40 a barrel for the first time since early March.

Market sentiment was buoyed by the possibility that the Organization of Petroleum Exporting Countries would agree with non-OPEC members to extend the cuts for a longer period than was agreed in April.

Oil analysts expect OPEC to fast track a “virtual” meeting to formally agree to maintaining cuts at the record 9.7 million barrels a day level. The meeting was scheduled for June 9, but bringing it forward would allow producers more time to set pricing levels.


This section contains relevant reference points, placed in (Opinion field)

An official with one OPEC delegation told Arab News there was consensus among the 23 OPEC+ members for the new date, which could be as early as June 4. The meeting will also consider how long the current level of cuts would be maintained. Some OPEC members want it to run to the end of the year, other producers would prefer a two-month extension.

Omar Najia, global head of derivatives with trader BB Energy, told a forum run by Gulf Intelligence consultancy: “I’d be amazed if OPEC did not extend the higher level of cuts. As long as Saudi Arabia and Russia continue saying nice things to each other I’d expect the rally to continue.”

A Moscow source close to the oil industry said energy officials there had come to the conclusion that “the deal is working” and it was important to keep prices at an “acceptable” level.

Sentiment was also affected by a comparatively high level of compliance with the new cuts, running at about 75 percent among OPEC+ members, with only Iraq and Nigeria noticeable under-compliers.

Robin Mills, chief executive of Qamar Energy, said: “That’s where I’d expect it to be after two months in such a fluid situation. It will be even better in June.”