It has been 19 months since the board of the Ethiopian Investment Commission, chaired by the Prime Minister, issued a directive opening the wholesale and retail trades to foreign investment.
Although foreign investment has yet to begin pouring in in earnest, the liberalization has captured the attention of international giants eager to secure a share in what is a huge and largely untapped market.
In May, Zeleke Temesgen (PhD), head of the Commission, stated during a business forum that the government had issued dozens of investment permits to foreign companies involved in retail, wholesale, export, and import trades.
A few weeks ago, Zeleke met with the representatives of Carrefour in Addis Ababa and announced that the global retail giant was “crafting a business model that would enable it to operate in Ethiopia.”
The April 2024 directive sets a USD 2.5 million paid-up capital threshold for retail entry, signaling the inclination of welcoming serious global players to virtually all corners of wholesale and retail in Ethiopia, barring petroleum products and fertilizer.
Liberalization, it seems, is not far off for the retail market at least. But the impending entry of giants like Carrefour, which operates in dozens of countries worldwide, raises questions about the status of the Ethiopian retail market, local retailers’ ability to withstand competition from much larger businesses, and what it will all mean for the consumer.
A Glance at Ethiopia’s Retail Market
Emma Copey, Carrefour’s global franchise director, was quoted as saying that Carrefour “has been viewing the Ethiopian market as a potential destination for a long time.”
Carrefour has its roots in France, where in the 1960s it became the first retailer to successfully adopt the American supermarket/hypermarket business model in Europe. In the decades since, Carrefour has grown into a global retail powerhouse with a large presence in Asia, Europe, the Middle East, and Africa.
UAE-based developer and retail conglomerate Majid Al Futtaim Group owns and operates Carrefour franchises in the region, including in Uganda and Kenya, where it has rapidly grown its market share over the past decade.
With a quickly growing population of approximately 130 million, Ethiopia represents a retail market valued at USD 23 billion and a lucrative opportunity for the likes of Carrefour and Majid Al Futtaim.
Despite its size, modern retail penetration remains extremely low, at below 10 percent, signaling massive untapped potential for organized trade. With an urbanization rate of around 23 percent, the country’s retail market is predominantly served by informal trade.
Obtaining precise statistics for the number of retail and wholesale operators in Ethiopia is difficult, as the majority of activity takes place through unregistered and informal channels, such as small kiosks (souks), open-air market vendors, and individual street sellers, which are significantly more numerous than formal businesses.
While The Reporter Magazine was unsuccessful in obtaining exact figures from either the Ministry Trade and Regional Integration or the Addis Ababa Trade Bureau, available materials suggest that the number of officially registered wholesale and retail establishments can range from 100,000 to more than double that number.
And while the true size of the retail market remains elusive, people involved in the retail business in Addis Ababa can testify to low market penetration and high potential for investment.
Getahun Abate manages operations at Bambis Supermarket, a storied retailer that has been an integral part of Addis Ababa’s shopping scene for decades. Charlambos Tsimas (known as “Mr. Bambis”) opened his landmark supermarket in the capital’s Olympia neighborhood in the early 1960s, three decades after moving to Ethiopia from Greece.
The supermarket, which caters largely to expats, diplomats, and high-income consumers, was acquired by Aschalew Belay, founder of the Belayab business conglomerate, in 2019 but retains its founder’s name.
Getahun observes plenty of room to grow for supermarkets in the capital, characterizing the retail sector as “not yet having truly influential players.”
“The supermarket business in Ethiopia is an under-served market, covering less than 20 percent of the potential. There are only a few supermarkets, and in my many years of experience, there have been no truly influential players in the market except for a few such as Bambis and Novis,” he said.
Today, Bambis operates a total of five branches in Addis Ababa and relies primarily on imported goods.
“We import up to six containers a month,” Getahun told The Reporter Magazine.
Shoa Shopping Center is another prominent name in the trade whose 15 branches in the capital combined serve 70,000 or more customers a month, according to Ferhana Nesredin, marketing manager and head of procurement at Shoa.
She says that during holiday seasons, Shoa’s outlets can see up to 80,000 customers walk through in a month. While the figures are relatively large, they pale in comparison to the city’s population.
It is safe to claim that the customer base of local supermarkets is generally dominated by middle and high earners. However, there are exceptions to this trend, and Queen’s Supermarket is worth mentioning in this regard. By offering reasonably priced, locally produced agricultural products, Queen’s has been able to embrace different customer demographics, including the low-income households that make up most of Addis Ababa.
Queen’s Supermarket PLC is a subsidiary of MIDROC Technology Group, which itself is part of the larger MIDROC Investment Group. Queen’s entered the market late in comparison to veterans like Bambis and Novis, and has taken a very different approach to retail.
It was established with one million Birr in capital in 2010 with the primary purpose of acting as a retail and wholesale distribution channel for the products of its numerous sister companies. Its capital now stands at 82 million Birr, and the supermarket operates a total of 13 branches across the capital.
Semira Sherefa, general manager, says Queen’s served more than 6.2 million customers over the past year and outlined plans to grow its network to 30 outlets before the decade is out.
Nearly two million customers passed through its doors over the past three months, according to Semira, with many of them lured in by fair pricing on food and household commodities, particularly fruit and vegetables.
However, the general manager says that its profit margins on domestic goods are minimal, often no more than 1.2 percent, despite the high sales volume. The “remarkably thin” margins are compounded by new tax regulations, according to Semira.
“This past October, we were charged a minimum tax of 2.5 percent, which actually exceeded our profit. Due to sales of 4.2 billion Birr, our tax payment was 105 million Birr. But our annual profit has never exceeded 100 million Birr,” she told The Reporter Magazine.
Nonetheless, the fair pricing at Queen’s is what draws most of its customers in.
Sintayehu Mekonnen, a shopper at the Queen’s outlet near Ghion Hotel, says she depends on the supermarket for its affordable basic groceries. She spends up to 7,000 Birr a month on vegetables, sugar, rice, and salt.
Henok Ayele, another Queen’s customer, cited quality and relatively lower prices for produce compared to other privately-run supermarkets. He says shopping there has saved him and his family up to 10,000 Birr a month in costs, and appreciates the wide range of products on offer at Queen’s.
“The availability of other products like clothes and shoes means you can buy them on the same trip, along with essential consumer goods,” he said.
Regardless of their differing approaches, Addis Ababa’s supermarket chains rely heavily on wider margins offered by imported products to keep business going. Getahun notes a strong market for imported goods driven by high consumer demand, and says that local products such as milk are sold at local supermarkets “with a margin of one Birr or a few cents.”
The retail sector is also beginning to show signs of innovation, with businesses moving beyond traditional models to modernize and expand.
Among the innovators is Chip Chip, a company that operates a social buying platform that directly connects customers with farmers. By aggregating demand through group orders, Chip Chip bypasses middlemen and creates a more equitable supply chain.
This model allows the business to source directly from producers and offer substantial discounts—20 to 80 percent below market price, according to Chip Chip co-founder Amir Redwan.
“Our main aim is to create a more equitable supply chain by avoiding middlemen. This model allows us to offer significantly lower prices, which means we are primarily focused on serving lower-income communities,” he said.
Chip Chip received a USD 250,000 grant from the World Food Program Innovation Center for its unique approach in bypassing traditional supply chains and facilitating group purchases.
Amir says the company is currently prioritizing the supply of fruits and vegetables.
“So far, we’ve reached close to 300,000 customers; most of these are in Addis Ababa,” he told The Reporter Magazine.
Amir argues that Chip Chip’s approach will take time to register attractive profit.
“If you focus on quantity and growth, the prospects for profit become less of an immediate concern. We believe we can achieve profitability at scale,” he said.
Bambis, Queen’s, Shoa, and Chip Chip are all still just a tiny part of a worldwide retail market valued at more than USD 25 trillion, but could soon be competing with the likes of Carrefour, which registered almost 100 billion euros in profit in 2024.
Shopping Shake-Up: What Foreign Giants Could Mean for Local Retailers
The potential impacts of the liberalization of retail are up for debate, and stakeholders interviewed by The Reporter Magazine hold differing views on how the market will evolve once international retailers begin operations.
Opinions diverge sharply on whether the imminent entry of giants like Carrefour represents a threat or an opportunity for modernization, and questions arise concerning competition, supply chain stability, and fair regulatory practices.
Getahun sees the prospect as a necessary stimulus and an opportunity for strategic collaboration, not competition. He argues international retailers can ensure the stability of supply, and believes their entry will ultimately be a “positive experience” for local retailers.
“Importers will set their own profit margins,” said Getahun. “This will ensure a consistent supply of imported goods at a reasonable price.”
Getahun’s optimism is understandable, but a deeper look at how chains like Carrefour entered and quickly began to dominate retail markets in comparable countries like Kenya and Uganda, pushing out local supermarket chains like the one he manages, shows his hopes might be misplaced.
Carrefour established a presence in Kenya through the Majid Al Futtaim Group—its exclusive franchisee in the Middle East, Africa and Asia—in 2016 with a single outlet in Nairobi.
In May, the retailer opened its 29th location in Kenya, threatening to overtake local supermarket chains Naivas and Quickmart, as the country’s largest retailer.
Even now, Getahun concedes that competing with the likes of Carrefour would be futile.
“Competing with them directly is impossible, as they enter the Ethiopian market with foreign standards, larger properties,, and higher quality products, which will make them preferable to consumers,” he told The Reporter Magazine.
Bambis’s core strategy is alignment and potential partnership, according to Getahun.
“We have already started a process of aligning with Carrefour, as we believe this is the most viable path forward,” he said.
Semira, on the other hand, does not see the entry of foreign competitors as a threat, citing her chain’s focus on domestic supply.
“There’s a difference between the foreign competitors and our market. We supply our own products and those from other suppliers at an affordable cost,” she told The Reporter Magazine. “We have a reliable supply base.”
Semira views liberalization as an advantage for overall market health.
“The presence of various suppliers means costs will be reduced and monopolistic market practices will also be avoided,” she said. “As the market expands and new competitors join, the differences will become clear, and we will build a better capacity because of it.”
Her expectations are at odds with Kenya’s experiences with Carrefour.
In late 2023, the Competition Authority of Kenya slapped Majid Al Futtaim with a USD 7.1 million fine (the country’s largest ever) for “abusing a superior bargaining position” to force suppliers to accept lower prices for their goods.
Kenyan regulators also accused the company of illegally transferring its costs to suppliers.
Ferhana from Shoa, on her part, expressed confidence in local retailers’ ability to compete, but raised serious concerns about the regulatory environment.
“We can compete because the market is huge, Addis Ababa is expanding, and people’s lifestyles are changing,” she said. “We can confidently compete as long as there’s a level playing field.”
She says that regulatory obstacles at the Ethiopian Food and Drug Authority (EFDA), which must approve products before they can go on supermarket shelves, have made doing business difficult for domestic retailers.
“It’s difficult to register a product with EFDA,” said Ferhana, explaining that officials at the Authority blame the slow bureaucratic process on a lack of manpower. “For instance, registering a food product is exhaustive even if you’re importing directly from the manufacturer.”
Ferhana stressed that true competition hinges on consistent regulation.
“If the products imported by foreign companies face similar controls, then the field is level, and we can confidently compete in the market,” she said.
There are others in the industry who see the imminent entry of global retail giants as a threat.
Among them is the general manager of a hypermarket in Addis Ababa, who shared his opinions anonymously.
“If they join the local market as wholesalers, it will add value for us; but if retailers come, it will create stiff competition in which the outcome will be decided by the market and consumers,” he said.
The broader analysis confirms that despite the promise of modernization brought by global expertise, challenges remain. Currency shortages, regulatory bottlenecks, and competition from strong informal markets will impact operations.
Success for the foreign entrants, particularly Carrefour, hinges on strategic local partnerships and building an ecosystem that goes “beyond retail,” promoting local sourcing and integrating digital channels.
It remains to be seen, however, whether these developments will offer truly meaningful relief to Ethiopian households severely affected by rising grocery prices.
