REUTERS SUMMIT-Saudi bookstore Jarir plans expansion drive

Asma Alsharif
Reuters Middle East

(For other news from Reuters Middle East Investment Summit,

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* Plans to boost store number at least 70 pct in 5 years

* To invest 20 pct of retained earnings on expansion

* Demographics support consumption boom

* No hurry to move beyond Gulf

* Stock outperforming market

RIYADH, Nov 19 (Reuters) - Saudi Arabia-based bookstore

chain Jarir Marketing Co plans to expand the number of

its stores by at least 70 percent in the next five years to take

advantage of the Gulf region's rapid population growth.

The kingdom's largest listed retailer plans to spend 120-150

million riyals ($32-40 million) a year, or about 20 percent of

retained earnings, on the expansion, chairman Muhammad al-Agil

told the Reuters Middle East Investment Summit on Monday.

"It's low-hanging fruit ... We are growing in Saudi and in

the Gulf, and we want to see that we populate the GCC," he said,

referring to the Gulf Cooperation Council, which also includes

the United Arab Emirates, Kuwait, Qatar, Bahrain and Oman.

"Between Saudi and the GCC, it will allow us to (almost)

double our size in the coming five years."

Jarir's experience underlines how population growth, not

just oil wealth, is fuelling corporate expansion in Saudi Arabia

and the six-member GCC.

The company has grown from a single store on a Riyadh street

in 1979 into a chain with 32 stores in the kingdom. It sells

books and office supplies, and has also become a major

electronics retailer.

For the next decade or so, population growth may support

Jarir's growth almost regardless of fluctuations in oil prices.

The GCC's population is projected to climb by 30 percent

over a decade to more than 50 million in 2020, according to the

Economist Intelligence Unit. Most of the 27 million people of

Saudi Arabia, the largest Arab economy, are under the age of 30.

"The growth in consumer numbers means growth for a long

time. There are a lot of young people," said al-Agil, who

co-founded the chain with his family.

He predicted the company would have more than 55 stores by

2017, which would roughly double its sales volume.


The firm expects to open about 80 percent of its new stores

in Saudi Arabia and says it already owns most of real estate

needed for this expansion - an important advantage in a country

where rising land prices have often crimped development plans.

The company's stock price has risen 10 percent so far this

year, outperforming a 4 percent gain for Saudi Arabia's main

stock market index.

Stocks focused on domestic demand have outperformed this

year as concern about the shaky global economy dampens stocks

with major international exposure, such as petrochemicals.

In 2009, al-Agil said Jarir would consider expansion in

North Africa after 2012, with Egypt a primary target. But he

delayed those plans in 2011, after Egypt and other countries in

the region were hit by the Arab Spring uprisings.

Given the boom in the Gulf, al-Agil said, Jarir is not in a

hurry to move into North Africa.

"We just keep looking at it and delaying it because we have

the opportunities to open here ... We have not finished in the


Follow Reuters Summits on Twitter @Reuters_Summits

($1 = 3.7503 Saudi riyals)

(With additional reporting by Angus McDowall; Editing by Andrew

Torchia and Mark Potter)

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