CEO Insights Magazine

On the sixth anniversary for Vision 2030 for the Kingdom, Saudi Arabia's economy is to exceed $1 trillion for the first time in history in 2022 according to the IMF. In this context of economic success and diversification away from oil, the development of the retail sector is a key objective of the National Transformation Program. Through modernization, digitalization and localization, retail is to become one of the main employers of Saudis.

The Transformation Program, together with drastic market changes related to the Covid pandemic followed by geo-political sudden shifts have proved to be incredibly challenging for food retailers in the Kingdom. Some players are exiting the market, many are struggling to face the new normal and some like Al Raya Supermarkets, are embarking on ambitious turnaround strategies to become leaner, more agile and better at meeting new consumer trends.

Al Raya Supermarkets was founded in 1991 in Jeddah as a pioneer in the supermarket business, with a peculiarity, each store was making daily its own bread and pastry. Over the past three decades, Al Raya Supermarkets has grown to become a robust network of supermarkets across the Western part of Arabian Peninsula, establishing itself as a household brand from the border with Jordan  to the border with Yemen.

A couple of years ago, Al Raya Supermarkets appointed Frederic Levy-Perrault as its CEO to lead an audacious transformation plan. BA from British University and MBA from both France and the US, Frederic possess multivariate professional experience. This includes his tenure as an adjunct professor of marketing at a US university, a consultant promoting exports out of the US, and a commercial executive in the Banking & Insurance business. 

However, Frederic, who also holds French citizenship, has been a retailer for most of his life in over six different countries. Food retail is his passion and it shows. His new role in Al Raya Supermarkets has been to transform the company's operation mode and turn it into an innovation engine in today's retail to meet the latest customer expectations.

In an exclusive interview, Frederic takes us through his journey and the latest endeavors with Al Raya Supermarkets.

What's your motivation as a leader to go out there and be successful day in and day out? Like Daniel Pink and Hubert Joly, I believe that Human beings have an innate inner drive to be autonomous, self-determined and connected to one another. And when that drive is liberated, people achieve more and live richer lives. I also believe that real success is to build value while contributing to one's environment and co-workers. My life's ambition has been to prove that we can build profit without lacking respect for others as well as the environment in which we operate.

I have been lucky to have been loved in my childhood, supported, educated, and to have reached a position of influence. My duty & my passion is to pay back a bit of this luck by contributing to a better world.

As a retail industry leader, my ambition is to promote fresh, tasty, and healthy food that causes the least possible damage to the planet. Let's be clear, the role of a grocer is not to dictate to our customers what to eat. Yet we have a responsibility to influence our guests to do the right thing for their health and their taste buds. For example, I motivate our teams to keep searching for organic and tasty fruits and vegetables. We aim to display them in such an attractive way in our stores that some customers will opt for delicious cherry tomatoes rather than candies or other transformed food for a snack.

My journey in Al Raya Supermarkets has been to decisively transform the company from systems, logistics, organization, our sales approach up to our store concept in order to put Al Raya back at the forefront of grocery retail. With 3500 employees, ensuring our crew understands and implements our changes swiftly is quite a challenge. The key of success is to communicate and lead the way through example, listening, sharing, and courage.

How would you define Al Raya Supermarkets as an organization and its position in the market? Al Raya Supermarkets has been a destination supermarket loved for its fresh bakery and fresh items at large for decades in big towns as well as remote smaller cities. Surveys show that Al Raya Supermarkets is one of the preferred supermarkets for middle-class Saudis in Western Saudi Arabia. We still make our own Samouli bread and Shami bread daily and keep selling six pieces for Sar one (without VAT) the lowest price in the market.

Reflect on some of the major challenges you have encountered so far. How did you overcome them, and what did you learn from them? I have met challenges like adjusting a French supermarket concept to Japan, turning around heavily bleeding retailers in Asia or Africa, or launching a new supermarket network throughout India. These experiences taught me the importance of a proper diagnosis, building a vision, and turning that vision into an actionable strategy. They also taught me the ability to listen, be resilient, transparent, honest, courageous, promote teamwork and KPIs that will highlight first successes. Sometimes team members are so concerned about what they left on the way that they do not realize their own new achievements.

It is difficult for teams of 3500 people who have been doing things one way for thirty years to drastically change their ways of doing things. I understand their resistance. I also realize that change, to be successfully implemented, must be understood and owned some how. Retail is a people-driven business, without the team we are nothing. I have heard that the faster the turnaround plan, the better. Although I agree that time is a scarce resource in a turnaround, outpacing the team's ability to understand and own the change does not facilitate success.

The transformation of a company of the size of Al Raya Supermarkets is like a journey across the ocean between two continents. At some point, anxiety grows within the crew as no land is in sight. The key to success is maintaining trust with the crew and getting them to share your vision and understand your plan. I keep celebrating small successes to cheer them up, and I communicate intensively with all to convey ownership of the ongoing action plan while adjusting directions as reality always diverges from what is planned.

Enumerate the technologies deployed in your services, and what are your plans to innovate your offerings further? How are you adapting new tools/technologies to revolutionize your services to be at par with current industry standards? Decision-making is based on information. That is why efficient information systems are crucial in business. In our case, we do benefit from the company being equipped with SAP ERP. Yet we have had to reorganize our databases and systems, build our first data lake, create a team of data analysts, a new more agile organization, systems for our supply chain, HR, and a Business Intelligence dashboard that could empower us to make fast and better decisions. We also started using task management apps to better organize the work of our team members.

Tell us about the opportunities you foresee. What's the future of Al Raya Supermarkets? I believe that supply chain improvements and the growth of e-Commerce in Saudi Arabia will favor smaller format supermarkets. Unlike e-Commerce, which is purely transactional, supermarkets can bring a unique shopping experience that triggers all the senses. You can easily sell famous branded items on the web, but what about tasty bread freshly cooked on a deck oven and made with organic flour? People love to experience with their five senses, and people love to socialize. Supermarkets can meet these expectations in a whole different way.

We are also witnessing the development of new categories like food to go, food to eat and food to heat. Some supermarkets are testing coffee shops or snacking areas within the sales area.

Digital media can also communicate narratives about Fresh products, whether online or in store, explaining where this tomato comes from, how it was grown by whom, and where. It can tell you the whole story of this tomato by just scanning the QR code on the tag of the tomato. Such technology should help customers know more about the fresh products they buy and eat. Technology should also help eliminate friction points that still occur during their shopping experience, like the payment, for example. New technologies will facilitate frictionless payment eliminating queues at the cashier line.

What advice would you give to the budding entrepreneurs in retail? Who am I to give advice to my fellow retail CEO? Let me rather quote Sam Walton, founder of Walmart in `Made in America'. Two things about Sam Walton distinguish him from almost everyone else I know. "First, he gets up every day bound and determined to improve something. Second, he is less afraid of being wrong than anyone I've ever known. And once he sees he's wrong, he just shakes it off and heads in another direction". And "Outstanding leaders go out of their way to boost the self-esteem of their personnel. If people believe in themselves, it's amazing what they can accomplish".