BMI Egypt 2015

Q4 2015
www.bmiresearch.com
EGYPT
RETAIL REPORT
INCLUDES 5-YEAR FORECASTS TO 2019
ISSN 2040-9265
Published by:BMI Research
Egypt Retail Report Q4 2015
INCLUDES 5-YEAR FORECASTS TO 2019
Part of BMI’s Industry Report & Forecasts Series
Published by: BMI Research
Copy deadline: August 2015
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CONTENTS
BMI Industry View ............................................................................................................... 7
SWOT .................................................................................................................................... 9
Retail SWOT ............................................................................................................................................. 9
Political ................................................................................................................................................. 11
Economic ............................................................................................................................................... 12
Industry Forecast .............................................................................................................. 14

Headline Retail Forecast .......................................................................................................................... 14
Table: Total Household Spending (Egypt 2012-2019) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Table: Retail Sector Spending, % Of Total (Egypt 2012-2019) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Table: Retail Sector Spending, % of GDP (Egypt 2012-2019) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Table: Headline Retail Sector Spending (Egypt 2012-2019) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Retail Sector Forecast .............................................................................................................................. 20
Food, Drink And Tobacco ........................................................................................................................ 21
Table: Food, Drink & Tobacco Spending (Egypt 2012-2019) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Clothing And Footwear ........................................................................................................................... 22
Table: Clothing & Footwear Spending (Egypt 2012-2019) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Household Goods ................................................................................................................................... 23
Table: Household Goods Spending (Egypt 2012-2019) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Personal Care ....................................................................................................................................... 24
Table: Personal Care Spending (Egypt 2012-2019) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Household Numbers And Income Forecast ................................................................................................... 25
Table: Household Income Data (Egypt 2012-2019) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Table: Labour Market Data (Egypt 2012-2019) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Demographic Forecast ............................................................................................................................. 30
Table: Total Population (Egypt 2012-2019) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Table: Population: Babies (Egypt 2012-2019) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Table: Population: Young Children (Egypt 2012-2019) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Table: Population: Children (Egypt 2012-2019) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Table: Population: Young Teens and Older Children (Egypt 2012-2019) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Table: Population: Young People (Egypt 2012-2019) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Table: Population: Older Teenagers (Egypt 2012-2019) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Table: Population: 21yrs + (Egypt 2012-2019) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Table: Population: Young Adults (Egypt 2012-2019) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Table: Population: Middle Aged (Egypt 2012-2019) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Table: Population: Urban (Egypt 2012-2019) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Macroeconomic Forecasts ............................................................................................... 35

Expenditure Breakdown .......................................................................................................................... 37
Table: GDP By Expenditure (Egypt 2012-2019) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Industry Risk Reward Index ............................................................................................. 43
© Business Monitor International Ltd Page 4

Middle East And North Africa Risk/Reward Index .......................................................................................... 43

Table: Middle East And North Africa Retail Risk/Reward Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Egypt - Risk/Reward Index ........................................................................................................................ 44
Rewards ............................................................................................................................................... 44
Risks .................................................................................................................................................... 45
Market Overview ............................................................................................................... 46

Retail Formats ....................................................................................................................................... 46
Competitive Landscape .................................................................................................... 49

Department Store Groups ........................................................................................................................ 49
MGR ................................................................................................................................................... 50
Fashion ................................................................................................................................................ 50
Consumer Electronics ............................................................................................................................. 51
Glossary ............................................................................................................................. 53
Methodology ...................................................................................................................... 61
Industry Forecast Methodology ................................................................................................................ 61
Sources ................................................................................................................................................ 64
Risk/Reward Index Methodology ............................................................................................................... 64
Table: Retail Risk/Reward Index Indicators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
Table: Weighting Of Indicators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67

BMI Industry View
BMI View: Though the situation has a degree of fragility after the 2011 revolution, the economy is on its
way to recovery. Strong growth is expected to continue for Egypt, which will boost household spending
leading to more opportunities for retailers. Retailers will benefit from the increased number of households
that will fall into the middle income range and above (USD10,000), indicating more consumers with
disposable income to spend and greater demand for luxuries. Despite that, food and drink continues to
dominate household spending, with the MGR sector able to benefit if it can attract Egyptians with the
convenience of their service. Retailers will have many opportunities if they can take advantage of urban
dwelling Egyptians changing preferences for modern retail formats.
The Egyptian economy is expected to continue its recovery from the downturn that occurred due to the
events of the revolution in 2011. The country's GDP is expected to grow to USD300bn for 2015, USD69bn
more than in 2011, however there are still too many people living in poverty as the country struggles to
regain its stability. The future is optimistic for Egypt, with more investment and a young working
population expected to boost growth further, and according to our predictions at BMI, the economy will
reach a total size of USD403bn by 2019, cementing its position as one of the most important countries in
the region. Household spending makes up just over a third of total GDP, with that pattern expected to
continue, with total household spending expected to reach USD136bn by 2019 from USD104bn in 2015.
Therefore retailers can look at Egypt as a potential destination for growth and expansion as the economy
grows.
The growth will result in higher incomes that should change the preferences and spending patterns of the
average Egyptian. The number of households that fall in the middle income bracket (USD10,000+) will rise,
meaning more of the population is considered to be in the middle income bracket. Currently in 2015, 10%
of total households fall into this category, while the absolute number of households in this range is expected
to double by 2019 and in turn representing 18.4% of total households. The increase in the amount of
households in the middle income bracket is vital for retailers as it allows more spending on non-essential,
luxurious goods as they have more disposable income and have more modern lifestyles and wants, as
they are also more informed of the range available to them including international brands. Retailers in
health related products for example can benefit from a growing demand from Egyptians who are more
conscious about their health, while the increasing number of homeowners will boost demand for household
appliances.

There is heavy investment at the moment that is likely to boost the Egyptian economy as well as improve
the nation's infrastructure which should have benefits across the board. The Suez Canal, which was recently
completed in just one year instead of the expected three and revealed with the backdrop of much fanfare,
will boost the amount of trade and the convenience of shipping goods in and out of Egypt. This illustrates
the modernisation of Egypt, especially in the city of Cairo, which is having an effect on the preferred and
available retail formats in the country. Hypermarkets are fast becoming the destination of choice for those
looking to do their family grocery shopping due to the increased convenience, while malls continue to gain
traction and becoming more and more popular denting the dominance of the unorganised informal retail
formats which still largely prevail. While much of the country lives in rural areas, e-commerce though
lagging behind many other markets is expected to increase at a rapid rate as the population becomes more
connected.
Recent Developments
■ The Suez Canal was recently completed in the beginning of August, costing USD8bn and improving the
transport infrastructure for the country.
■ Telecom Egypt announced Q2 2015 profits of USD48mn, which is up 55% on 2015, due to increased
data services provided, indicating that e-commerce is a more viable channel for retailers.
■ One of the largest e-commerce firms in Egypt, Jumia, began their own clothing range to compete with
foreign international brands in the fashion sector.
■ Majid Al Futtaim, the operator of mass grocery retail chain Carrefour in Egypt announced plans to
add three new stores in the short term as part of a larger expansion plan for the country.
■ Bombardier and Orascom have agreed to build a new monorail connecting Cairo and Giza, improving
infrastructure and transport links, allowing for greater ease of movement for shoppers.
Key BMI Forecasts
■ We expect total household spending to reach USD104bn in 2015.
■ Household numbers will rise to 24.77mn in 2015, up 3.4% from the year before.
■ Around 5.1mn households will be in the USD10,000-plus income bracket by the end of 2019, compared
with 2.47mn in 2015.
■ The number of people in the key 20-39 age range will increase to 28.9mn from 27.4mn by 2019, helping
drive growth in the economy.

SWOT
Retail SWOT
Egypt Retail SWOT
Strengths ■
With a population of almost 85mn, Egypt is the largest market in the Arab world and
offers retail groups a potentially better return than the more saturated markets of the
UAE and Saudi Arabia.
■
The country is increasingly urbanised and this is supporting a movement towards
modern retail formats and generating new demand for non-essential goods.
■
The retail market is very diversified, with a range of formats for retailers to take
advantage of and reach customers by.
■
Egypt is a popular tourist destination, so there is many opportunities for retailers
selling goods specific to Egyptian culture.
Weaknesses ■
There is a lack of good quality retail space with retailers reliant on construction of new
retail space, which can be a slow process.
■
The majority of Egyptians, especially in rural areas, are low-income consumers.
■
The country faced a period of political instability over the past few years and this has
negatively impacted the confidence of both retailers and consumers.
■
Traditional shopping habits continue to favour small local retailers and this is
restricting the potential opportunities of the large, international retailers who may
struggle to attract consumers, especially outside of the country's urban areas.
Opportunities ■
The adoption of social media among the youth population is changing social and
shopping habits, with demand for international brands soaring.
■
Growth in tourism income during 2015 grew 27% to USD7.5bn and this will help
create new opportunities for retailers seeking to generate sales in the lucrative tourist
consumer market.

Egypt Retail SWOT - Continued
■
The country's increasingly affluent and youthful population are adopting modern
spending habits and this is expected to boost demand for non-essential items such
as clothing & footwear over the medium-to-long term.
■
The retail property market is set to grow strongly with supermarkets, hypermarkets,
department and speciality stores and modern shopping malls transforming the
retail formats available for domestic and international retailers.
Threats ■
If unemployment remains high in the country it will damage the spending levels of the
population, giving retailers less opportunity to sell non-essential products.
■
The instability of the region and the country could negatively affect the confidence in
the industry, particularly if it returns to the high levels of instability, putting off the
construction large retail spaces.
■
Hikes to domestic energy prices will have a pronounced impact on spending patterns
over the coming years as households are forced to devote a greater share of their
incomes to fuel.
■
High inflation poses an ongoing threat to the retail sector due to the negative
influence on household's purchasing power, thereby threatening consumer spending.

Political
SWOT Analysis
Strengths ■
Egypt has no serious disputes with neighbouring states, although its relationship with
Iran is relatively tense.
■
The interim government has received substantial financial assistance for Saudi Arabia,
UAE and Kuwait - indicating regional support.
Weaknesses ■
There is considerable domestic opposition to the government's relations with the US
and Israel, and, increasingly, to recent economic reforms.
■
Substantial tension exists between the military and Islamist groups, including the
popular Muslim Brotherhood.
■
The transition away from authoritarian rule and the creation of necessary democratic
institutions will be a protracted process, and there is no certainty that the end result
will be a fully consolidated representative regime.
■
The risk of sporadic terrorist attacks is significant, particularly from Sinai Province
(formerly Ansar Bait Al-Maqdis).
Opportunities ■
The country is a major player in the Arab-Israeli peace process.
■
Any success for Barack Obama's plans to re-engage with Syria and Iran would
benefit Egypt.
Threats ■
Although the level of militant attacks, particularly on tourists and Western targets,
appears to have fallen in recent years, sporadic incidents should not be ruled out.
■
Demands for the military to quicken the transition process away from authoritarian
rule are unlikely to be met, which could increase the risk of large-scale unrest.
■
The reported presence of Hizbullah operatives in Sinai, apparently planning to attack
tourist sites in Egypt, has highlighted the lack of effective policing in the region and
added to security risks in the area.

Economic
SWOT Analysis
Strengths ■
Exposure to the liquidity story in the Gulf should insulate Egypt against external
shocks to some degree and keep growth positive, assuming a relatively quick
recovery for the region from the current turmoil.
■
Low wages in global terms are advantages for foreign investors, particularly for those
wishing to use Egypt as a base for export-oriented manufacturing.
■
With a population of 84 million, Egypt is the largest market in the Arab world.
Weaknesses ■
Unemployment is high, which subdues demand.
■
Egypt has a large fiscal deficit owing to a surging subsidies bill and rising public wage
costs.
■
There are relatively high levels of corruption and bureaucracy.
Opportunities ■
The formation of a more representative government that is democratically elected
could help reduce graft.
■
Future tenders will most likely be more transparent, helping those firms not politically
connected with the government secure lucrative contracts.

SWOT Analysis - Continued
Threats ■
The wide fiscal deficit ensures elevated costs for servicing debt, most of which is held
domestically.
■
High unemployment may lead to political resistance to privatisation plans.
■
Militant attacks on tourist sites pose a downside risk to revenues from the key tourist
sector, although increased security spending appears to have been successful in this
regard.
■
Piracy in the Gulf of Aden has resulted in large numbers of shipping companies opting
for alternative routes that do not use the Suez Canal. If the situation is not resolved,
this key geo-strategic advantage will be lost.

Industry Forecast
Headline Retail Forecast
BMI View: As the economy has recovered so has the retail industry, with the industry as a whole expected
to post healthy growth figures during our forecast period. Overall household spending will rise to
USD136bn by 2019, from USD104bn, an increase of more than 25%. Food and drink is the main recipient
of this spending, however it isn't growing in importance, suggesting retailers should look elsewhere for the
major growth industries. Spending on health related products and services will experience average growth
of 9.1% a year during our forecast period, significantly higher than the 6.8% average for the retail
industry, and so representing opportunities for retailers looking to increase in presence and establish
themselves in a growing market.
Egypt has edged gradually towards a more stable political and economic environment over the past two
years and this has led to renewed interest in the retail property development scene. As a result, a wide-range
of modern formats such as supermarkets, hypermarkets, department and speciality stores are sprouting up
across the country. Luxury malls such as the Mall of Egypt are designed to cater to the capital's urban,
affluent and young population. Existing large malls, such as the City Stars and Cairo Festival City are home
to increasing numbers of international brands - a result of increasing awareness and demand from the
country's key wage-earning age bracket of 20-39 year olds who represent 32.4% of the population in 2015.
Providing stability can be maintained, we believe 2015 has the potential to offer a wide range of
opportunities within Egypt's retail sector. The stabilisation of the economy means we now expect real GDP
growth to reach 2.95% in 2015 up from 2.20% in 2014. This is supporting subtle but noticeable changes
which include more women entering the workforce and a more affluent middle class. We therefore are
anticipating greater demand for both food and non-food products, including premium products, and this will
create new opportunities for retailers. While the troubles of the past few years have dented performance in
the retail sector, the environment in 2015 appears more accommodating for both consumers and retailers.
Though it must be noted that this period stability is not guaranteed to last, as there are still tensions to
resolve regain full confidence in economic growth.

Recovery In Spending Projected For 2015 Onwards
Total household spending, USDbn, % growth (2012-2019)
15 140
10
120
100
0
-5 80
2012 2013 2014e 2015f 2016f 2017f 2018f 2019f
Total household spending, USD % y-o-y (LHS)
Total household spending, USDbn (RHS)
e/f = BMI estimate/forecast. Source: Egypt CAPMAS, BMI
While we believe disposable incomes and consumer spending will continue to rise, household consumption
growth will slow over the coming years due to external pressures such as fuel subsidy cuts as well as the
ongoing threat of high inflation. This is due to the fact that over the coming few years, these pressures may
exert a negative influence on Egyptian household's purchasing power.
The retail industry in Egypt is less saturated than a number of Middle East and North Africa (MENA)
countries such as the United Arab Emirates (UAE) and Saudi Arabia. As a result, there are strong incentives
for large international brands to plan their expansion or entry into the Egyptian retail sector. Over the next
five years, an increasing number of well-known international brands will enter the market while also
furthering the ongoing modernisation of the country's retail formats. The past year saw the likes of British
fashion retailer Ted Baker launch its first outlet in the country, while in February 2015 Kellogg's made a
major acquisition of Egypt's largest biscuit producer, Bisco Msr. These international entrants will benefit
from the forecast growth in household spending on the retail sector, which is expected to average 6.8%
between 2015 and 2019, with household spending rising from USD104bn to USD136bn. Moreover,

household spending within the retail sector will continue to account for around 34.7% of overall GDP for
Egypt, a respectable figure emphasising the importance of the sector as a whole.
Table: Total Household Spending (Egypt 2012-2019)
2012 2013 2014e 2015f 2016f 2017f 2018f 2019f
Total household spending, EGPbn 530.5 595.3 694.5 788.3 882.9 984.4 1,082.9 1,185.8
Total household spending, USDbn 87.4 86.6 98.0 104.0 109.0 118.6 127.4 136.3
Total household spending, USD % y-o-y 10.54 -0.90 13.22 6.12 4.76 8.81 7.41 6.98
Total household spending, % GDP 33.7 34.0 34.8 34.7 34.2 33.8 33.6 33.8
Total household spending, USD per
household 3,940.2 3,756.9 4,091.8 4,201.0 4,258.1 4,483.5 4,689.2 4,885.8
Total household spending, USD per capita 1,082.5 1,055.3 1,175.8 1,228.4 1,267.3 1,358.6 1,438.4 1,517.3
The vast majority of household spending is focused on the food & drink category, which accounts for the
lion's share of the household budget, and will continue to do so throughout our forecast period. Housing &
utilities also takes a sizeable share of total spending. Food & non-alcoholic drink spending is forecast to
account for 37.9% of total retail spending in 2015, while housing & utilities represents 18.7%. Spending on
health is some way behind, accounting for 9.8% of total retail spending. Transport is the fourth-biggest
spending area, at 5.5% of the total. In 2015, we believe that the food & non-alcoholic drinks and housing &
utilities sectors will collectively represent 56.6% of total retail spending in Egypt.
Housing and utilities will take up more of household spending in proportional terms from 18.7% to 18.9%
of total household spending from 2015 to 2019. This is because of the cuts on fuel subsidies increasing the
cost of utilities as well as the continued urbanisation and modernisation of the Egyptian population. As they
become urbanised they will look to live in higher quality and more expensive housing as supply is limited,
and the demand for utilities increases as their energy demands increase. There are three subsectors that are
set to see their share of household spending decrease during our forecast period. The largest is the food and
drink sector that will experience a drop of 1.2% in its proportion of total household spending as the essential
foodstuffs don't take up as much of spending. Clothing and footwear will also see a drop in importance,
moving from 4.9% to 4.6% of total household spending. Recreational spending will also decrease slightly in
proportional terms from 2.0% to 1.9% by 2019, as Egyptians prioritise their spending in other areas. It is
important to note that though as a proportion of household spending, these subsectors will experience a
decline, in absolute terms there will be strong growth as the economy grows.

Table: Retail Sector Spending, % Of Total (Egypt 2012-2019)
2012 2013 2014e 2015f 2016f 2017f 2018f 2019f
Food and non-alcoholic drinks spending, % total 39.1 38.1 38.3 37.9 37.5 37.2 36.9 36.7
Alcoholic drinks and tobacco spending, % total 3.8 4.1 3.9 4.0 4.1 4.2 4.2 4.3
Clothing and footwear spending, % total 5.4 5.5 5.0 4.9 4.8 4.7 4.7 4.6
Housing and utilities spending, % total 18.3 18.3 18.5 18.7 18.7 18.8 18.9 18.9
Furnishing and home spending, % total 4.1 4.2 4.0 4.0 4.0 4.0 4.0 4.1
Health spending, % total 8.8 9.4 9.5 9.8 10.0 10.3 10.4 10.6
Transport spending, % total 5.3 5.3 5.5 5.5 5.6 5.7 5.7 5.7
Communications spending, % total 2.4 2.3 2.4 2.4 2.4 2.4 2.4 2.4
Recreation and culture spending, % total 2.1 2.0 2.0 2.0 2.0 2.0 2.0 1.9
Education spending, % total 4.0 4.1 4.1 4.2 4.2 4.3 4.3 4.3
Personal, insurance and other spending, % total 3.0 3.1 3.0 2.9 2.9 2.9 2.9 2.9
Furnishing & home spending is one of the most promising non-essential spending categories within Egypt's
retail sector, as the increasingly affluent middle class prioritises household improvements and drive up
demand. Household expenditure on this segment is forecast to grow by an average 9.3% per year between
2015 and 2019. The country's larger urban population is also expected to spend increasing amounts on
restaurants and hotels, with household spending on this retail sub-sector forecast to grow by an
annual average 7.29% during the period under review.
Table: Retail Sector Spending, % of GDP (Egypt 2012-2019)
2012 2013 2014e 2015f 2016f 2017f 2018f 2019f
Food and non-alcoholic drinks spending, % GDP 13.2 12.9 13.3 13.1 12.8 12.6 12.4 12.4
Alcoholic drinks and tobacco spending, % GDP 1.3 1.4 1.4 1.4 1.4 1.4 1.4 1.4
Clothing and footwear spending, % GDP 1.8 1.9 1.8 1.7 1.6 1.6 1.6 1.6
Housing and utilities spending, % GDP 6.1 6.2 6.4 6.5 6.4 6.4 6.3 6.4
Furnishing and home spending, % GDP 1.4 1.4 1.4 1.4 1.4 1.4 1.4 1.4
Health spending, % GDP 3.0 3.2 3.3 3.4 3.4 3.5 3.5 3.6
Transport spending, % GDP 1.8 1.8 1.9 1.9 1.9 1.9 1.9 1.9
Communications spending, % GDP 0.8 0.8 0.8 0.8 0.8 0.8 0.8 0.8
Recreation and culture spending, % GDP 0.7 0.7 0.7 0.7 0.7 0.7 0.7 0.7

Retail Sector Spending, % of GDP (Egypt 2012-2019) - Continued
2012 2013 2014e 2015f 2016f 2017f 2018f 2019f
Education spending, % GDP 1.4 1.4 1.4 1.5 1.4 1.4 1.4 1.5
Restaurants and hotels spending, % GDP 1.2 1.2 1.3 1.3 1.2 1.2 1.2 1.2
Personal, insurance and other spending, % GDP 1.0 1.1 1.0 1.0 1.0 1.0 1.0 1.0
Additionally, household spending on areas such as health and education will continue to see strong growth,
a sign of an increasingly affluent spending pattern on the part of Egyptian consumers. Health spending is
forecast to expand significantly, from USD10.2bn to USD14.4bn between 2015 and 2019, rising from
3.4% of GDP to 3.6%. Household expenditure on education, meanwhile, is projected to increase from
USD4.4bn to USD5.9bn over our forecast period. The increase spending on education arises from the
greater options available to parents and students in the private sector, from private schools to extra-tuition.
Table: Headline Retail Sector Spending (Egypt 2012-2019)
2012 2013 2014e 2015f 2016f 2017f 2018f 2019f
Food and non-alcoholic drinks spending, EGPbn 207.5 226.6 266.1 298.4 331.0 365.9 399.8 435.2
Alcoholic drinks and tobacco spending, EGPbn 20.2 24.5 27.2 31.7 36.1 40.9 45.6 50.5
Clothing and footwear spending, EGPbn 28.7 32.6 35.0 38.8 42.5 46.6 50.5 54.5
Housing and utilities spending, EGPbn 96.8 109.2 128.8 147.0 165.4 185.2 204.3 224.3
Furnishing and home spending, EGPbn 21.5 24.7 27.9 31.7 35.6 39.8 43.8 48.0
Health spending, EGPbn 46.9 55.7 66.0 77.3 88.7 100.9 112.8 125.2
Transport spending, EGPbn 28.3 31.6 38.0 43.7 49.6 55.8 61.8 68.2
Communications spending, EGPbn 12.8 13.8 16.7 18.9 21.1 23.5 25.8 28.2
Recreation and culture spending, EGPbn 11.2 12.2 14.1 15.8 17.5 19.4 21.2 23.0
Education spending, EGPbn 21.4 24.3 28.7 33.0 37.4 42.1 46.7 51.4
Restaurants and hotels spending, EGPbn 19.1 21.7 25.4 28.7 32.1 35.7 39.2 42.9
Personal, insurance and other spending, EGPbn 16.0 18.5 20.5 23.2 25.9 28.7 31.5 34.4
Food and non-alcoholic drinks spending, USDbn 34.2 33.0 37.6 39.4 40.9 44.1 47.0 50.0
Alcoholic drinks and tobacco spending, USDbn 3.3 3.6 3.8 4.2 4.5 4.9 5.4 5.8
Clothing and footwear spending, USDbn 4.7 4.7 4.9 5.1 5.2 5.6 5.9 6.3
Housing and utilities spending, USDbn 15.9 15.9 18.2 19.4 20.4 22.3 24.0 25.8
Furnishing and home spending, USDbn 3.5 3.6 3.9 4.2 4.4 4.8 5.2 5.5

Headline Retail Sector Spending (Egypt 2012-2019) - Continued
2012 2013 2014e 2015f 2016f 2017f 2018f 2019f
Health spending, USDbn 7.7 8.1 9.3 10.2 10.9 12.2 13.3 14.4
Transport spending, USDbn 4.7 4.6 5.4 5.8 6.1 6.7 7.3 7.8
Communications spending, USDbn 2.1 2.0 2.4 2.5 2.6 2.8 3.0 3.2
Recreation and culture spending, USDbn 1.8 1.8 2.0 2.1 2.2 2.3 2.5 2.6
Education spending, USDbn 3.5 3.5 4.1 4.4 4.6 5.1 5.5 5.9
Restaurants and hotels spending, USDbn 3.1 3.2 3.6 3.8 4.0 4.3 4.6 4.9
Personal, insurance and other spending, USDbn 2.6 2.7 2.9 3.1 3.2 3.5 3.7 4.0
Alcoholic drinks and tobacco spending, USD % y-o-y 22.29 7.22 7.93 8.68 6.72 10.55 8.74 8.13
Clothing and footwear spending, USD % y-o-y 12.42 0.51 4.10 3.47 2.62 6.84 5.85 5.60
Housing and utilities spending, USD % y-o-y 11.15 -0.43 14.52 6.72 5.22 9.23 7.74 7.27
Furnishing and home spending, USD % y-o-y 13.49 1.30 9.55 6.38 4.96 9.00 7.56 7.11
Health spending, USD % y-o-y 18.64 4.87 15.03 9.47 7.31 11.06 9.13 8.46
Transport spending, USD % y-o-y 9.79 -1.47 16.70 7.65 5.95 9.87 8.23 7.69
Communications spending, USD % y-o-y 5.62 -4.83 17.78 5.74 4.46 8.54 7.20 6.80
Recreation and culture spending, USD % y-o-y 6.42 -4.17 12.57 4.84 3.74 7.88 6.68 6.34
Education spending, USD % y-o-y 12.32 0.44 14.52 7.60 5.91 9.84 8.20 7.67
Restaurants and hotels spending, USD % y-o-y 12.15 0.32 13.48 5.81 4.51 8.59 7.24 6.83
Personal, insurance and other spending, USD % y-o-y 14.20 1.81 7.76 5.60 4.35 8.44 7.12 6.73
Food and non-alcoholic drinks spending, USD % y-o-y 7.12 -3.59 14.00 4.85 3.74 7.89 6.68 6.34

Retail Sector Forecast
BMI View: Though food and non-alcoholic drinks make up the most of the retail industry, its dominance
will wane slightly as Egyptians grow richer and opt to spend their extra disposable income elsewhere.
Tobacco and alcohol will be one of the subsectors to benefit, by growing at 8.6% on average per a year,
until 2019, stronger growth than standard food and drink. As more Egyptians become house owners there
will also be stronger demand for household appliances, benefitting retailers in this sector.
A more stable economic and political backdrop has set the foundations for total household spending within
the Egyptian retail sector to grow to USD104bn in 2015. We expect expenditure to continue
growing robustly over the next five years, by an average 6.8% a year, across all areas of the retail sector.
This will be further boosted by the growing number of households moving into the USD10,000-plus income
bracket, which is crucial for spending on the retail sector and set to more than double between 2015 and
2019 to 5.1mn. In addition, the important 20-39 year age bracket is also forecast to grow slightly, and will
account for almost a third of the total population by 2019.
Essentials Spending Still Drives Retail Sector Growth

Household spending by category, USDbn (2012-2019)
75
50
25
0
2012 2013 2014e 2015f 2016f 2017f 2018f 2019f
Food and non-alcoholic drinks spending, USDbn
Household goods spending, USDbn
Clothing and footwear spending, USDbn
Personal care and effects spending, USDbn

We believe that the long-term trend within the Egyptian retail sector will see spending gradually move away
from the food & drink category and instead towards non-essential purchases. While food & drink
constitutes 37.9% of total spending in 2015, it is forecast to fall slightly to 36.7% by 2019. Such a trend
is common in countries where the population is gradually experiencing rising levels of disposable income
and moving further away from sustenance-based spending patterns. The planned opening of the Mall of
Egypt in 2016 is just one response to this long-term trend as developers and retailers alike are grabbing new
opportunities to cater to the country's gradually expanding thirst for non-essential purchases.
Food, Drink And Tobacco
Food & drink represents the largest area of household spending in Egypt, with housing & utilities some way
behind in second place. According to our forecasts, food & non-alcoholic drinks spending will account for
USD39.4bn in 2015, while alcohol & tobacco will account for an additional USD4.2bn. Food & non-
alcoholic drinks spending is expected to see average annual growth of 5.9% throughout our forecast period
as the mass grocery retail (MGR) sector in particular becomes more developed. We forecast even higher
average annual growth for alcohol & tobacco, at 8.6% between 2015 and 2019.
Per household spending on food & non-alcoholic drinks is forecast at USD1,590 in 2015, and we expect this
to increase to USD1,793 by the end of our forecast period in 2019. Per capita spending, meanwhile, is
expected to grow from USD465 to USD577 between 2015 and 2019. Food accounts for the lion's share of
expenditure in the food & non-alcoholic drinks segment, constituting USD37.5bn of the total spend of
USD39.5bn. Sales of non-alcoholic drinks are forecast at USD1.4bn in 2015.
It is important to note that while most Egyptians do not drink in public, many purchase alcohol to
drink privately at home. In 2013, plans were announced to ban the sale of alcohol, a move pushed forward
by Islamist hardliners in the government. These plans were shelved and this has allowed spending on
this category to rise, in part due to strong demand from tourists. It remains to be seen, however, whether a
future ban may be put into place. Such a ban would be devastating for inbound tourism flows and would
also remove an important source of tax revenue of the government.

Table: Food, Drink & Tobacco Spending (Egypt 2012-2019)
2012 2013 2014e 2015f 2016f 2017f 2018f 2019f
Food and non-alcoholic drinks spending, 207.5 226.6 266.1 298.4 331.0 365.9 399.8 435.2
EGPbn
USDbn
Food spending, USDbn 32.4 31.2 35.6 37.3 38.7 41.7 44.5 47.3
Non-alcoholic drinks spending, USDbn 1.2 1.2 1.3 1.4 1.4 1.6 1.7 1.8
Alcoholic drinks and tobacco spending, 3.3 3.6 3.8 4.2 4.5 4.9 5.4 5.8
USDbn
Alcoholic drinks spending, USDbn 1.5 1.6 1.8 1.9 2.0 2.2 2.4 2.5
Tobacco spending, USDbn 1.8 2.0 2.1 2.3 2.5 2.7 3.0 3.3
Food and non-alcoholic drinks spending, 7.12 -3.59 14.00 4.85 3.74 7.89 6.68 6.34
USD %
Food spending, USD % 6.80 -3.86 14.21 4.81 3.72 7.86 6.66 6.33
Non-alcoholic drinks spending, USD % 14.67 2.14 9.31 5.71 4.43 8.51 7.18 6.77
Alcoholic drinks and tobacco spending, USD 22.29 7.22 7.93 8.68 6.72 10.55 8.74 8.13
%
Alcoholic drinks spending, USD % 12.67 4.53 10.30 7.44 5.78 9.74 8.13 7.61
Tobacco spending, USD % 31.79 9.49 6.03 9.71 7.49 11.21 9.24 8.55
Food and non-alcoholic drinks spending, 1,541.5 1,429.8 1,567.9 1,590.4 1,596.4 1,666.6 1,731.2 1,793.0
USD per household
USD per capita
Clothing And Footwear
Clothing & footwear currently accounts for a relatively modest part of overall household spending; around
4.9% of the total in 2015. We expect household expenditure on clothing & footwear to grow by an annual
average 5.46% throughout our forecast period from 5.1bn in 2015 to 6.4bn in 2019. This is due to
increasing demand from the 20-39 years age bracket and those in the USD10,000-plus income bracket.
Despite this growth, its share of overall household spending is forecast to fall slightly to 4.6% by 2019 as
other segments grow more strongly.
The country's youthful and increasingly urbanised population will be the main driving force behind growth
in demand of clothing and footwear over the coming few years. Major fast-fashion retailers such as H&M

are already established in the country while modern shopping malls continue to be developed to attract the
attention of international brands who may wish to gain a foothold in the market. Providing stability in the
market continues, opportunities within the clothing & footwear segment will flourish on the back of a
growing consumer base.
Table: Clothing & Footwear Spending (Egypt 2012-2019)
2012 2013 2014e 2015f 2016f 2017f 2018f 2019f
Clothing and footwear spending, EGPbn 28.7 32.6 35.0 38.8 42.5 46.6 50.5 54.5
Clothing and footwear spending, USDbn 4.7 4.7 4.9 5.1 5.2 5.6 5.9 6.3
Clothing spending, USDbn 3.8 3.8 4.0 4.2 4.3 4.6 4.8 5.1
Footwear including repair spending, USDbn 0.9 0.9 0.9 1.0 1.0 1.1 1.1 1.2
Clothing and footwear spending, USD % y-o-y 12.42 0.51 4.10 3.47 2.62 6.84 5.85 5.60
Clothing spending, USD % y-o-y 12.42 0.51 4.25 3.55 2.69 6.90 5.90 5.64
Footwear including repair spending, USD % y-o-y 12.43 0.52 3.44 3.15 2.36 6.60 5.65 5.42
Clothing and footwear spending, USD per household 213.0 206.0 206.3 206.5 205.1 212.0 218.5 224.8
Clothing and footwear spending, USD per capita 58.5 57.9 59.3 60.4 61.0 64.3 67.0 69.8
Household Goods
The household goods sub-sector will continue to see strong growth throughout our forecast period, as the
number of households in the middle-income bracket of USD10,000-plus reaches 5.1mn by 2019, giving
consumers more disposable income to spend on products such as household appliances, consumer
electronics and furnishings. We forecast expenditure on household goods to see average annual growth of
7.7% throughout our forecast period, rising from USD2.4bn to USD3.2bn by 2019, which still doesn't
represent a particularly significant portion of household spending and it has more long term potential for
growth beyond our forecast period.
Of this, the largest proportion will be spent on household appliances, expected to reach USD0.7bn in 2015
and to grow by an annual average 10.9% through to 2019, when household spending on this area will
reach USD1.1bn. Opportunities for retailers in this segment lie in the increasing desire of Egyptians to have
modern appliances in their homes, driving spending growth. Though the household goods market remains
unsaturated, retail giants such as IKEA have already established themselves in the country and this will
pose new challenges to domestic retailers which may not be able to compete on price or range of items. The

other subsector to see strong growth (8.5% on average per a year), is spending on AV, camera & computers
as Egyptians become increasingly connected and more exposed to technology.
Table: Household Goods Spending (Egypt 2012-2019)
2012 2013 2014e 2015f 2016f 2017f 2018f 2019f
Household goods spending, EGPbn 11.9 13.7 15.7 18.0 20.4 22.9 25.4 27.9
Household goods spending, USDbn 2.0 2.0 2.2 2.4 2.5 2.8 3.0 3.2
Furniture and furnishings spending, USDbn 0.4 0.4 0.5 0.5 0.6 0.6 0.7 0.7
Household textiles spending, USDbn 0.4 0.4 0.4 0.4 0.4 0.4 0.5 0.5
Household appliances spending, USDbn 0.6 0.6 0.7 0.7 0.8 0.9 1.0 1.1
Glass, tableware and utensils spending, USDbn 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2
Home & garden tools/equipment spending, USDbn 0.1 0.1 0.1 0.1 0.1 0.1 0.2 0.2
AV, camera and computer spending, USDbn 0.3 0.3 0.3 0.3 0.3 0.4 0.4 0.4
Toys, sports, gardens and pets spending, USDbn 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1
Household goods spending, USD % y-o-y 14.06 1.71 10.92 7.47 5.80 9.74 8.13 7.60
Furniture and furnishings spending, USD % y-o-y 6.64 -3.99 18.77 8.67 6.71 10.53 8.73 8.11
Household textiles spending, USD % y-o-y 13.81 1.53 5.02 4.54 3.51 7.68 6.52 6.21
Household appliances spending, USD % y-o-y 23.51 7.97 10.68 9.75 7.51 11.21 9.24 8.54
Glass, tableware and utensils spending, USD % y-o-y 9.65 -1.59 5.80 3.62 2.75 6.99 5.96 5.72
Home & garden tools/equipment spending, USD % y-o-y 19.21 5.25 5.95 5.86 4.55 8.63 7.27 6.86
AV, camera and computer spending, USD % y-o-y 10.11 -1.23 13.77 7.49 5.82 9.73 8.13 7.59
Toys, sports, gardens and pets spending, USD % y-o-y 10.65 -0.82 8.23 5.78 4.49 8.56 7.21 6.80
Household goods spending, USD per household 88.4 86.5 92.3 95.9 98.2 104.3 109.8 115.1
Household goods spending, USD per capita 24.3 24.3 26.5 28.1 29.2 31.6 33.7 35.7
Personal Care
Personal care & effects spending is forecast to account for USD83.6 per household in 2015, and for
USD24.4 per capita. This represents USD2.1bn in total, according to our calculations. We believe this retail
subsector will continue to see steady growth over the next five years, on the back of increased
household spending on personal care, insurance & personal effects. Total household spending on personal
care & effects is expected to reach USD2.3bn by 2019, at an average annual growth rate of 2.2%. The
greater proportion of spending on personal care & effects is accounted for by personal care
products, forecast to be worth USD1.7bn in 2015; while the personal effects products segment is expected

to be worth USD0.4bn in 2015. Personal care & effects spending per household is projected to grow to
USD83.7 by the end of our forecast period. Per capita expenditure is projected to grow to USD26.0 by
2019.
Table: Personal Care Spending (Egypt 2012-2019)
2012 2013 2014e 2015f 2016f 2017f 2018f 2019f
Personal care and effects spending, EGPbn 12.9 14.8 14.9 15.7 16.4 17.8 19.0 20.3
Personal care and effects spending, USDbn 2.1 2.1 2.1 2.1 2.0 2.1 2.2 2.3
Personal care products spending, USDbn 1.8 1.9 1.7 1.7 1.7 1.8 1.9 2.0
Personal effects products spending, USDbn 0.3 0.3 0.4 0.4 0.4 0.4 0.3 0.3
Personal care and effects spending, USD % y-o-y 5.01 1.19 -2.30 -1.24 -2.38 5.87 4.63 4.30
Personal care products spending, USD % y-o-y 56.05 1.24 -10.19 0.25 -1.30 7.93 6.21 5.67
Personal effects products spending, USD % y-o-y -66.92 0.86 50.38 -7.16 -7.01 -3.56 -3.42 -3.39
Personal care and effects spending, USD per household 95.6 93.1 87.5 83.6 79.0 80.9 82.4 83.7
Personal care and effects spending, USD per capita 26.3 26.2 25.1 24.4 23.5 24.5 25.3 26.0
Household Numbers And Income Forecast
BMI View: The key characteristic regarding the makeup of household income for retailers is a growth
of those in the middle income bracket (USD10,000+), as it doubles from 2.4mn households to
5.1mn households. This is important for retailers as there is more disposable income for the population to
buy non-essential luxurious goods as more income is left after the purchases of the basics. The increase in
the total number of households and the average income per capita also boosts retailers prospects in
the forecast period.
The overall increase in the number of households in Egypt reflects the total population growth of the
country with the total expected to be 27.9mn in 2019, a significant increase on the 24.8mn households in
2015 and represents an average growth of a steady 3.09% a year during our forecast period. The increase in
the number of new households gives retailers an opportunity to build customer loyalty as there is greater
access to new customers. Economic growth in Egypt also results in greater income for households giving
them greater spending power as net income increases.
We forecast household and per capita income to increase during our forecast period as Egypt's economy
stabilises. Net income per household is forecast to reach USD8,430 by 2019, a marked improvement on

2015's projected USD6,736. Similarly, net per capita income is fore cast to grow fromUSD2,834 to
USD3,587 between 2015 and 2019. As a result of this income growth, the country's middle income bracket
of USD10,000-plus is set to expand in size from 10% of the country in 2015 to 18.4% in 2019. Despite
these increase in income, we expect to see slowing household consumption growth over the coming years,
primarily on the back of fuel subsidy cuts. Nevertheless, it is important to keep in mind that our baseline
scenario envisages tepid growth in household consumption, rather than an outright collapse.
Table: Household Income Data (Egypt 2012-2019)
2012 2013 2014e 2015f 2016f 2017f 2018f 2019f
Households,
number 22,176,339 23,049,544 23,961,707 24,767,743 25,598,099 26,453,847 27,168,395 27,895,521
Households, % 3.9 3.9 4.0 3.4 3.4 3.3 2.7 2.7
y-o-y
Average
working adults 2.3 2.2 2.2 2.2 2.1 2.1 2.1 2.0
per household
Gross Income,
per household, 42,189.68 45,986.11 51,296.76 57,224.06 63,706.68 70,487.91 76,730.80 82,236.98
EGP
Gross Income,
per household, 6,949.24 6,689.08 7,241.44 7,553.04 7,865.02 8,492.52 9,027.15 9,452.53
USD
Gross Income,
per capita, 17,520.4 19,176.5 21,493.2 24,078.9 26,906.8 29,865.0 32,588.4 34,990.3
EGP
Gross Income,
per capita, 2,885.86 2,789.39 3,034.14 3,178.19 3,321.83 3,598.19 3,833.92 4,021.88
USD
Net Income,
per household, 37,623.91 41,009.49 45,745.42 51,031.27 56,812.34 62,859.70 68,426.99 73,337.29
EGP
Net Income,
per household, 6,197.2 5,965.2 6,457.8 6,735.6 7,013.9 7,573.5 8,050.2 8,429.6
USD
Net Income,
per capita, 15,624.35 17,101.25 19,167.21 21,473.07 23,994.96 26,633.02 29,061.65 31,203.68
EGP
Net Income,
per capita, 2,573.6 2,487.5 2,705.8 2,834.2 2,962.3 3,208.8 3,419.0 3,586.6
USD
Tax and social
contributions, 10.8 10.8 10.8 10.8 10.8 10.8 10.8 10.8
% of gross
income
Tax and social
contributions, 1,896.06 2,075.29 2,326.00 2,605.82 2,911.86 3,231.99 3,526.71 3,786.66
per capita,
EGP

Household Income Data (Egypt 2012-2019) - Continued
2012 2013 2014e 2015f 2016f 2017f 2018f 2019f
Tax and social

contributions, 312.3 301.9 328.4 343.9 359.5 389.4 414.9 435.2
per capita,
USD
Households
'000 Net 10,555.9 10,234.0 12,412.2 13,919.5 15,410.1 17,777.0 19,615.6 21,089.0
Income
USD5,000+
Households
'000 Net 2,194.2 2,272.4 2,376.4 2,465.1 2,553.8 3,333.2 4,346.9 5,132.8
Income
USD10,000+
Households
'000 Net 1,497.6 1,507.7 1,629.4 1,710.4 1,794.9 1,914.0 2,010.5 2,090.5
Income
USD50,000+
Households
Net Income
USD5,000+, % 47.6 44.4 51.8 56.2 60.2 67.2 72.2 75.6
total
households
Households
Net Income
USD10,000+, 9.9 9.9 9.9 10.0 10.0 12.6 16.0 18.4
% total
households
Households
Net Income
USD50,000+, 6.8 6.5 6.8 6.9 7.0 7.2 7.4 7.5
% total
households
e/f = BMI estimate/forecast. Source: National sources, BMI
The key opportunity for retailers in the future is the growth of the middle-income bracket (USD10,000-plus)
where households have more disposable income to spend on non-essential items. We forecast the number of
households falling into this bracket to more than double between 2015 and 2019, from 2.4mn to more than
5.1mn. The number of households in the highest income bracket of USD50,000+ increases but by a smaller
amount from, 1.7mn to 2.1mn during our forecast period, which represents 6.9% and 7.5% of the total
household numbers in 2015 and 2019 respectively.

Employment Patterns
In part, this overall growth is due to our forecast pickup in economic growth, as well as the gradually rising
rates of employment. Unemployment, while on the high side (at a forecast 12.0% in 2015) is expected to
fall steadily throughout our forecast period, reaching 9.0% in 2019. Meanwhile, an additional 3.1mn people
will join the active workforce over our forecast period. The extra numbers in employment are positive for
retailers but the high unemployment is still a limitation on the earning and spending potential of the country.
Currently 4% of households have an income of less than USD1,000 per annum, which is not a significant
amount and should not limit opportunities for retailers too much. Too much of a large proportion of the
population on a low level of income, particularly under USD1,000 a year, means retailers would be limited
to selling the most basic goods. The events of the revolution in 2011 has had negative effect on those living
in the poorest conditions, with the amount of people living in poverty or extreme poverty rising, especially
in rural areas, with Egypt hoping the economy can experience strong growth and help raise much of the
population out of poverty. Almost 50% of households currently have an income of between USD1,000 and
USD5,000 and could be classified as low income households, without a huge amount of disposable income,
which is why more than half of household spending goes on food and drink, and housing and utilities, rather
than luxuries. Around 29.2% of the workforce was employed in the agricultural sector in 2012, with the
level slowly decreasing over the years.
However, the agricultural sector, though employing a large amount of people is not as productive for the
economy, with only 14.6% of the national GDP being coming from agriculture. The high proportion of
people working in agriculture in rural areas results in lower average incomes there compared to urban areas,
with cotton, rice and corn being some of the key crops in the country. The industrial sector only employs
24% of the working population but is relatively productive producing 38.9% of the nation's GDP. The
industrial sector is quite diverse, with production of iron and steel, petroleum refining and plastics
production some of the main industries.
The industrial activity centres around Greater Cairo, Alexandria and Helwan, and they provide higher
incomes than the agricultural sector. Most of the population is employed in the services sector, with almost
half of the workforce (47%) producing almost half of the GDP (46.5%). The main employing industries in
the service sector is in construction, tourism, canal trade and administrative roles, with the ICT industry
growing quickly. The average net income per capita is therefore USD2,834, which is not significantly high
and retailers should look to specialise in quite basic affordable goods to access the majority of the
population.

There is only 6.9% of the total number of households considered high income (USD50,000+) representing
the limited amount of customers there are for luxury high end products. Those who are capable of
producing a high income are often employed in the banking and insurance industry, as well as technical or
managerial roles in the petroleum industry which can also prove to lucrative. The main areas that have the
most highly paid individuals are Cairo which is the financial hub, and Alexandria which benefits from trade
and shipping services. Retailers would do best to target these areas if they are involved in the sale of non-
essential luxury goods, with the modern shopping malls being the ideal destination.
The high poverty statistics are largely a result of the high level of unemployment, also a consequence of the
political upheaval that occurred during 2011. Currently unemployment levels are at 12% which though is
higher than pre-revolution times, is on a decreasing trend, which will continue as it expects to be 9% in
2019. The youth unemployment rate is particularly high, as the labour market needs more reforms in the
future to encourage employment growth in the formal sector, with much of employment being in the
informal sector, leading to insecure jobs and unreliable incomes. The improvement in the unemployment
rate would benefit retailers as more households would have disposable income.
Table: Labour Market Data (Egypt 2012-2019)
2012 2013e 2014e 2015f 2016f 2017f 2018f 2019f
Labour force, '000 27,020.5 27,519.1 28,043.5 28,624.1 29,107.3 29,710.5 30,379.7 31,031.0
Labour force, % y-o-y 1.9 1.8 1.9 2.1 1.7 2.1 2.3 2.1
Employment, '000 23,595.7 23,886.5 24,397.9 25,189.2 25,905.5 27,036.5 27,645.5 28,238.2
Employment, % y-o-y 1.1 1.2 2.1 3.2 2.8 4.4 2.3 2.1
Unemployment, '000 3,424.8 3,632.5 3,645.7 3,434.9 3,201.8 2,673.9 2,734.2 2,792.8
Unemployment, % y-o-y 7.6 6.1 0.4 -5.8 -6.8 -16.5 2.3 2.1
Unemployment rate, %, ave 12.7 13.2 13.0 12.0 11.0 9.0 9.0 9.0

Demographic Forecast
BMI View: Egypt is the biggest country in the region in terms of population, and its overall demographic
profile is extremely attractive to retailers. There is a large amount of the population in the key growth
driving group of 20-39 years old, which represents great opportunities for retailers. Many of these will be
new wage earners and so gives an opportunity to retailers to build brand loyalty with new customers. One
drawback is that over half of the population live in rural areas, and are therefore more inaccessible to
retailers. Most of the transport centres around Cairo and the Suez Canal, with the railways being more
reliable than the road network.
As the most populous country in the Middle East, Egypt presents a lucrative choice for retailers wishing to
establish a base in the region. We forecast population to grow by an average 1.5% a year between 2015 and
2019, rising from a projected 91.5mn in 2015 to 98.8mn by 2019. This large population is accompanied by
an unsaturated and fragmented retail market whereby new opportunities are continually emerging.
Furthermore, the growing number of Egyptian households set to earn more than USD10,000 will continue
to fuel spending on retail as well as slowly modernise their spending patterns.
The country's 20-39 year age group plays a major role in generating long-term potential within the retail
market. We forecast growth in this age bracket to increase from 27.5mn in 2015 to 29.0mn in 2019. A
growing number of this age bracket are urban dwellers, educated and employed. In addition, this group are
technologically proficient. These factors combine together and will both influence and define the shopping
habits of the population over our forecast period. In addition to this, both new and existing retailers in the
market have the valuable opportunity to develop long-term brand loyalty amongst this particular age
group. This group will fuel the future growth in the retail sector, as well as the direction as they use the
internet significantly more than the previous generation and have greater awareness of international brands.
However, over the longer term this age bracket will see a moderate shrinkage as our forecasts show a
declining birth rate. We are also expecting minimal growth over the next five years in the young children
(0-4 years) age category. This means that in 15-20 years' time the key target market will be somewhat
smaller as the amount of those in working age falls and there is a greater amount of elderly people who
increase the pressure on those working.
Egypt has a smaller urban population when compared to its regional peers, constituting a total of 44.2% in
2015. However the huge size of its overall population means that the size of the urban segment remains very
substantial. Retail groups, both in the food and non-food sectors, are taking advantage of this by expanding

rapidly in urban areas, with the new 6th of October City urban community being developed to ease
overcrowding in Cairo.
Table: Total Population (Egypt 2012-2019)
2012 2013 2014 2015f 2016f 2017f 2018f 2019f
Total population, '000 85,660.9 87,613.9 89,579.7 91,508.1 93,383.6 95,215.1 97,006.9 98,771.4
Total population, % y-o-y 2.2 2.3 2.2 2.2 2.0 2.0 1.9 1.8
Total population, male '000 43,257.8 44,255.8 45,258.7 46,240.4 47,193.0 48,121.0 49,027.1 49,917.9
Total population, female '000 42,403.1 43,358.1 44,321.0 45,267.7 46,190.6 47,094.1 47,979.9 48,853.5
f = BMI forecast. Source: National sources, BMI
Table: Population: Babies (Egypt 2012-2019)
2012 2013e 2014e 2015f 2016f 2017f 2018f 2019f
Babies 0-12 months, '000 1,899.6 1,875.4 1,849.7 1,831.2 1,824.9 1,825.4 1,829.6 1,832.9
Babies 0-12 months, % y-o-y -0.6 -1.3 -1.4 -1.0 -0.3 0.0 0.2 0.2
Babies 0-12 months, % population 2.4 2.3 2.2 2.2 2.1 2.1 2.1 2.0
Babies 0-12 months, female '000 927.4 915.3 902.6 893.5 890.5 890.7 892.9 894.7
Babies 0-12 months, male '000 972.2 960.0 947.0 937.6 934.5 934.7 936.7 938.2
National Sources/BMI
Table: Population: Young Children (Egypt 2012-2019)
2012 2013 2014e 2015f 2016f 2017f 2018f 2019f
Young children 0-4 yrs, '000 9,139.2 9,205.8 9,252.5 9,284.5 9,302.1 9,303.8 9,291.7 9,268.1
Young children 0-4 yrs, % y-o-y 1.0 0.7 0.5 0.3 0.2 0.0 -0.1 -0.3
Young children 0-4 yrs, % population 11.3 11.2 11.1 11.0 10.8 10.7 10.5 10.3
Young children 0-4 yrs, male '000 4,675.3 4,709.9 4,734.4 4,751.1 4,760.4 4,761.5 4,755.4 4,743.5
Young children 0-4 yrs, female '000 4,463.9 4,495.8 4,518.1 4,533.4 4,541.6 4,542.3 4,536.3 4,524.7

Table: Population: Children (Egypt 2012-2019)
2012 2013 2014e 2015f 2016f 2017f 2018f 2019f
Children 5-9 yrs, '000 8,330.3 8,526.9 8,713.9 8,873.0 8,998.1 9,092.7 9,160.2 9,207.7
Children 5-9 yrs, % y-o-y 2.2 2.4 2.2 1.8 1.4 1.1 0.7 0.5
Children 5-9 yrs, % population 10.3 10.4 10.5 10.5 10.5 10.4 10.3 10.3
Children 5-9 yrs, male '000 4,258.7 4,359.3 4,455.1 4,536.8 4,601.2 4,650.1 4,685.3 4,710.1
Children 5-9 yrs, female '000 4,071.6 4,167.5 4,258.8 4,336.2 4,396.9 4,442.6 4,474.9 4,497.5
Table: Population: Young Teens and Older Children (Egypt 2012-2019)
2012 2013 2014e 2015f 2016f 2017f 2018f 2019f
Young teens and older children 10-14 yrs, 7,754.6 7,798.8 7,869.1 7,976.5 8,125.4 8,307.0 8,503.7 8,690.7
'000
Young teens and older children 10-14 yrs, % 0.5 0.6 0.9 1.4 1.9 2.2 2.4 2.2
y-o-y
Young teens and older children 10-14 yrs, % 9.6 9.5 9.4 9.4 9.4 9.5 9.6 9.7
population
male '000
female '000
Table: Population: Young People (Egypt 2012-2019)
2012 2013 2014e 2015f 2016f 2017f 2018f 2019f
Young people 0-14 yrs,'000 25,224.1 25,531.4 25,835.5 26,134.0 26,425.5 26,703.5 26,955.6 27,166.5
Young people 0-14 yrs,% y-o-y 1.2 1.2 1.2 1.2 1.1 1.1 0.9 0.8
Young people 0-14 yrs,% 31.2 31.1 31.0 30.9 30.7 30.6 30.4 30.2
population
Young people 0-14 yrs, male '000 12,896.0 13,053.9 13,210.2 13,363.6 13,513.5 13,656.5 13,786.2 13,894.9
Young people 0-14 yrs, female 12,328.0 12,477.5 12,625.3 12,770.4 12,912.0 13,047.0 13,169.4 13,271.6
'000

Table: Population: Older Teenagers (Egypt 2012-2019)
2012 2013 2014e 2015f 2016f 2017f 2018f 2019f
Older teenagers 15-19 yrs, '000 7,497.7 7,543.1 7,598.4 7,648.3 7,687.5 7,723.2 7,767.7 7,838.2
Older teenagers 15-19 yrs, % y-o-y 0.2 0.6 0.7 0.7 0.5 0.5 0.6 0.9
Older teenagers 15-19 yrs, % population 9.3 9.2 9.1 9.0 8.9 8.8 8.8 8.7
Older teenagers 15-19 yrs, male '000 3,822.4 3,846.2 3,875.1 3,901.0 3,921.3 3,939.8 3,962.6 3,998.7
Older teenagers 15-19 yrs, female '000 3,675.3 3,696.9 3,723.4 3,747.3 3,766.1 3,783.4 3,805.1 3,839.5
Table: Population: 21yrs + (Egypt 2012-2019)
2012 2013 2014e 2015f 2016f 2017f 2018f 2019f
Population 21+ yrs, 46,475.4 47,498.5 48,482.3 49,438.0 50,422.5 51,384.9 52,337.3 53,294.4
'000
Population 21+ yrs, % 2.3 2.2 2.1 2.0 2.0 1.9 1.9 1.8
y-o-y
Population 21+ yrs, % 57.6 57.9 58.1 58.4 58.6 58.9 59.1 59.3
population
Population 21+ yrs, 23,043.5 23,553.8 24,042.8 24,515.9 25,002.1 25,475.1 25,941.4 26,409.1
male '000
Population 21+ yrs, 23,431.9 23,944.7 24,439.5 24,922.1 25,420.3 25,909.8 26,395.9 26,885.3
female '000

Table: Population: Young Adults (Egypt 2012-2019)
2012 2013 2014e 2015f 2016f 2017f 2018f 2019f
Young adults 20-39 yrs,'000 25,958.9 26,495.0 26,997.3 27,464.6 27,897.4 28,293.3 28,646.7 28,950.4
Young adults 20-39 yrs,% y-o-y 2.2 2.1 1.9 1.7 1.6 1.4 1.2 1.1
Young adults 20-39 yrs,% 32.2 32.3 32.4 32.4 32.4 32.4 32.3 32.2
population
Young adults 20-39 yrs, male 13,083.1 13,354.0 13,608.8 13,845.7 14,064.5 14,264.4 14,442.7 14,596.1
'000
Young adults 20-39 yrs, female 12,875.8 13,141.1 13,388.6 13,619.0 13,832.9 14,028.9 14,204.0 14,354.3
'000
Table: Population: Middle Aged (Egypt 2012-2019)
2012 2013 2014e 2015f 2016f 2017f 2018f 2019f
Middle aged 40-64 yrs,'000 17,484.1 17,771.1 18,080.8 18,433.4 18,835.3 19,282.5 19,771.9 20,296.5
Middle aged 40-64 yrs,% y-o-y 1.7 1.6 1.7 2.0 2.2 2.4 2.5 2.7
Middle aged 40-64 yrs,% 21.7 21.7 21.7 21.8 21.9 22.1 22.3 22.6
population
Middle aged 40-64 yrs, male '000 8,797.5 8,943.5 9,098.0 9,270.8 9,464.8 9,678.4 9,911.6 10,162.9
Middle aged 40-64 yrs, female 8,686.5 8,827.6 8,982.8 9,162.6 9,370.5 9,604.1 9,860.3 10,133.5
'000
Table: Population: Urban (Egypt 2012-2019)
2012 2013 2014e 2015f 2016f 2017f 2018f 2019f
Urban population, '000 35,277.2 35,994.7 36,714.7 37,434.0 38,236.1 39,038.0 39,839.0 40,639.2
Urban population, % population 43.7 43.9 44.0 44.2 44.5 44.7 45.0 45.2
Rural population, '000 45,444.6 46,061.7 46,672.1 47,271.7 47,773.5 48,259.7 48,729.9 49,184.3
Rural population, % population 56.3 56.1 56.0 55.8 55.5 55.3 55.0 54.8

Macroeconomic Forecasts
BMI View: Egypt's economic growth will gather steam over the coming quarters on the back of political
stability, pent-up demand and a weaker currency. This will mostly manifest itself through a rapid uptick in
fixed investment and net exports. Growth in consumption (both public and private) will be relatively low
given subsidy reform, high unemployment and efforts to reduce the fiscal deficit. We forecast real GDP
growth of 3.0% in FY2014/15 and 4.1% in FY2015/16.
We expect growth in the Egyptian economy to pick up steam in the coming quarters with fixed investment
becoming the key contributor. We retain our expectation for real GDP growth of 3.0% in FY2015
(fiscal year running from July 2014 - June 2015) and 4.1% in FY2016, from an estimated 2.2% in
FY2014. Our forecasts are a notable uptick compared with previous years; however, economic expansion
on par with the early 2000s at 5-6% is off the cards until 2017 at the earliest. Growth will be increasingly
driven by fixed investment as consumer and government spending remain weighed down by fuel subsidy
reform. Over the longer term, we see increasing potential for Egypt to sign an IMF Stand-By Arrangement.
It has already undertaken some of the required reforms such as cutting energy subsidies and widening the
income tax base, and while we do not expect an agreement to be reached in 2015, any positive signals from
negotiations over the coming quarters could bolster investment activity next year.

Notable Uptick
Egypt - Real GDP Growth (%)
1
2009
2010
2011
2012
2013
2014e
2015f
2016f
2017f
2018f
2019f
e/f = BMI estimate/forecast. Soucre: BMI, CBE
Although we expect economic activity to gradually gather steam over the coming quarters, we believe the
conditions necessary for a more aggressive acceleration are not yet present. Namely, Egypt's fiscal and
current accounts are experiencing significant strains, while policy levers available to authorities are
minimal. The external climate is also likely to prove less than favourable in the near term, with the eurozone
(which absorbs one quarter of Egyptian exports) growing at only a minimal pace.

Cautious Signs Of Optimism

Egypt - HSBC Purchasing Managers' Index
Source: BMI, HSBC
Expenditure Breakdown
Household Consumption: Fuel subsidy cuts and elevated inflation will ensure household consumption
growth remains relatively slow over the coming quarters, even with lower global oil and food prices. Hikes
to domestic energy prices will have a pronounced impact on spending patterns, as households are forced to
devote a greater share of their incomes to fuel.
In addition, significant structural weaknesses, particularly anaemic credit growth to the private sector and an
only modestly improving employment picture, will prevent more robust consumer spending in the near
term. According to the central bank, the official unemployment rate has fallen very slowly from an all-time
high of 13.1% in Q314 to 12.9% at the end of 2014, and we believe the unofficial rate is significantly
higher.
However, our baseline scenario envisages tepid growth in household consumption, rather than a return to
contraction. There are several factors which augur well for private spending patterns over the coming
quarters. One positive for household consumption is the improving outlook for Egypt's crucial tourism

industry, which accounts for around 10% of the country's GDP and employs a similar share of the
population. According to Egypt's Central Agency for Public Mobilization and Statistics, 640,200 visitors
arrived in October, a 5.6% year-on-year (y-o-y) increase. Given our expectation for a modest improvement
in political and stability, we expect the tourism sector to gradually return to monthly tourist levels of
800,000-1mn in the coming quarters. Overall, we forecast private consumption growth of 2.5% in 2015 and
3.0% in 2016, contributing 2.3 and 2.7 percentage points in real growth respectively.
Turnaround Will Be Slow

Egypt - Unemployment rate (% of Labour Force)
Source: BMI, CBE
Government Consumption: We expect one of the most pronounced changes to the shape of Egyptian
growth over the coming quarters will be a sharp slowdown in government consumption. In FY2015 the
budget deficit will contract slightly to 12.1% of GDP from a record 14.1% the previous year, as fuel subsidy
cuts are implemented. The elevated budget deficit, combined with yields on three-month treasury bills at
11.4%, means Egypt is not in a position to expand fiscal policy at present. Indeed, despite significant
pressures to raise living standards and create employment opportunities, an increase in the public sector
wage bill is unlikely. We forecast government consumption to expand by only 2.5% in real terms in
FY2015, marking one of the slowest paces of expansion in our time series dating back to 1998.

Gross Fixed Capital Formation: We expect an acceleration in gross fixed capital formation (GFCF) in
Egypt over the coming quarters on the back of relative political stability and policy continuity as well as
substantial pent-up demand. Since early 2011, net foreign direct investment into Egypt has fallen
precipitously, from USD6.4bn in FY2011 to USD4.1bn in FY2014, as political turmoil took hold firstly
with the overthrow of President Hosni Mubarak and most recently with the ousting of the Muslim
Brotherhood. FDI inflows came in at a fairly healthy USD5.2bn in the July-December 2014, up 10.2% y-o-
y. Crucially, this rise was mostly on the back of an uptick in investment from the Gulf States.
While it may be too early to tell what the impact of lower oil prices will have on overseas investments by
the Gulf we expect continued investments across the housing and banking sectors in Egypt given huge
potential. We forecast GFCF to become an increasingly important growth driver over the coming quarters,
with real growth of 6.5% in FY2015, compared with overall real GDP growth of 3.0%.
With parliamentary elections due to take place in Q415, we expect a further improvement in the country's
political risk profile. The success of elections would ensure a degree of policy continuity, the absence of
which has deterred investment since the onset of the Arab Spring. Indeed, the government has announced it
will pass laws in the coming weeks to clarify regulations for the mining sectors and the purchase of
industrial land.

Investment To Bolster Growth

Egypt - Real GDP Growth By Expenditure, % y-o-y
10
-5
-10
2013
2014e
2015f
2016f
2017f
Private final consumption, real growth % y-o-y
Government final consumption, real growth % y-o-y
Fixed capital formation, real growth % y-o-y
Exports of goods and services, real growth % y-o-y
Imports of goods and services, real growth % y-o-y
Net Exports: The outlook for net energy exports is particularly precarious due to rising domestic
consumption and a lack of investment in production, even with higher fuel costs. Our Oil & Gas team
forecast the country's net exports of natural gas will fall from 1.1 billion cubic metres (bcm) in 2013, to a
net importer of 5.1bcm in 2018. The trend for oil is even more concerning, with imports forecast to increase
from an estimated 78,000 barrels per day (b/d) at the end of 2014 to some 114,700b/d in 2018. The lag
between improvements in political stability and the impact on investment and hydrocarbons production
means that Egypt will only become a net exporter of gas in two years. We believe that the current global
downstream dynamics and low fuel pricing structure in Egypt provide insufficient incentive to attract
significant international investment. This will leave the planned redevelopment of the sector largely in the
hands of the government. Egypt will also become increasingly reliant on imported gas from Israel.

Worrying Outlook
Egypt - Net Hydrocarbon Exports (USDbn)
10
-5
2007
2008
2009
2010
2011
2012
2013e
2014e
2015f
2016f
2017f
2018f
2019f
Total net oil exports (crude & products), USDbn
Dry natural gas net exports, USDbn
e/f = BMI estimate/forecast. Source: BMI, EIA
We expect Egypt's large manufacturing export base to see growth over the coming quarters given recent
investment in the autos and food sectors especially with the devaluation in the Egyptian pound is going to
have on boosting competitiveness. That said while the external environment is certainly improving
moreover, global growth is far from being strong enough to act as a key driver of Egypt's macroeconomic
recovery.

Table: GDP By Expenditure (Egypt 2012-2019)
2012 2013 2014e 2015f 2016f 2017f 2018f 2019f
Private final consumption, EGPbn 1,271.0 1,417.8 1,654.1 1,885.7 2,130.8 2,397.2 2,665.6 2,918.9
Private final consumption, USDbn 209.4 206.2 233.5 248.9 263.1 288.8 313.6 335.5
Private final consumption, real growth % y-o- 6.5 2.8 3.0 3.0 4.0 5.0 5.2 5.0
y
Government final consumption, EGPbn 179.0 204.8 240.0 272.4 307.8 343.2 377.5 409.6
Government final consumption, USDbn 29.5 29.8 33.9 36.0 38.0 41.4 44.4 47.1
Government final consumption, real growth 3.1 3.5 1.0 2.5 4.0 4.0 4.0 4.0
% y-o-y
Fixed capital formation, EGPbn 246.1 241.6 265.1 311.5 364.4 420.9 479.9 535.1
Fixed capital formation, USDbn 40.5 35.1 37.4 41.1 45.0 50.7 56.5 61.5
Fixed capital formation, real growth % y-o-y 5.7 -9.6 2.0 6.5 8.0 8.0 8.0 7.0
Exports of goods and services, EGPbn 274.6 316.6 303.4 343.1 384.3 424.7 462.9 488.4
Exports of goods and services, USDbn 45.2 46.1 42.8 45.3 47.4 51.2 54.5 56.1
Exports of goods and services, real growth -2.3 4.1 1.5 2.1 3.0 3.0 3.0 1.0
% y-o-y
Imports of goods and services, EGPbn 407.2 434.5 480.5 552.6 635.5 727.6 814.9 892.3
Imports of goods and services, USDbn 67.1 63.2 67.8 72.9 78.5 87.7 95.9 102.6
Imports of goods and services, real growth 10.8 -1.1 3.0 4.0 6.0 7.0 6.0 5.0
% y-o-y
Net exports of goods and services, EGPbn -132.6 -117.9 -177.1 -209.4 -251.1 -302.9 -352.0 -404.0
Net exports of goods and services, USDbn -21.8 -17.1 -25.0 -27.6 -31.0 -36.5 -41.4 -46.4
Net exports of goods and services, real 93.0 -17.6 9.0 11.1 16.3 19.2 13.9 14.5
growth % y-o-y

Industry Risk Reward Index

Middle East And North Africa Risk/Reward Index
The attraction of the Middle East and North Africa retail market to potential investors comes mainly from a
favourable long-term economic outlook, a steady rise in disposable income, strong tourism industries and a
growing interest in Western styles of retailing in the region.
Table: Middle East And North Africa Retail Risk/Reward Index
Rewards Risks
Industry Country Industry Country Retail index

Rewards Risks Rank
rewards rewards risks risks score
Qatar 69.17 70.00 68.33 64.53 70.00 60.88 67.77 1
Saudi Arabia 73.33 76.67 70.00 47.63 50.00 46.05 65.62 2
Iran 73.33 63.33 83.33 42.34 50.00 37.23 64.03 3
UAE 62.50 56.67 68.33 55.73 50.00 59.56 60.47 4
Bahrain 64.17 60.00 68.33 51.84 50.00 53.07 60.47 5
Israel 57.50 76.67 38.33 63.26 50.00 72.10 59.23 6
Algeria 63.33 53.33 73.33 45.16 45.00 45.27 57.88 7
Egypt 63.33 60.00 66.67 43.86 50.00 39.77 57.49 8
Kuwait 59.17 50.00 68.33 52.40 50.00 54.00 57.14 9
Jordan 57.50 53.33 61.67 48.23 55.00 43.72 54.72 10
Tunisia 51.67 46.67 56.67 50.01 55.00 46.68 51.17 11
Morocco 51.67 46.67 56.67 49.42 50.00 49.03 50.99 12
Iraq 53.33 53.33 53.33 38.93 50.00 31.54 49.01 13
Scores out of 100, with 100 being the best. The Retail score is the principal part of the Index. It comprises two sub-
scores: Risks and Rewards, which have a 70% and 30% weighting respectively. In turn, the Rewards score comprises
Industry Rewards and Country Rewards, which have an equal weighting and are based on growth/size of the retail
industry (Industry) and the broader economic/socio-demographic environment (Country). The Risks score comprises
Industry Risks and Country Risks, which have a 40% and 60% weighting respectively, and are based on a subjective
evaluation of barriers to entry and the regulatory environment (industry) and the industry's broader country risk exposure
(country), which is based on BMI's proprietary Country Risk Index. This structure is aligned across all industries for which
BMI provides Risk/Reward Indices, and is designed to enable clients to consider each index individually or as a
composite. Source: BMI

Egypt - Risk/Reward Index
Egypt sits in eighth place out of 13 countries in BMI's Retail Risk/Reward Index for the Middle East
and North Africa (MENA) region, with an overall score of 57.49 out of 100. The country's performance is
boosted by its large population and strong forecast household spending growth and weakened by low per
capita household spending, high inflation and the ongoing threat of political instability.
Rewards
Egypt scores 63.33 out of 100 for overall rewards, putting it fifth regionally in this category. The
country scores highly for forecast household spending growth and the size of its overall population, but
continues to be held back by modest per capita spending, and therefore total household expenditure.
Industry Rewards
The industry rewards score is calculated from the total household spending, the household spending per
capita, and the household spending growth. Egypt as a large economy has a sizeable total expenditure for all
households. The country currently spends USD104bn a year from households, which makes up 34% of the
total GDP. Household spending per capita is slightly more modest at USD1,228, lagging behind some of its
Middle Eastern neighbours that have far greater spending as individuals. Growth is healthy, though not as
strong as it could be due to the instability within the country, estimated to be around 6.8% a year on average
throughout the next 4 years. Overall Egypt scores a 60.00 for Industrial rewards, one of the stronger in the
MENA region, with only 4 countries rating higher.
County Rewards
The level of urbanisation in Egypt is below par for the region, standing at only 44.2%, and the level of
increased urbanisation will only be minor during the next four years. This severely limits the market size for
retailers in Egypt as it makes it difficult to efficiently reach large numbers of people who live in rural areas.
The proportion of people in the prime working age is 32.4% which will help drive the economy as well as
spending, benefitting retailers by increasing the individuals with significant levels of disposable income.
The biggest boon is its large overall population with 84.7mn people living in Egypt, which is expected to
grow by 5mn by 2019, increasing the market for retailers. The result is that Egypt ranks in the middle of the
pack for country rewards with a ranking of 66.7 due to the low levels of urbanisation.

Risks
Egypt scores 43.86 out of 100 for overall risks, placing it 11th out of 13 countries in the region. This score
is a slight improvement from the first quarter of 2015 when Egypt was ranked lowest with a score of 42.03.
This is due to signs of improvements in both the political and economic situation within the country.
Industry Risks
Egypt scores averagely for industry risks sharing a rating of 50.00 with eight other countries in the region.
The industry risk score is reached by gauging the barriers to entry, as well as the state of the regulatory
environment in the industry. Since 2004, Egypt has had an investment program to attract more FDI, the
General Authority for Investment and Free Trade (GAFI), which has lowered tariffs and simplified
procedures. All sectors are open, but some have more regulations depending on their importance to the
economy and their sensitivity. Since the revolution, capital controls have been put in place meaning more
authorisation is needed for amounts over USD100,000 leaving the country, which reportedly can take
several weeks.
Country Risks
The country risks of an economy is calculated by taking into account the level of inflation, exchange rate
volatility, political and economic score, as well as the infrastructure of the country (physical and labour).
There is unfortunately bleak long-term inflationary outlook as well as poor labour and physical
infrastructure that will persist over the coming few years. Though the physical infrastructure has been given
a boost with the large scale project to widen the Suez Canal to increase traffic, which some thought cost too
much, but will improve traffic nevertheless. There is also the possibility that the political environment could
once again destabilise as the revolution was only four years ago, with the situation still fragile. Overall
Egypt ranks poorly for country risks, with a rating of 39.77 only above Iraq and Iran, due to its tense
political environment mainly, as it is still very much in the restabilising mode post-revolution.

Market Overview
Egypt's large, young and relatively urbanised population has created an increasingly lucrative
retail environment for domestic and intentional retailers alike. The past decade has seen continued growth in
the number of modern retail formats on offer within the country however the market remains fragmented
with smaller, family run shops dominating even in the highly populated cities. Despite the fragmented
nature of the market, it is also far less saturated than that of regional peers. Egypt's retail market is
undergoing a gradual modernisation process. While traditional formats prevail in both urban and rural areas,
the proliferation of modern shopping malls is broadcasting the lifestyle-element of the retail sector to a
young and open consumer base. As a result, there is a growing familiarity with international brands,
especially amongst urban dwellers, and retailers are increasingly keen to cater to potential demand in what
currently remains a relatively unsaturated market.
Demand for retail space has recovered well after the Arab spring, as retailers look to benefit from the
growing economy. There is a lack of supply in the urban areas at the moment, as new developments are not
completed quickly enough to satisfy all retailers. The retailers are targeting space in malls, as Egyptian
urban dwellers lean towards that format slowly; however the informal sector still dominates in proportional
terms. As investors gain more confidence that the stability will be long lasting, there will be more incentive
to invest heavily in constructing new and modern retail space.
Retail Formats
Traditional retail formats remain popular among the vast majority of Egyptian consumers. Small, 'mom and
pop' stores cater to a wide variety of household needs and continue to dominate, even in the country's highly
populated urban areas. Nonetheless, modernisation is underway and there is a gradual move to organised
retail formats which are being pushed forward by a number of developers who are constructing modern
retail real estate to cater to these changes. As a result, there is huge room for growth as both food and non-
food retail move into more organised formats.
MGR
Both local and international Hypermarkets and supermarkets have been warmly embraced by Egyptian
shoppers, becoming the first choice for many when doing their weekly shop. They have become a
convenient place where families, particularly those in the middle income brackets, can complete all their
main shopping duties in one trip, while taking advantage of the low prices that the economies of scale
offers. Shoppers are also demanding higher standards of stores, in terms of cleanliness and choice of

products that the traditional "mom and pop" stores cannot provide. As a result of these changing
preferences, the number of supermarkets and hypermarkets are increasing at the expense of the more
traditional formats for groceries.
A key indication of the potential seen within Egypt's mass grocery retail (MGR) sector is the presence
of multinational retailers in the region, with hypermarkets, supermarkets and express stores all
proliferating. Convenience and discount formats are also popular. Expansion in the MGR sector is
continuing, with the government recently granting legal approval to MAF for the building of 20 new stores,
half of them in suburbs around Cairo and Alexandria. BIM recently announced plans to enter the Egyptian
market; while Dina Farms, Egypt's largest private farm which currently has eight retail stores nationwide,
has said it will add four more. Majid Al Futtaim will be adding three new stores in the short term in Egypt
as part of a larger expansion plan for the country. These three stores will form the foundation of plans to add
10 new stores during 2015, all of which will be built outside of the Cairo and Alexandria governorates.
Multi-use Shopping Malls
Malls are not yet as prevalent in Egypt, apart from the largest cities such as Cairo, Alexandra and Giza
(which is part of greater Cairo), due to the dominance of traditional informal retailers. There is a change in
the large urban areas as the younger generation have grown up to be familiar with the mall format, and
prefer it more compared to their seniors. Therefore there is a lot of potential for the mall format as there is
still a lot of space in the market for multi-use malls, especially as the average income is rising and
Egyptians look for more comfortable ways to shop and for recreational uses. Overall in 2015 it is forecast
that there will be up to 1.8mn sq m of new mall retail space in Cairo alone, according to property
consultants JLL, with more than 10 other development being planned beyond 2015 already. In Cairo there
is currently a 25% vacancy rate in malls due to the uncertainty of future stability in the region from retailers
as they wait until its safe. The potential however remains large in the long term, as it is expected 20% of the
population will be shoppers at malls, which means 3mn potential customers in Cairo.
E-Commerce
E-commerce is an increasingly significant format in the Egyptian retail market. There are currently 15.2
million online shoppers in Egypt, which is the most in the Arab world. The increase in e-commerce comes
from an increase in internet penetration rates, driven by the younger generation who are more familiar with
technology. Retailers would be wise to include an online option or channel for purchases, as well as
building their online marketing and a social media presence if possible, or risk missing out on a lucrative
and growing market. Some entrants have solely focused on e-commerce as their only channel of sales, such

as Jumia, which started in 2012 and is already one of the main players in the market, with sales expected to
grow by 36% in 2016.

Competitive Landscape
BMI View: Though traditional informal formats of retail are still very prevalent, particularly in non-urban
areas, there is growth of the formal store format increasingly making up more of the retail landscape in
Egypt. Foreign investors are looking to take advantage of a growing economy as stability seems to be
returning to the country and the risks seem to lessen. The modernising economy with a growing youthful
population are driving growth in modern stores such as department stores, while also demanding foreign
brands in various sectors including electronics and fashion.
Department Store Groups
Traditional Egyptian department stores have declined over the years, with Omar Effendi, the longest-
established chain in Egypt, the subject of protracted legal proceedings following its privatisation in 2006.
Other traditional names, such as Cicurel, Shemla, Benzion, Sednaoui, Simon Arzt, Chalons, Gattegno
and Pontremoli have long gone, although the high-end Beymen department store continues to flourish.
Otherwise, international department store groups now dominate the sector, pulling in younger, more
affluent customers with well-known brands. Global names active in the Egyptian department store sector
include UK-based Marks & Spencer (M&S) and Debenhams.
M&S
Leading British department store chain M&S opened its first Egyptian store in Cairo's City Stars mall in
2010. Represented by the Al-Futtaim Group (AFG), it currently has four stores in Egypt, with the latest
being a two-floor, 4,400 square metre flagship store in the Cairo Festival City development. The company
are optimistic with regards to the Egyptian retail market and hope to open four more stores within the next
three years, with one located in the almost completed Mall of Egypt
Debenhams
Fellow British operator Debenhams opened its first store in Egypt (and also in Africa) in the Alexandria
City Centre mall in 2010, offering a full assortment ranging from women's, men's and children's wear to
beauty, furniture, electrical and gifts. During November 2014, they opened their second store in Cairo's
Festival City Mall. The stores are run by franchise operator Alshaya Retail. Healthy demand in Egypt
allowed Debenhams to see an increase in revenue for 2014.

MGR
UAE-based Majid Al-Futtaim Group (MAF) owns the global mass grocery retail (MGR) chain Carrefour
in Egypt and operates a network of hypermarkets, supermarkets and express stores throughout the country.
Saudi Arabia's second-largest mass grocery player, Al-Othaim, has seen success in Egypt with its
convenience and discount formats, while Turkish discount retailer BIM has entered the market and
expanded aggressively. Spinneys Group has four stores in Egypt, while Mansour Group-owned Metro
(not to be confused with German Metro Group, which recently entered Egypt) is the leading domestic
retailer. Meanwhile, Dina Farms, Egypt's largest private farm, currently has 16 retail stores nationwide.
Metro
Metro, owned by the Mansour Group, is the largest domestic retailer by turnover, and has more than 700
stores in Cairo, Alexandria, Giza, Mansoura and Iasmailia. Most of its outlets are open 24 hours a day in
order to meet the growing demand for convenience, since there are more Egyptian women working than
ever before who are increasingly unable to shop during office hours. Metro's strategy has also been to
diversify its store formats to adapt to the local area and shopping needs while also offering a suitable range
of products.
Carrefour MAF
Carrefour MAF ranks among the leading foreign MGR retailers operating in Egypt, and is the market leader
in the hypermarket category. There are currently 23 stores nationwide and there are plans in place to bring
the number up to 32 with support from the government which has agreed to allocate land to facilitate the
company's expansion. By partnering up with MAF, Carrefour has benefited from having a regional partner
that is accustomed to the nuances of regional consumers. In January 2014, MAF said it planned to invest
about USD2.3bn in Egypt over the next few years, including in Carrefour with one set to be located in the
Mall of Egypt when it is opened. Overall sales are up 7% in H1 2015 for the region and look to expand in
the future.
Fashion
The department store operators take a large slice of the fashion market, but there are many niche players,
too. Most international fashion retailers entering Egypt go down the franchise route, with Retail Group
Egypt, a subsidiary of Saudi-based Fawaz Al Hokair Fashion Retail, operating stores for a number of
global fashion companies. It is also a major fashion retailer in its own right. Saudi Arabian operator Al-

Sawani Group (ASG), meanwhile, has fashion stores in Cairo and Alexandria; with other regional groups
such as Alshaya from Kuwait, MAC from Saudi Arabia and Lebanon's Azadea Group present in
Egypt. Recent entrants include fashion retailer Ralph Lauren which opened its first polo store in the
Downtown Kattameya Mall, Cairo, in December 2014.
Al-Sawani Group
Al-Sawani Group was established in Saudi Arabia in 1977, and entered the Egyptian market in 2004. One of
the foremost fashion retailers in the Middle East, it offers more than 30 international brands. It is the
franchise company for Sfera, and operates stores for the Spanish company in Cairo.
Retail Group Egypt
Retail Group Egypt was established in 2007 to provide the Egyptian market with major international fashion
labels. Operating 21 brands across 88 stores, the company covers the women's, men's and children's wear
segments, as well as footwear and accessories. Fashion brands represented by Retail Group Egypt include
Gap, Mango, Inditex, Arcadia and M&S.
Jumia
Jumia is one of the main e-commerce stores in Egypt, after starting in 2012 that offers a wide range of
products for sale online, with fashion goods being one of their main lines. As well as being a retailer for
well known, and international brands such as Adidas, Skechers and Jack Jones, of clothing and footwear,
they have also recently introduced their own new brand of clothes. Their New brand Agu, which is a joint
project with a British designer, produces a range of clothes made in Egypt and Jumia have high hopes. In
leadership news, there are two new CEOs, Hesham Safwat,an Egyptian retail expert and a French engineer,
Amaury Celier, aiming to improve the logistics of the company.
Consumer Electronics
Hypermarkets and department stores in Egypt offer streamlined electronics assortments, but the biggest
consumer electronics retail chain in Egypt is RadioShack, selling everything from cameras and camcorders
to computers, TVs and video games. Household appliances chain B.TECH operates 58 branches throughout
Egypt; while electronic components distributor Future Electronics Egypt has a store in
Abbassia. Consumer electronics retailers are attracted by an underpenetrated market, with growing demand
for PCs, smartphones and tablets from a youthful consumer base.

B.TECH
B.TECH was established in 1997 with three retail branches, and today operates 58 branches from Marina on
the north coast and Hurghada on the Red Sea to Suhag and Aswan in the south. It is the exclusive agent for
global brands including Miele, Sony, Ariston, Indesit, Philips, Electrolux, Daewoo, Haier, Babyliss and
Playstation, and has a large network of dealers and service centres. B.TECH predict that sales for 2015
would reach EGP1.80bn, which represents a strong increase from EGP1.45bn in 2014, while the CEO
Mahmoud Khattab believes there is more growth for B.TECH to be had in the Egyptian market.
RadioShack
US franchise RadioShack is the biggest consumer electronics retail chain in Egypt, with product categories
including cameras and camcorders, computers and tablets, home and office, music and audio, phones and
radio communications, TV and video and video games and toys. It has branches in Cairo, Alexandria, Giza,
Hurghada, Port Said, Sharm El Sheikh and various other locations throughout Egypt. The future for
RadioShack, however, is uncertain as its performances in its native US has suffered forcing it to sell more
than 2,000 of its stores.

Glossary
BMI's household spending data are based upon the UN Classification of individual consumption by purpose
(COICOP), which is a classification system used to define consumption expenditures incurred by
households. It lists various categories and sub-categories defining the different types of groups and groups
of items that households spend on.
Where spending data is not readily allocated into the COICOP format, BMI applies a rigorous and logical
approach in allocating data to fit categories, and if needed, apply aggregation methods or other techniques
to achieve category level data.
BMI's spending data defines spending in terms of three different types of consumer units, individuals (given
as per capita), households and total economy.
Per Capita Spending - is defined as spending by each individual person.
Households - is defined as a group of people living in the same residential unit. The number of households
and average persons per household is sourced from national statistics. Where this data is unavailable, BMI
uses alternative best sources for the data, and where needed use best practice techniques to make an
estimate. Please note that Households exclude institutionalised individuals such as those in hospitals,
military religious institutions and other institutions. Where national statistics include it, BMI uses the
relevant best practice to amend the data in order to keep all countries similar with respects to their
definition.
Per Household Spending - is defined as spending by each household unit.
Below are definitions to the different indicators covered in this report. For more details on what is
included in each of the categories, please review: 'UN - detailed structure and explanatory notes', http://
unstats.un.org/unsd/cr/registry/regcst.asp?Cl=5&Lg=1
Food and non-alcoholic drinks spending - refers to the sum of food spending and non-alcoholic food
spending. Details of what is included in these categories are given below.

Food spending - refers to the sum of spending on the following food items:
01.1.1 - Bread and cereals
01.1.2 - Meat
01.1.3 - Fish and seafood
01.1.4 - Milk, cheese and eggs
01.1.5 - Oils and fats
01.1.6 - Fruit
01.1.7 - Vegetables
01.1.8 - Sugar, jam, honey, chocolate and confectionery
01.1.9 - Food products, other.
Note that refers to spending on food for home consumption and excludes food spending outside of the home
for consumption.
Non-alcoholic drinks spending - refers to the sum of spending on the following types of drinks:
01.2.1 - Coffee, tea and cocoa
01.2.2 - Mineral waters, soft drinks, fruit and vegetable juices
Note that refers to spending on drinks for home consumption and excludes drinks spending outside of the
home for consumption.

Alcoholic drinks and tobacco spending - refers to the sum of spending on the following items/services:
Alcoholic drinks spending - refers to the sum of spending on the following items:
02.1.1 - Spirits
02.1.2 - Wine
02.1.3 - Beer
Tobacco spending - refers to spending on the following tobacco products: - Cigarettes; cigarette tobacco
and cigarette papers; - cigars, pipe tobacco, chewing tobacco or snuff. Excludes: other smokers' articles.
Clothing and footwear spending - refers to the sum of spending on the following items/services:
Clothing spending - refers to the sum of spending on the following clothing items:
03.1.1 - Clothing materials
03.1.2 - Garments
03.1.3 - Other articles of clothing and clothing accessories
03.1.4 - Cleaning, repair and hire of clothing
Footwear including repair spending - refers to the sum of spending on the following items:
03.2.2 - Repair and hire of footwear
Housing and utilities spending - refers to the sum of spending on the following items:
04.1 - Actual rentals for housing
04.2 - Imputed rentals for housing

04.3 - Maintenance and repair of the dwelling
04.4 - Water supply and miscellaneous services relating to the dwelling
04.5 - Electricity, gas and other fuels
Furnishing and home spending - refers to the sum of spending on the following items/services:
Furniture and furnishings spending - refers to spending on the following items:
05.1.1 - Furniture and furnishings
05.1.2 - Carpets and other floor coverings
05.1.3 - Repair of furniture, furnishings and floor coverings
Household textiles - refers to the sum of spending on the following items:
05.2.0 - Household textiles which includes items such as fabrics, bedding, linen, kitchen and bathroom
linen, cloths and towels.
Household appliances - refers to the sum of spending on the following items:
05.3.1 - Major household appliances whether electric or not
05.3.2 - Small electric household appliances
05.3.3 - Repair of household appliances
Glass, tableware and utensils - refers to the sum of spending on the following items:
05.4.0 - Glassware, tableware and household utensils which includes items such as cutlery, flatware,
silverware, kitchen utensils, pans, non-electric household containers, waste bins etc.

Home & garden tools/equipment spending - refers to the sum of spending on the following items:
05.5.1 - Major tools and equipment
05.5.2 - Small tools and miscellaneous accessories
Goods and services for routine household maintenance - refers to the sum of spending on the following
items:
05.6.1 - Non-durable household goods
05.6.2 - Domestic services and household services
Health spending - refers to the sum of spending on the following items/services:
06.1 - Medical products, appliances and equipment
06.2 - Outpatient services
06.3 - Hospital services
Transport spending - refers to the sum of spending on the following items/services:
07.1 - Purchase of vehicles
07.2 - Operation of personal transport equipment
07.3 - Transport services
Communications spending - refers to the sum of spending on the following items/services:
08.1 - Postal services
08.2 - Telephone and telefax equipment

08.3 - Telephone and telefax services
Recreation and culture spending - refers to the sum of spending on the following items/services:
09.1 - AV, camera and computer - refers to the sum of spending on the following items:
AV equipment spending - includes television, radio and CD players.
Cameras and video cameras - includes sound recording equipment.
Computers spending - includes all types of personal computers, software and peripherals.
Recorded Media - includes recordable CD's, cassette and recording films.
AV, camera and computer repairs
09. 2 - Other major durables for recreation and culture
09.3 - Toys, sports, gardens and pets - refers to the sum of spending on the following items:
Games, toys and hobbies spending - includes items such as card, board, electronic games. Also includes
hobbies, e.g. stamp collecting, and video games.
Sport and camping equipment - includes items such as sports equipment, and game specific footwear.
Gardens, plants and flowers - also includes artificial flowers, pots and pot holders.
Pet food/products and vet fees - also includes all pet related accessories.
09.4 - Recreational and cultural services
09.5 - Newspapers, books and stationery
09.6 - Package holidays

Education spending - refers to the sum of spending on the following items/services:
10.1 - Pre-primary and primary education
10.2 - Secondary education
10.3 - Post-secondary non-tertiary education
10.4 - Tertiary education
10.5 - Education not definable by level
For more details on what is included in each of the above categories, please review "UN - detailed structure
and explanatory notes", below is a direct link to the relevant section:
Restaurants and hotels spending - refers to the sum of spending on the following items/services:
11.1 - Catering services
11.2 - Accommodation services
Personal, insurance and other spending - refers to the sum of spending on the following items
Personal care and effects spending - refers to the sum of spending on the following items:
12.1 - Personal care products spending - includes spending on hairdressing/personal grooming, small
electric appliances for personal care, toiletries and other similar products.
12.2- Personal effects products spending - refers to the sum of spending on the following items:
12.3.1 - Jewellery, clocks and watches
12.3.2 - Other personal effects
12.3 - Insurance - includes all types of personal, home, health and transport insurance.

12.4 - Other spending - which includes social protection, financial services and other similar services etc.
Household Goods (BMI only category/BMI Calculation) - is the sum of spending on: Furniture and
furnishings, Household textiles, Household appliances, Glass, tableware and utensils, Home & garden tools/
equipment, AV, cameras and computers and, toys, sports, gardens and pets.
Income Definitions
Gross Income - refers to income received before tax and deductions.
Net Income - refers to income received less any income taxes and social contributions.
Tax and social contributions, % of gross income - refers to tax plus social contribution rate as percentage
of total gross income.

Methodology
Industry Forecast Methodology
BMI's industry forecasts are generated using the best-practice techniques of time-series modelling and
causal/econometric modelling. The precise form of model we use varies from industry to industry, in each
case being determined, as per standard practice, by the prevailing features of the industry data being
examined.
Common to our analysis of every industry, is the use of vector autoregressions. Vector autoregressions
allow us to forecast a variable using more than the variable's own history as explanatory information. For
example, when forecasting oil prices, we can include information about oil consumption, supply and
capacity.
When forecasting for some of our industry sub-component variables, however, using a variable's own
history is often the most desirable method of analysis. Such single-variable analysis is called univariate
modelling. We use the most common and versatile form of univariate models: the autoregressive moving
average model (ARMA).
In some cases, ARMA techniques are inappropriate because there is insufficient historic data or data quality
is poor. In such cases, we use either traditional decomposition methods or smoothing methods as a basis for
analysis and forecasting.
BMI mainly uses OLS estimators and in order to avoid relying on subjective views and encourage the use of
objective views, BMI uses a 'general-to-specific' method. BMI mainly uses a linear model, but simple non-
linear models, such as the log-linear model, are used when necessary. During periods of 'industry shock', for
example poor weather conditions impeding agricultural output, dummy variables are used to determine the
level of impact.
Effective forecasting depends on appropriately selected regression models. BMI selects the best model
according to various different criteria and tests, including but not exclusive to:
■ R2 tests explanatory power; adjusted R2 takes degree of freedom into account
■ Testing the directional movement and magnitude of coefficients
■ Hypothesis testing to ensure coefficients are significant (normally t-test and/or P-value)
■ All results are assessed to alleviate issues related to auto-correlation and multi-collinearity

BMI uses the selected best model to perform forecasting.
It must be remembered that human intervention plays a necessary and desirable role in all of BMI's industry
forecasting. Experience, expertise and knowledge of industry data and trends ensure that analysts spot
structural breaks, anomalous data, turning points and seasonal features where a purely mechanical
forecasting process would not.
Sector-Specific Methodology
Within the Retail forecasts, human intervention might include, but is not exclusive to, business environment
changes; changes in consumer trends; introduction of new technology; changing fashion trends; expansion
of retail capacity/stores; and industry regulatory changes. Intervention can also be necessary with respect to
the following factors: regional trends changing; demographic factors; infrastructure investment;
macroeconomic indicators; and regulatory changes. Our analysts take into consideration both macro and
industry factors when intervening, bringing together our country risk and industry knowledge to give a
complete forecast of the industry.
During periods of 'industry shock' - for example a deep recession - dummy variables are used to determine
the level of impact.
The retail industry data can be divided into the following main categories: demographics, household
structure, CPI breakdown and total household spending.
■ Demographics - This covers the different types of consumers by age group, sex, and urban/rural
population. This is important in highlighting the different consumer groups and sizes of each group.
■ Household structure - This includes indicators such as household size by the number of people in the
household, net/gross income per household/per capita, and number of households earning above
USD5,000, USD10,000 and USD50,000. This gives a background overview of the household within a
country.
■ CPI Breakdown - indicators on the price index and annual change in price of all goods/services and the
main categories of spending.
■ Total Household Spending - across different across the main categories of consumer spending.
The categories for household spending forecasts are:
■ Food and Non-Alcoholic Drinks;
■ Alcoholic Drinks and Tobacco;
■ Clothing and Footwear;

■ Housing and Utilities;
■ Furnishing and Household Goods;
■ Health;
■ Transport;
■ Communications;
■ Recreation and Culture;
■ Education;
■ Restaurants and Hotels;
■ Personal Care, Insurance and Other.
These main categories can then be divided into the following sub-categories
Food and non-alcoholic drinks:
■ Food;
■ Non-alcoholic drinks.
Alcoholic drinks and tobacco:
■ Alcoholic drinks spending;
■ Tobacco.
Clothing and Footwear:
■ Clothing;
■ Footwear including repair.
Furnishing and home & Recreation and culture:
■ Household goods spending;
■ Furniture and furnishings;
■ Household textiles;
■ Household appliances;
■ Glass, tableware and utensils;
■ Home & garden tools/equipment;
■ AV, camera and computer;

■ Toys, sports, gardens and pets.
The following categories are forecast:
■ Demographics - This data is based upon World Bank and UN population levels. BMI forecasts this data
using UN and World Bank projected population levels as a benchmark while objectively and subjectively
intervening where necessary.
■ Household Structure - This data is forecast objectively based upon BMI's core country-specific
macroeconomic data; this includes BMI's views on population, household demographics and GDP.
Total Household Spending - Using a selection of leading retail indicators and macro-economic data from
our Country Risk service, BMI estimates each indicator of spending individually. This can be intervened
subjectively to take into account qualitative information believed to be necessary. Once every individual
spending indicator has been forecast, BMI then uses this information, along with any other sector and
macro views, to form headline total spending indicators.
Sources
The retail sector sources data primarily from national-level sources; this includes data from national
statistics, government ministries, central banks and industry associations. In addition, BMI uses national
sourced data in conjunction with data available from Eurostat, the World Bank and the UN where needed.
In some instances where full-time series data is not available, we use a combination of the above, coupled
with industry expertise, to model industry data.
Risk/Reward Index Methodology
BMI's Risk/Reward Index provides a comparative regional ranking system evaluating the ease of doing
business and the industry-specific opportunities and limitations for potential investors in a given market.
The index is divided into two distinct areas:
Rewards: Evaluation of sector's size and growth potential in each state, and also broader industry/state
characteristics that may inhibit its development. This is further broken down into two sub categories:
■ Market Rewards (this is an industry specific category taking into account current industry size and
growth forecasts, and the openness of market to new entrants and foreign investors, to provide an overall
score for potential returns for investors)
• Country Rewards (this is a country-specific category, and the score factors in favourable political and
economic conditions for the industry)

Risks: Evaluation of industry-specific dangers and those emanating from the state's political/economic
profile that call into question the likelihood of anticipated returns being realised over the assessed time
period. This is further broken down into two sub categories:
■ Market Risks (this is an industry-specific category whose score covers potential operational risks to
investors, regulatory issues inhibiting the industry and the relative maturity of a market)
• Country Risks (this is a country-specific category in which political and economic instability,
unfavourable legislation and a poor overall business environment are evaluated to provide an overall
score).
We take a weighted average, combining market and country risks, or market and country rewards. These
two results in turn provide an overall Risk/Reward score, which is used to create our regional ranking
system for the risks and rewards of involvement in a specific industry in a particular country.
For each category and sub-category, each state is scored out of 100 (100 being the best), with the overall
risk/reward score a weighted average of the total score. Importantly, as most of the countries and territories
evaluated are considered by BMI to be 'emerging markets', our indices are revised on a quarterly basis. This
ensures that the indices draw on the latest information and data across our broad range of sources, and the
expertise of our analysts.
Sector-Specific Methodology
In constructing these indices, the following indicators have been used. Almost all indicators are objectively
based.
Table: Retail Risk/Reward Index Indicators
Rationale
Rewards
Industry Rewards
Total Household Spending, USDbn This measures the total market size or total spending power of households, a higher
score is given to countries with a higher spending.
Household Spending per capita, This measures total spending per person, a score is given to countries with higher
USDbn amount of spending power per person.
Household spending growth, %, This measures growth of total household spending over the last five years and tells
CAGR us whether household spending has been growing or declining. A higher score is
given to those countries that report a stronger growth in total household spending
over this period.
Country Rewards

Retail Risk/Reward Index Indicators - Continued
Rationale
Urban pop, % of total This measures the percentage of population that is urban. The higher the
percentage, the easier it is for firms to access a large pool of consumers. A higher
score is given to a larger urban population.
Spending pop, % of total This measures the size of the key consumer group, ages 20-39 years as a
percentage of total population. A higher score is given to countries with a large
proportion of this key consumer group.
Population, total, '000 This measures the total population in a country. A higher score is attributed to
countries with more people who can spend.
Risks
Industry Risks
Barriers to entry Measures the degree of openness and entry in the sector. A higher score reflects a
more open market.
Regulatory environment Measures the degree of regulation within the market. A higher score reflects a better
regulatory environment
Country Risks
Long-term inflation Measures inflation over the past five years. A higher inflation rate hurts purchasing
power and limits the amount of goods and services bought. A higher score is given
to markets with a smaller inflation rate.
Financial risk (proxy for currency) Measures exchange rate volatility. Large-scale volatility makes long term business
planning difficult. A higher score reflects a more stable exchange rate environment.
Short-term political score Denotes health of political structure, including various indicators such as
policymaking process, social stability and security/external threats and policy
continuity. A higher score reflects a more stable short-term political environment.
Short-term economic score It evaluates likely growth trajectory over a two-year forecast period, based on BMI's
Country Risk forecasts and projections of the economy, business environment and
consumer confidence. A higher score reflects a better short-term economic
environment.
Physical infrastructure Measures the state of physical infrastructure. A higher score reflects better physical
infrastructure.
Labour infrastructure Measures the state of the labour market and working conditions. A higher score
reflects better labour infrastructure.
Source: BMI
Weighting
Given the number of indicators/datasets used, it would be inappropriate to give all sub-components equal
weight. Consequently, the following weighting has been adopted:

Table: Weighting Of Indicators
Weighting (%)
Rewards 70 of which
Industry Rewards 50 of which
Total Household Spending, USDbn 33
Household Spending per capita, USDbn 33
Household spending growth, %, CAGR 33
Country Rewards 50 of which
Urban pop, % of total 33
Spending pop, % of total 33
Population, total, '000 33
Risks 30 of which
Industry Risks 40 of which
Barriers to entry 50
Regulatory environment 50
Country Risks 60 of which
Long-term inflation 17
Financial risk (proxy for currency) 17
Short-term political risk score 17
Short-term economic risk score 17
Physical infrastructure 17
Labour infrastructure 17
Source: BMI

BMI Egypt 2015

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BMI Egypt 2015

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Q4 2015

Part of BMI’s Industry Report & Forecasts Series

Published by: BMI Research

Copy deadline: August 2015

BMI Research © 2015 Business Monitor International Ltd

BMI Industry View ............................................................................................................... 7

Industry Forecast .............................................................................................................. 14

Macroeconomic Forecasts ............................................................................................... 35

Industry Risk Reward Index ............................................................................................. 43

© Business Monitor International Ltd Page 4

Middle East And North Africa Risk/Reward Index .......................................................................................... 43

Market Overview ............................................................................................................... 46

Competitive Landscape .................................................................................................... 49

© Business Monitor International Ltd Page 5

BMI Industry View

© Business Monitor International Ltd Page 7

Key BMI Forecasts

■ We expect total household spending to reach USD104bn in 2015.

© Business Monitor International Ltd Page 8

Egypt Retail SWOT

© Business Monitor International Ltd Page 9

Egypt Retail SWOT - Continued

© Business Monitor International Ltd Page 10

© Business Monitor International Ltd Page 11

© Business Monitor International Ltd Page 12

SWOT Analysis - Continued

© Business Monitor International Ltd Page 13

© Business Monitor International Ltd Page 14

Recovery In Spending Projected For 2015 Onwards

Total household spending, USDbn, % growth (2012-2019)

e/f = BMI estimate/forecast. Source: Egypt CAPMAS, BMI

© Business Monitor International Ltd Page 15

Table: Total Household Spending (Egypt 2012-2019)

2012 2013 2014e 2015f 2016f 2017f 2018f 2019f

e/f = BMI estimate/forecast. Source: Egypt CAPMAS, BMI

© Business Monitor International Ltd Page 16

Table: Retail Sector Spending, % Of Total (Egypt 2012-2019)

2012 2013 2014e 2015f 2016f 2017f 2018f 2019f

e/f = BMI estimate/forecast. Source: Egypt CAPMAS, BMI

Table: Retail Sector Spending, % of GDP (Egypt 2012-2019)

2012 2013 2014e 2015f 2016f 2017f 2018f 2019f

© Business Monitor International Ltd Page 17

Retail Sector Spending, % of GDP (Egypt 2012-2019) - Continued

2012 2013 2014e 2015f 2016f 2017f 2018f 2019f

e/f = BMI estimate/forecast. Source: Egypt CAPMAS, BMI

Table: Headline Retail Sector Spending (Egypt 2012-2019)

2012 2013 2014e 2015f 2016f 2017f 2018f 2019f

© Business Monitor International Ltd Page 18

Headline Retail Sector Spending (Egypt 2012-2019) - Continued

2012 2013 2014e 2015f 2016f 2017f 2018f 2019f

e/f = BMI estimate/forecast. Source: Egypt CAPMAS, BMI

© Business Monitor International Ltd Page 19

Retail Sector Forecast

Essentials Spending Still Drives Retail Sector Growth

e/f = BMI estimate/forecast. Source: Egypt CAPMAS, BMI

© Business Monitor International Ltd Page 20

Food, Drink And Tobacco

© Business Monitor International Ltd Page 21

Table: Food, Drink & Tobacco Spending (Egypt 2012-2019)

2012 2013 2014e 2015f 2016f 2017f 2018f 2019f

e/f = BMI estimate/forecast. Source: Egypt CAPMAS, BMI

Clothing And Footwear

© Business Monitor International Ltd Page 22

Table: Clothing & Footwear Spending (Egypt 2012-2019)