For young leaders today, we share with you a case study of Al-Othaim Company, led by the entrepreneur Abdullah Al-Othaim, who continued his father's passion and skill in business acumen in the trade of selling consumer foodstuffs from the beginning until now.
Abdullah Al-Othaim Company, known today as "Al-Othaim Holding", which includes Abdullah Al-Othaim Markets Company, one of the prominent Saudi family companies that has contributed to the wheel of development and the Saudi economy. New horizons were opened by Abdullah Al-Othaim to transform this small institution, founded by his father, Saleh Al-Othaim, into a billion-dollar company in the Saudi market today.
Challenges:
Al-Othaim Group faced a challenge when expanding from being a small local company to a large retail chain, it wished to maintain its core principles and focus on a customer-centric model, however, adapting to this big change was also a big challenge, they had to grow smoothly without losing the character of their business in this transformation, so the group sought to maintain its reputation, where customer satisfaction was the key and the sustainable practice of working with specific values was important.
Objectives:
Al-Othaim goal is to transform a modest grocery store into a renowned retail chain, where they have sought to ensure customer loyalty and total satisfaction by offering quality products at competitive prices which is also part of their plan to pass leadership from generation to generation.
Strategic Methods: Al-Othaim’s story is a model of inspiration and a roadmap for growth:
The company has adopted strategies that focus on core principles in market analysis, marketing innovations, financing strategies, and values shared across generations.
General Analytics:
Leadership Transition: Abdullah Al-Othaim derived his passion for business from his father, he learned the principles of trade that established the foundation of his knowledge in business.
Multi-generational leadership: The company chose to avoid a sudden change in leadership and adopted a multi-generational leadership approach. Saleh Al-Othaim was able to push his sons to leadership roles and give them powers at an early age, he contributed to their acquisition of this experience through continuous education and gradual immersion through practice and work that enabled them to assume leadership in low-risk ways after his death. The approach of working closely to current leaders while continuing to receive support, guidance and advice from the previous generation allowed them to gain practice experience for new generations enabling them to be in leadership positions.
Shared values: shared values played a significant role in the company’s success as the vision has been passed between generations on a regular basis. The second and third generation have deepened their understanding of the company through what we mentioned earlier and understood its foundations and purpose.
The innovative solutions and strategies adopted by Al-Othaim family to expand and excel in the wholesale and retail market of food products:
Providing strategic products: The company aims to provide high quality products within a reasonable price range, so that it was able to obtain customer loyalty through this strategy.
Customer orientation: This strategy focuses on identifying customer needs. The company avoids diversification into unrelated sectors to maintain a strong reputation for the company.
Marketing strategies: The company provides weekly promotions to arouse customers interest, unique marketing techniques have helped in attracting new customers and retaining existing ones.
Al-Othaim Company allocated a team specialized in managing the locations of its branches, and it entrusted them with devising financing strategies that facilitated expansion and growth. Instead of opening ten branches per year, it set a larger goal and achieved it through a strategy of land and real estate ownership, construction, selling, and re-leasing. This strategy allowed them to open thirty branches during the year.
Customer Service Excellence: The company emphasizes respect for all customers and provides high quality service that guarantees customers a sense of importance. Hence, trust and a sense of loyalty towards Al-Othaim are built.
Turning points in the journey of successful investment:
1- Financial growth: In June 2008, Abdullah Al-Othaim Markets Company offered 30% of its shares, which was a significant turning point. At that time, the company's value was 900 million Saudi Riyals. This offering enabled it to achieve positive growth rates that confirmed the company's successful strategy and vision for noticeable growth and development.
The company's main market file on Tadawul exchange in Saudi Arabia.
2- Market expansion: In 2010, the company decided to expand outside the Kingdom and enter the Egyptian markets with an initial amount of 144 million Saudi Riyals. The first 15 branches were opened in 2015 as part of the expansion plan to establish Al-Othaim chains in the Egyptian market.
Based on all the efforts made by the company since its inception until now, the value of the institution today is approximately 13 billion Saudi Riyals.
To read the annual reports of the company
Lessons learned from this inspiring journey:
In conclusion, successful investment in the next generation lies in empowering and guiding young people to lead, providing opportunities for experience, building common goals and values, developing their knowledge and skills, and integrating them into the labor market. By doing so, family-owned businesses in the Kingdom can achieve sustainable success across generations with deep-rooted foundations from their parents and ancestors.
