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Fearful of an erosion of its market share at home, leading British supermarket business Sainsbury's believed the strength of the brand was transferable to new international markets. After all, despite competition, Sainsbury's had a loyal customer base in the UK, which trusted the brand and valued the range of offerings, which included financial services.
So, in 1999, the company set about revolutionizing the under-developed Egyptian retail food industry, entering the market with a vision of rapid expansion and quickly establishing 100 stores, putting some Egyptian grocers out of business in the process.
The Egyptian market offered considerable potential: 65 million people lived in a very concentrated area. There was a sizeable, yet largely unexploited food market, where supermarkets claimed only a 5 per cent share. Relatively, Egyptians spent more than three times as much of their incomes on food than UK customers. More than 12 million of Egypt's 69m people could afford to buy imported food products, and Western and new products had wide appeal. Additionally, Egyptian consumers had become increasingly aware of quality and variety.
Consumer goods multinationals in Egypt had enjoyed excellent performance in the previous 10 years, and there were good relations between the Egyptian and British Governments. The Egyptian market with its large and growing population was seen as very attractive. Egypt was also viewed as a stepping stone for further expansions into the Middle East.
Stone-throwing protests waged outside stores
A joint venture was established with an Egyptian retail group, and Sainsbury's sent 64 of its headquarters staff to...