Strategic Management Report: Lulu Hypermarket in UAE Grocery Market

This report provides a strategic analysis of Lulu Hypermarket, a major player in the UAE grocery market. It begins with an overview of the company's background and competitive stance, highlighting its pricing strategy and store network. The report then delves into a PEST analysis, examining the political, economic, social, and technological factors influencing the market, including the impact of Brexit and consumer trends. Strategy maps visualize Lulu's competitive positioning relative to competitors like Carrefour and Spinneys. Porter's Five Forces analysis assesses the competitive intensity within the industry, while the report also outlines Lulu's growth objectives and proposes a blueprint for achieving them. The analysis concludes by revisiting Lulu's competitive advantages and emphasizing the importance of a hybrid focus strategy for sustained success in the dynamic UAE grocery market. The report utilizes various sources and provides a comprehensive understanding of Lulu's strategic position.

Running head: STRATEGIC MANAGEMENT
Strategic Management
Name of the Student
Name of the University
Author Note

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Table of Contents
Introduction:...............................................................................................................................3
Background of the business entity:............................................................................................3
Competitive Stance of the business entity:................................................................................3
PEST Analysis:..........................................................................................................................4
Strategy Map 1:..........................................................................................................................6
Strategy Map 2:..........................................................................................................................7
Porter’s Five forces:...................................................................................................................8
Growth aim of business entity:..................................................................................................9
Blueprint for growth:..................................................................................................................9
Competitive Stance of the business entity Revisited:..............................................................10
Conclusion:..............................................................................................................................10
References:...............................................................................................................................11
Transcript:................................................................................................................................13

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Introduction:
The study analyses the commercial actions of Lulu Hypermarket of grocery operating
in United Arab Emirates. The study delivers a short summary of the commercial actions of
the corporation and also describes the competitive stance of the business entity. The study
analyses the global trends of the industry with precise application of the PEST analysis and
assesses the competition in the UAE grocery market through utilizing the Porter’s five forces
tool. Along with that the study provides an important understanding of the growth
opportunities of the business entity. In addition to this, the study shows the position of the
business entity in the grocery market of UAE through pictorial presentation.
Background of the business entity:
The organization operates in the grocery industry of UK and is regarded as one of the
largest names of the mentioned industry. The business entity proposes an extensive range of
products to their clients which ranges from grocery products, fresh food products, mobile and
gadgets, electronics products, home and lifestyle related products along with the fashion
products (Luluhypermarket.com/en-ae 2020). The senior management of the business entity
is dedicated in making it the most preferred destination for the people of UAE and that is
visible with the urge of the senior management of the business entity in applying the low
pricing. Along with that, the strong presence of the organization in the form of the store
outlets is a vital feature that influences the accomplishment of the business entity. In UAE
market, the business entity is observed to face a strong level of rivalry from the part of other
competitor organizations such as Almaya Supermarkets, Carrefour, Spinneys, Choithrams
and Union Co-op (Almaya.ae. 2020).

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Competitive Stance of the business entity:
With an exact look at the commercial actions of the business entity it is
understandable that one of the key aspects that increases the competitive nature of the
business entity is their pricing policy. The business entity is observed to have the knowledge
of utilizing low pricing strategy for their products. A survey conducted by Souqalmal.com
showed that the organization is in third place in utilizing low pricing policy for their products
amongst the supermarket chains or the grocery stores operating across the nation. Apart from
this, the robust existence of the business entity in the form of 188 stores and 23 shopping
malls across the globe, is observed to be significant for the business entity in reaching out to
the clients (Lulugroupinternational.com. 2020). As a result, it is understandable that the
business entity is placed in an advantageous position in comparison to their competitor
organization in terms of the infrastructural strength. Apart from this, the business entity is
observed to be determined in continuously expanding their product chain as that will be of
great significance for them in ensuring that the different requirements of a larger number of
clients are met in a professional manner.
PEST Analysis:
With a detailed consideration towards the macro environmental factors of the nation,
it is understandable that the impact of Brexit is pretty significant on the grocery market of the
nation. With the application of Brexit, the business entity is expected to face substantial
amount of difficulty in sourcing skilled and experienced employees for their business
operations at cheaper rates (Busch and Matthes 2016).
The total GDP (PPP) of the nation in 2019 was 3.131 trillion US dollars and the per
capita value of the same was 46827 US dollars (Tradingeconomics.com. 2020). In addition to
this, the high score of 0.920 in the Human Development Index is noteworthy in affirming a

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substantial increment in the per capita income of the country (Hdr.undp.org. 2020). As a
result, it is expected that the people of the nation will conduct increasing amount of purchase
of the products offered by the business entity.
Considering the social trend, it is evident that preferences of the people towards fresh
grocery products is notably high and that influences the business entity to put strong
emphasis on the development of the infrastructure such as the cold storage (Bredesen 2019).
Other than this, the British citizens are more inclined towards the companies that have the
capability to design their products as per the insights of the clients and that influences the
business entity to improve the efficiency of their customer relationship management system.
Considering the technological aspect, it is important for the business entity to promote
their business offerings through the online channels and the social media platforms as that
increases the capability of the business entity in influencing the purchase preferences of a
substantial number of citizens who have active presence in the social media platforms
(Dwivedi, Kapoor and Chen 2015).

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Lulu
Union Co-
op
Carrefour
Al Maya
Spinneys
QUALITY
P
R
I
C
E
Choithrams
Strategy Map 1:
(Created by Author)

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From the strategic map 1, it is understandable that Carrefour sells cheapest products.
Union Co-op, Lulu, Spinneys and Choithrams are observed to be at 2nd, 3rd, 4th and 5th place in
applying low pricing and Al Maya applies low pricing policy for their products
(Thenational.ae 2020). The position of Lulu hypermarket is observed to be accurate for the
competitive stance of the business entity where the business entity delivers quality products
with comparatively low pricing tags. The match is important for the business entity in
showcasing the perfect achievement of the value proposition of the business entity. Along
with that, it enhances the ease of the business entity in targeting increasingly larger number of
clients in an efficient manner.
Strategy Map 2:

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Lulu
Union Co-
op
Carrefour
Al Maya
Spinneys
INFRASTRUCTURE
M
A
R
K
E
T
I
N
G
Choithrams
(Created by Author)
(Carrefouruae.com 2020)

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Porter’s Five forces:
Competitive Rivalry: The business entity is facing tough
competition from Almaya Supermarkets,
Carrefour, Spinneys, Choithrams and Union
Co-op (Carrefouruae.com 2020).
Threat of New Entry: The entry into the UAE grocery market is
subjected to substantial amount of financial
investment, infrastructural requirements and
human resources. In addition to this, the
strictness associated with the trade licenses
and taxation policy are major points of
concerns for the new business organizations.
Threat of Substitution: Majority of the companies are observed to
utilize low pricing for their products and are
continuously trying to enhance the quality
of their products which is expected to keep a
high threat of substitution for Lulu market
(Thenational.ae 2020).
Bargaining power of buyers: High bargaining power due to the
availability of multiple number of
organizations with the capability of
applying low pricing and diversified product
offerings.
Bargaining power of Suppliers The bargaining power of the suppliers for
Lulu is moderate. Majority of the supplier

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organizations of the nation are observed to
have the capability of supplying accurate
quantity of materials, on time supply though
following the appropriate supplier code, In
addition to this, almost each and every
suppliers have cold storage facility and at
the same time, the suppliers offer substantial
amount of discount on bulk purchases from
the part of the grocery companies.
Growth aim of business entity:
With a precise consideration towards the UAE grocery industry, it is evident that the
business entity is expected to enlarge their product chain for achieving the desired market
growth in a more professional manner. The grocery spending in the nation in the year 2011
was 24.48 billion US dollars and that increased to 30.35 billion US dollars in 2015
(Statista.com 2020). In addition to this, UAE had a sales of 21.92 billion US dollars in the
food retail market and that in the year 2015, reached to 25.64 billion U.S. dollars
(Statista.com 2020). As a result, it is evident that the UAE grocery market in expanding in a
substantial manner and in such situation, it becomes important for Lulu hypermarket to
increase their business offerings through new product development.
Blueprint for growth:
With a detailed consideration towards the objective of the business entity, it is
understandable that the organization’s capability in applying low pricing policy has the
capability to increase the ability of the business entity in applying the market penetration

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strategy (Spann, Fischer and Tellis 2015). Along with that, the interest of the organization in
expanding their business offerings asks for the utilization of the product diversification
strategy (Bowen, Baker and Powell 2015). As a result, the business entity is in need to apply
the hybrid focus strategy as that will increase the competence of the business entity in
handling a stable commercial actions in the UAE market (Lapersonne, Sanghavi and De
Mattos 2015).
Competitive Stance of the business entity Revisited:
With a precise look at the competitive advantages of the business entity and the
business objectives of the organization, it is visible that the organization has no major
necessity of changing their competitive stances. The high level of expertise of the employees
will increase the capability of the business entity in developing new products in a substantial
manner. Along with that, the momentous infrastructural strength of the business entity will
increase the ease of the employees in designing the bestseller new products. In addition to
this, the competence of the business entity in utilizing low pricing strategy will be substantial
for attracting a superior number of clients for their products.
Conclusion:
On a concluding note, it is visible that the business entity has the aptitude to manage a
stable business in the UAE grocery market. The ability of the business entity in applying the
low pricing and continuously increasing their product offerings are observed to important
causes for the growth of the business entity. Having said that, the business entity is subjected
to an intense level of competition in the grocery marketplace of the nation where the success
of the business entity in continuously enhancing their growth is reliant on the aptitude of the
business entity in utilizing hybrid focus strategy.

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References:
Almaya.ae. 2020. Almaya. [online] Available at: https://www.almaya.ae/
Bowen, H.P., Baker, H.K. and Powell, G.E., 2015. Globalization and diversification strategy:
A managerial perspective. Scandinavian Journal of Management, 31(1), pp.25-39.
Bredesen, T.A., 2019. Design and simulation of a small cold storage with NH3 refrigeration
system and CO2 as indirect cooling loop for storing of fresh fruits and vegetables (Master's
thesis, NTNU).
Busch, B. and Matthes, J., 2016. Brexit-the economic impact: A meta-analysis (No. 10/2016).
IW-Report.
Carrefouruae.com 2020. Carrefour UAE - Shop Online for Food, Grocery, Mobiles,
Electronics & More. [online] Available at: https://www.carrefouruae.com/
Dwivedi, Y.K., Kapoor, K.K. and Chen, H., 2015. Social media marketing and advertising.
The Marketing Review, 15(3), pp.289-309.
Hdr.undp.org. 2020. [online] Available at:
http://hdr.undp.org/sites/all/themes/hdr_theme/country-notes/GBR.pdf
Lapersonne, A., Sanghavi, N. and De Mattos, C., 2015. Hybrid Strategy, ambidexterity and
environment: toward an integrated typology. Universal Journal of Management, 3(12),
pp.497-508.
Lulugroupinternational.com. 2020. [online] Available at:
https://www.lulugroupinternational.com/business-sectors/retail-business/

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Luluhypermarket.com/en-ae 2020. LuLu Hypermarket UAE Website. LuLu Hypermarket
UAE - Shop Online Groceries, Electronics, Fashion & more. [online] Available at:
https://www.luluhypermarket.com/en-ae/
Spann, M., Fischer, M. and Tellis, G.J., 2015. Skimming or penetration? Strategic dynamic
pricing for new products. Marketing Science, 34(2), pp.235-249.
Statista.com 2020. Food retail market size UAE, 2015 | Statista. [online] Available at:
https://www.statista.com/statistics/584084/food-retail-market-size-uae/
Statista.com 2020. Grocery spending United Arab Emirates (UAE), 2015 | Statista. [online]
Available at: https://www.statista.com/statistics/585689/grocery-spending-uae/
Thenational.ae 2020. Revealed: survey finds UAE's most budget-friendly supermarket.
[online] Available at: https://www.thenational.ae/business/money/revealed-survey-finds-uae-
s-most-budget-friendly-supermarket-1.746184
Tradingeconomics.com. 2020. United Kingdom GDP per capita PPP | 1990-2018 Data |
2019-2020 Forecast | Calendar. [online] Available at: https://tradingeconomics.com/united-
kingdom/gdp-per-capita-ppp

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Transcript:
The success of the companies operating in the modern world, is observed to be largely
dependent on their ability in assessing the feasibility associated with the business. In such
situation, the companies are expected to apply various business analysis tools such as the
PEST analysis or Porter’s five forces. The presentation covers the analysis of business that
Lulu Hypermarket is conducting. The presentation provides a narrative discussion on the
background of the business entity and along with that, the presentation covers the competitive
stance of the business entity, UK grocery sales trends, evaluation of the competitive rivalry in
the UAE grocery market through strategic maps and porter’s five forces analysis. Along with
that, the presentation shows the objective of growth for the business entity.
Considering the competitive stance of the business entity, it is visible that the business
entity has the capability of applying low pricing strategy for their products. Along with that,
the strong store presence of the business entity which is visible in the form of 188 stores and
23 shopping malls across the globe, is an important factor that increases the competitive
advantage of the organization in comparison to its competitors. Considering the macro
environmental factors of UK market, it is evident that the effects of Brexit will increase the
concern for the companies operating in the grocery market owing to its limitations on the
availability of labour in the nation. Other than this, the increment in the total GDP (PPP) of
the nation and the high score in the Human Development Index of the nation is pretty
significant in stating the economic growth of the nation which places the business entity in
perfect position for increasing the sales of their products. The high score in the HDI is
substantial in stating the availability of enormous number of skilled and experienced
employees for the management of the business entity’s business operations. Having said that,
the business entity has the necessity to improve the efficiency of their promotional activities

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with the application of the technological advancement and innovative solutions. Considering
the competitive nature of the UAE grocery market, it is visible that the business entity is
facing tough competition from Almaya Supermarkets, Carrefour, Spinneys, Choithrams and
Union Co- op. Along with that, majority of the companies are observed to apply low pricing
for their products and are continuously trying to enhance the quality of their products which
is expected to keep a high threat of substitution for Lulu market. As a result, the business
entity is expected to face high bargaining power of the buyers.
Considering the situation of the UAE grocery industry, the growth of the industry is
pretty prominent with grocery spending of the nation increasing from 24.48 billion US dollars
in the year 2011 to 28.72 billion US dollars in the year 2014. In addition to this, UAE had a
sales of 21.92 billion US dollars in the food retail market and that in the year 2015, reached to
27.06 billion US dollars and that influences the selected business entity to continuously
develop new products for achieving the desired market growth. Considering the blue print for
the achievement of the objectives of the market growth that the business entity has, it is
understandable that the organization’s capability in applying low pricing policy has the
capability to increase the ability of the business entity in applying the market penetration
strategy. On the other hand, the objective of the organization in expanding their business
offerings asks for the application of the product diversification strategy. Hence, it is
prominent that the business entity is in need to apply the hybrid focus strategy as that will
increase the capability of the business entity in conducting a stable business in the UAE
market. With a detailed look at the strategic map of the business entity, it is visible that the
Carrefour sells cheapest products. In addition to this, Union Co-op, Lulu, Spinneys and
Choithrams are observed to be at 2nd, 3rd, 4th and 5th place in applying low pricing and Al
Maya applies low pricing policy for their products.

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Revisiting the competitive stance of the business entity for achieving the growth
objective, it is visible that the organization has no major necessity of changing their
competitive stances. The skills and expertise of the employees will certainly increase the
ability of the business entity in developing new products in an efficient manner. The
noteworthy infrastructural strength of the business entity will enhance the ease of the
employees in designing the bestseller new products and on the other hand, the capability of
the business entity in applying low pricing strategy will be substantial for attracting a larger
number of clients for their products.