Sainsbury comes a cropper in Cairo
Did HRM factors contribute to supermarket’s failure in Egypt?
ustomers at the first and largest Sainsbury store to open in Egypt regularly tried to
force tips on to the supermarket’s staff, particularly those at the meat, cheese and
fish counters who were providing a person-to-person service.
Giving tips was the norm in the Egyptian grocery system, which had hitherto been
dominated by small independent grocers, and customers had great difficulty adapting to
Sainsbury’s ‘‘no tipping’’ policy. As one customer insisted to a Sainsbury butcher: ‘‘You are
embarrassing me . . . Take it, take it.’’
This culture clash was one of many to take place during Sainsbury’s short-lived expansion
into the Egyptian market.
Sainsbury blamed difficult trading conditions
Sainsbury paid £100 million for a 25.1 percent share in the Egyptian supermarket chain
Edge. Established by the El-Nasharty group in 1997, Edge had 74 stores at the time of the
Sainsbury purchase in 1999. Six months later, Sainsbury raised its stake to 80.1 percent, for
a further £40 million. The first supermarket in Egypt to trade under the Sainsbury banner
opened in February 2000, and by November 2000 Sainsbury operated 106 supermarkets
and neighborhood stores in the greater Cairo area.
Only 14 months after opening the first Sainsbury store in Egypt, however, the company
pulled out and sold the subsidiary at a loss to its Egyptian partner. Sainsbury blamed difficult
trading conditions such as trading-permit delays, and the deteriorating political situation in
the Middle East. Moreover, the Sainsbury Group as a whole had performed badly in 2000
and 2001, and a strategic review had led to the decision to focus on the core UK grocery
business. This had led to the sale not only of the Egyptian operation, but also the Homebase
chain in the UK.
Sainsbury had done many things well in Egypt. In particular, it had greatly improved on the
inefficient, wasteful and sometimes unsanitary food-distribution system that prevailed in