Upscale perishables

Spinneys is a name synonymous with highly priced but high quality groceries. So how do their supply chain and logistics stay on top?

Spinneys, Jumeirah Beach Road

In Dubai’s heat, even a few minutes in traffic can shrivel all the fresh produce you have stacked in your boot after a grocery shopping spree. But supermarket giant Spinneys obviously has its business down pat. Not only can you find the freshest fruits, vegetables, cheeses and ready meals, they’re also available
at a premium.

“We like to brag about our fresh produce which is airlifted on a daily basis from different parts of the world – Holland, Lebanon, UK among others,” says Muhammed Zahir Asif, Head of Logistics at the high end grocery chain. “That’s our forte and we’re proud of it.”

“The reason for the pride in our selection is because what we have in our stores is not present anywhere else,” continues Asif. “This is what sets us apart.”

But, with the skyrocketing price of fuel these days, airlifting comes at a high price. “We do not pass the extra cost of airlifting to our consumers,” says Asif. “We’re absorbing most and passing only some of the cost. Profits have been affected, but volume of sales has also increased, thereby balancing out the bottom line.”

Fresh produce is Spinneys’ top line product, having experienced a 55 per cent growth in the last two years. “Our customers are willing to pay a little more for the quality and it is our duty to make sure of their satisfaction,” says Asif. The queues which are always a norm at the check out counters are proof enough.

Managing the operations and logistics of the products is running smooth currently. The main and largest warehouse (around 130,000 sq feet in size) is located in Al Quoz. It has a capacity to house 13,000 pallets and also has 31,215 sq feet of refrigerated space. Another cold space warehouse in Aweer stores all the fresh produce and ready to eat food. Spinneys has also rented space in JAFZA on an e-governance basis for its online clearance facility. In this system, the duty for the goods is paid as and when they move out of the warehouse.

Muhammed Zahir Asif, Head of Logistics, Spinneys

Twenty two refrigerated vehicles deliver products to 34 Spinneys stores around the emirates. And each vehicle is dedicated to delivering one of the three types of products
– fresh, frozen and non-perishables. Deliveries happen round the clock, starting from four in the morning and continuing until midnight. Traffic is the only challenge that causes hindrances in the flow of supply.

All branches are connected to a centralised system that runs on SAP. At present, the auto replenishment system is being streamlined on a few major categories of products such as dental products and juices. This will mean each branch will be able to place orders on the system based on sales and the warehouse will deliver only required quantities. This will improve efficiency as compared to the present system, where for instance, a few imported dry line items such as Waitrose products and spaghetti are delivered on alternate days from the warehouse to all the stores.

Challenges are being overcome on an ongoing basis. Prior to SAP, product quantities were counted when they left the centralised warehouse and then were counted again by the store staff upon receipt and before off loading. This caused delays in delivery times all round. Now, however a pre-set number of each product leaves the warehouse for each store and is not counted upon arrival. This has caused the number of deliveries possible in a day to dramatically increase making life easy.

Internationally, the supply chain is being managed quite efficiently. Since a large volume of their products are from different parts of the world, Spinneys recently acquired the John Hold warehouse in Houston, USA, where a lot of the products gather and then are either shipped or airlifted depending on their type to the Middle East. Once the products reach the UAE, customs clearing agent AMI – a 3PL – handles 100 per cent of all the air and sea clearances. Of course, being a Platinum customer of Dubai Customs also comes in handy.

Business at Spinneys is definitely booming. The grocery store chain is now awaiting the opening of its biggest store in the region – all of 55,000 sq feet in Dubai Mall. Depending on the completion of the mall, the store is expected to throw open its doors sometime end of this month. In the last three years, Spinneys has opened eight new stores in Oman bringing the grand total to 45 stores in the region.

Asif is proud of his company’s achievements. “It’s been 40 years since the first Spinneys opened in Dubai,” he says, “but the rate of growth has been mercurial in the last four to five years. That can easily be attributed to our new CEO, Jannie Holtzhausen. From the time he joined, we’ve grown from about eight to 10 stores to 45 today.” Another 27,000 sq foot store is going to open soon in the Marina Mall, Dubai Marina.

“When our new more than 660,000 sq foot warehouse in the Dubai Logistics City is constructed and complete, we will shift base there. It’s a fantastic location, right next to the new airport. It’s going to be fitted out with the latest technology. It’s going to be huge,” he says proudly.