Raya Trade plans to expand its instalment sales sector at Raya Mega Store, as well as increasing sales via e-commerce in 2017. According to Bassem Mogahed, CEO of Raya Trade, affiliated to Raya Holding, the company will focus on increasing its revenues in US dollars through the expansion of call centre and maintenance services in the African market in 2017.
Mogahed believes that mobile phone sales in 2016 will not differ from the 17m devices sold in 2015.
How do you evaluate the company’s performance during 2016? What are your expectations for 2017?
This year was one of the toughest years in terms of investment; however, the company will achieve its financial targets by the end of the year, based on the current performance indicators. The sales growth is expected to reach 25% by the end of 2016, compared to last year, due to the high inflation rates in 2016, increasing the devices’ prices in Egyptian pounds. Additionally, consumption rates did not decline as expected in 2016, but they fell significantly during the fourth quarter (Q4). On the other hand, our earnings increased slightly more than our targets, as a result of reducing the profit margin to ease the product price hikes that resulted from the differences in currency exchange rates.
We have concerns over the consumer spending strategies in 2017, given the expected increase of the already high inflation rate by the end of 2016. This will make consumers rearrange their needs and priorities, and reduce spending.
How will your company face the expected decline in sales in 2017?
We are working on creating new products with lower prices. Additionally, we will increase our presence in different outlets, as we are now preparing to open two stores in the Delta region and Assiut to cover mobile phone outlets in these areas. Our branches in the Delta region record the highest sales rate, since a lot of the governorate’s residents work abroad.
Additionally, we plan to expand in providing the purchases via instalments, and expect most consumers to repair their phones instead of buying new ones, in line with reducing their expenses. We also aim to increase the efficiency of our staff to increase production rates.
What are your plans for expanding the Raya Mega Store?
The retail outlets for home and electronic appliances have shown great success over the past period, despite the unstable economic situation, given the need for instalments. Hence, we decided to continue expanding in this sector.
According to our expansion plans, we now have nine branches in Cairo, Giza, Alexandria, and Tanta, and will increase the number of Raya Mega Store outlets to 15 branches in the Delta region and Upper Egypt by 2017, and 20 branches by 2018.
Why do you want to increase the number of Raya Mega Store outlets?
This allows a bigger space for display, and presents different electronic and home appliances, with a focus on basic goods, such as refrigerators and washing machines. It also provides instalment payments, which attracts many consumers due to the current economic conditions.
According to the financial indicators, payment in instalments doubled compared to last year and are expected to increase even more in 2017.
How do you see the Egyptian mobile market in 2016?
Mobile phone sales during 2016 were acceptable, with the support of the smartphone market’s growth, as well as the popularity of Nokia regular phones. Raya is exclusively taking over the agency of Nokia in Egypt.
The traditional mobile phones market represents about 30% of the phone market in terms of the number of sold devices during the current year. The market size annually declines by almost 20% in favour of the smartphone market, while its financial value represents a maximum of 10% of the total market value.
Mobile phone sales reached about 17m devices last year and are expected to achieve the same volume of sales during the current year or slightly increase to 17.5m devices.
You are now the exclusive agent of Nokia mobile phones in Egypt. When do expect the end of Nokia in the market?
The popularity of traditional mobile phones is significantly declining, but still exists. Additionally, Nokia already started entering the smartphone sector, and will launch its first smartphone with an Android operating system (OS) in the second quarter (Q2) of 2017.
Chinese Foxconn Company bought Nokia from Microsoft and established a new headquarters in Finland. They appointed a former head of the company as the new CEO to produce Nokia smartphones with Android OS.
Therefore, we are counting on Nokia smartphone sales to push the growth rates over the next year.
How do you see the investment climate in the Egyptian market?
The investment climate is very difficult now and the inflation rate continuously increases, which affects the cost of mobile phones. Additionally, most of our activity is based on importing, and the state has recently limited imports.
On the other hand, we have an investment opportunity in local manufacturing and exports. There are promising opportunities in the textile sector and the export of fruits and vegetables, as well as outsourcing services, such as call centres. For example, more than 70% of Raya call centre customers are from outside Egypt.
What are your plans to increase the company’s revenues in US dollars?
We focus on the expansion of the outsourcing and call centre industry. We recently opened two call centres in Hurghada and Poland. Raya is also a partner in a pasta factory in Poland, which exports its products to many European countries and some Middle Eastern markets.
We also have a service centre in Nigeria, which works with a number of international mobile phone manufacturers, and we are now studying expanding in this sector.
We own 200.000 sqm in the Suez Canal area, and we will use part of the land to build food and electronic devices factories.
What are the main challenges your company is facing?
We have big problems regarding the import of mobile phones, despite being a production sector. We have no facility for the import of mobile phones. For days, the government has been trying to find a suitable way with mobile operators to increase the cost of recharge cards after the imposition of the value-added tax (VAT), due to the importance of this service to customers. However, it did not pay similar interest to support the import of mobile phones, which are mainly involved in the production process.
What are the developments in the after-sales service sector?
We offer maintenance services for many electronic brands in the Egyptian market, including Samsung, Acer, Asus, Huawei, and Lenovo. We acquire about 60% of the maintenance services market share, where we offer maintenance services for over 350.000 consumers annually. We plan to add more 10 maintenance service centres in the coming period.