Egypt has recently become the latest beneficiary of free trade agreements, following Turkey’s lead. In just six months, Kazyon, Egypt’s leading discount retail chain, has nearly doubled its stores from 50 to almost 100. This rapid expansion underscores the significant advantages offered by free trade in boosting economic growth and business opportunities.
In April 2023, Development Partners International (DPI), an Africa-focused private investment firm, invested $165 million in Kazyon Ltd. Initially dominating the hard discount market in Egypt, Kazyon has since set its sights on international expansion. Following entries into Saudi Arabia and Brazil, Morocco has become a key strategic market for Kazyon since early 2024. Despite the strong presence of hypermarkets and supermarkets in Morocco, the hard discount sector is carving out its own niche. Notably, hard discount stores first emerged in Germany in the late 1940s.
Hard discount: A growing sector in Morocco
Kazyon’s venture into Morocco aligns with a growing trend in the hard discount sector. Known for their limited assortments, private labels, and stringent cost control, hard discount stores aim to attract customers through low prices and efficient operations. This business model, unlike the large-scale economies of hypermarkets, allows smaller stores to thrive within limited catchment areas.
In Morocco, the hard discount sector, although still small, is gaining traction. Following the path of BIM, Kazyon has rapidly established its presence. In just six months, the chain has expanded to 100 stores, with locations in Casablanca, Rabat, Berrechid, Bouskoura, and Mohammedia. These stores, ranging from 150 to 300 square meters, are strategically located in densely populated areas to cater to a diverse clientele and offer a competitive alternative to other market players.
Economic insights and future prospects
The rapid growth of Kazyon in Morocco reflects the broader benefits of free trade agreements. Kazyon aims to open 200 stores within two years and reach 600 stores in five years, aiming to surpass BIM’s performance, which has been in Morocco for over a decade. The expansion of hard discount stores in Morocco demonstrates the tangible benefits of free trade agreements, which facilitate market entry and growth for foreign companies. However, Moroccan businesses still face challenges in finding similar opportunities in partner countries with whom they have free trade agreements.
Overview of Morocco’s retail sector
According to the Competition Council, Morocco’s retail sector is dominated by seven major brands: Marjane, Acima, Aswak Assalam, Label’Vie, Metro, Carrefour, and BIM. These brands operate in two main store formats, with hundreds of locations across the country. The sector has seen several consolidation activities in recent years, such as the merger of Marjane and Acima under the SNI Group and Label’Vie’s acquisition of various distribution companies, particularly in Rabat and Casablanca.
In conclusion, the advantages of free trade are clearly illustrated by the rapid growth of Kazyon in Morocco. This trend not only highlights the dynamic nature of the retail sector but also points to the broader economic benefits that free trade agreements can bring. As Morocco continues to integrate into the global economy, the success of foreign retail chains like Kazyon serves as both a challenge and an inspiration for local businesses to innovate and compete on a larger scale.
