Insight

How a Maltese Company Broke into Africa’s Challenging Retail Market

Meet the low-profile Chairman of one of Malta’s biggest sports and fashion companies: Hudson Holdings’ Alfie Borg speaks to MaltaProfile about the island’s retail sector, Malta’s potential as a regional logistics hub and the Group’s success in seizing opportunities in Africa’s fast-developing retail sector.

Hudson Holdings has grown into one of the largest retail companies in Malta and has built up a significant international presence. How did it all begin? 

I joined the company, which at that time was called Time International, 33 years ago as sales executive selling cosmetics – something I honestly had no clue about. At that time, it was a very small company – a room with three people in it. Compared to today, Malta’s retail landscape looked completely different back then, and we used to see the big brands only on TV or when we went abroad. I was very much into sports, particularly into martial arts and fitness. My favourite brand was Nike, and at the age of 21, I dreamed of bringing Nike to Malta. I heard that the American company was making plans to come into Europe, so I suggested that we approach them, but my boss did not buy into the idea and did not want to take the risk. At the same time, I took a loan to buy a small apartment, but I had no money to buy the furniture. I decided to sell my car, but when I ordered the furniture, I only had to pay a deposit because it would take a few months for the furniture to arrive. I went back home with the cash in my pocket and placed it in a shoebox in my wardrobe. I kept thinking about that money. After a while, I went to my boss and suggested that we use this money to try to get Nike. My boss started laughing and said I should stop being silly, but I brought it up over and over again. Eventually, he said: ‘Ok, go ahead, but it’s your risk. If you lose your money, I am not responsible.”

 

What happened next? How did you manage to convince Nike?

There was a big tradeshow coming up in Munich, so I got on a plane to Munich. I had a very short business plan in my bag, and I went to the Nike stand. However, they didn’t even want to let me in. I stayed there three days, asking the receptionist if I could talk to someone. The response was always that management had no free meeting slots. On the last day, I finally received a call because there was a cancellation, and I was offered 15 minutes with the Italian sales director of Nike. I told him enthusiastically who I am and what I had in mind. He asked me for how much my first order was going to be?

Compared to the orders he was used to receiving, the initial investment of €10,000 sounded frail, yet to me that was a lot of money. However, he then said: “I like your spirit, I’ll give you Nike for Malta.” I went back to Malta, ordered stock, managed to sell it all and got the initial capital back in time to pay for the furniture. As Nike grew, our company grew with it. I worked my way up and eventually became Managing Director of Time International.

 

From sports to fashion: Hudson represents many different brands in Malta, Europe and Africa.  

Can you tell us a bit about your international operations?

We always looked beyond Maltese shores. In 2006, together with a few other key partners, namely Chris Muscat, Etienne Camenzuli and George Amato and the help of HSBC we put together a management buyout of Time International and formed Hudson Holdings. A few years later, Kevin Grech joined us. We then started experimenting. We had created Urban Jungle as a sneaker store, and with the permission of Nike, we took it to Italy. Today, we have 18 stores in Italy, three stores in Spain, and we are now in Morocco and Algeria and seek to expand even further within other countries. We are proud to say that we are the only franchise that came out of Malta so far.

 

When and how did you break into Africa?

Our first country was Nigeria; Nike granted us the rights on an experimental basis because nobody showed interest. I went there, found a local partner and opened Nike stores in this challenging territory. When the sanctions on Libya were lifted, we were there with Nike as probably the first brand. We opened our doors in 2004/2005. It was a very difficult market, especially in terms of payments, but we got it going. From there, we took distribution for Algeria, Tunisia and Morocco.

We took a giant leap forward when Nike closed their Dubai distribution centre, and we were offered the opportunity to open a distribution centre for Africa in Malta. Our business grew steadily from here. Our distribution centre has now become too small, and we are investing €3 million to build a new one in Hal Far, which should be ready by February/March 2020. Today, we distribute Nike products to over 28 countries in Africa from Malta.

 

Under construction: Hudson Holidngs new distribution centre will be completed later in 2020.


Did you ever consider moving operations, especially your distribution centre, to Africa?

We employ a total staff complement of around 450 people in Malta. Our headquarters are here and will remain here, although we are currently strengthening our presence in Africa. We already employ 100 people in Morocco, and at the beginning of 2020, our Nigeria office is going to open. The plan is that we’ll manage North Africa from Morocco and the sub-Saharan countries from Nigeria. We would not move our distribution centre out of Malta. Malta is a stable country, and throughout the years, we have seen that the situation can change very quickly in Africa. Take Libya. We serviced 16 stores over there, including Nike, Esprit, Tommy Hilfiger, Timberland and New Look, all doing fantastically. Then came the war. We are not afraid of taking risks, but Malta has proven to be a stable and efficient hub from where we can manage our operations. Malta is an excellent logistics hub, with very good shipping connections. Since we took over Nike’s Africa distribution from Dubai, Nike products are 25 days quicker to market. Giving that there are four seasons in a year, we are gaining four months of sales.

  

How would you describe the African retail landscape?

I believe that Africa is our future. However, it is a challenging market. Africa’s retail landscape has long been dominated by traditional open markets. Modern trade outlets and the whole mall culture are only now emerging, although some countries are ahead of others. I believe it is only a matter of time for the retail sector to really take off.

While we still plan to expand into selected European markets, the large majority of our future investment will be directed towards Africa. Our strategy centres around Nike. This success enables us to continue introducing new brands such as Tommy Hilfiger, Calvin Klein and Mango, which we will continue rolling out.

 

What are your plans for Malta and how do you expect the island’s retail sector develop in the coming years?

We are consolidating ourselves as the leading clothing company on the island. Recently, we took over Intersport, and we are converging our sports stores into Intersport. The first shop will open in Sliema in February 2020. Retail in general is changing massively, and we want to remain on top of it. Technology is playing an increasingly import role in defining the customer experience.  Big brands have displayed interest in working with Hudson, plus we will be unravelling five big names in the coming months that will be joining our already impressive list of brands.

We want our stores in Malta to be first class and a showcase of what’s possible, especially for our key partners and staff from Africa. These stores will be our ticket to take Hudson out of Malta, to Africa and Europe. 

The availability of large retail spaces is a problem in Malta – brands today demand big box shops, which hardly exist in Malta. However, I believe there’s still plenty of potential. Take Valletta. There are still empty buildings and old shopping malls that could be converted into spectacular retail spaces.

 

Hudson's international operations are managed from its headquarters in Malta. 

Where would you like to see Hudson in five years’ time?

Strategically, we’d like to work with even bigger brands. I am proud to say that new brands are continuously expressing their interest to work with us, especially those that are also keen to enter the African market. They appreciate our experience on the African continent. Therefore, I am very optimistic about the future, and our plans head towards tripling our turnover in five years. Our foreign business is already bigger than the local business for obvious reasons, and it will also be the main source of future growth.

Find out more  

Read more about Malta's retail sector in the upcoming Malta Report, the most influential publication on doing business and investing in Malta. To participate in this report, contact Garvan Keating on +356 99252229 or keating@countryprofiler.com.

2020 edition 

 Published: 13th January 2020

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