DUBAI, United Arab Emirates Ride-hailing app Careem, a subsidiary of Uber Technologies, is joining the fast-growing dark stores space with the launch of its new rapid grocery delivery service, Careem Quik. The service, which combines the warehouse infrastructure of purpose-built stores with shortened delivery times, adds Careem to an international pool of start-ups that have seen booming investment in a model that aims to completely upend traditional grocery store shopping. Dark stores, alongside dark kitchens, are stores and kitchens that are closed to the public, housing goods meant solely for online ordering. Our true competitor is the offline supermarket. Thats where the majority of customers are spending their time, Chase Lario, Careems head of grocery, told CNBC ahead of the launch announcement. Grocery is one of the few industries thats not radically changed from a customer perspective in the last hundred years. We generally dont think its a great solution to the problem that users face, Lario said. Thats really what were trying to do here, is radically simplify the way people are shopping for their groceries. The company aims to be able to provide its rapid delivery service to nearly half of Dubai by the end of this year, and the entire city next year, with 100 stores planned across both the UAE and Saudi Arabia in 2022. Careem also has plans to automate the process over time through its partnership with U.S.-based robotic sidewalk delivery start-up Kiwibot. Careem already provides grocery delivery on its app through partnerships with local retailers, whose delivery times vary but often exceed an hour. With Quik, Careem controls the entire supply chain, which it says will allow for more control over prices, speed, reliability and inventory. It says its aiming for grocery delivery times to be as little as 15 minutes. The news comes against the backdrop of a global supply chain crunch thats hit nearly every aspect of e-commerce. But Lario says Careem Quiks operation has so far been unaffected. Part of the beauty of the dark stores is theyre relatively simple in their requirements. Fridges, freezers and shelves and some basic fixtures, which is what allows them to be so efficient, he said. Youre talking about 10 times the amount of revenue per square foot than a traditional supermarket. And fortunately, everything weve needed has been readily available. The dark store model will bring the consumer price point down to full parity with supermarkets, Lario said, highlighting the threat it poses to conventional retailers who often have already strained financial models and struggle to deliver at pace with demand. That takes a lot longer to prepare and its far more complex, Lario added. You see things like price inflation creep in. With Careem Quik, the model is really efficient and well be able to compete with some of the biggest supermarkets out there. While the investment figure for the new service has not been disclosed, Lario said the build-out of the service is fully funded by the company itself. He sees the company hiring new drivers by the hundreds and potentially the thousands to meet demand. The Middle East and North Africa grocery market is a $0.4-0.5 trillion industry today, according to Careem, and it forecasts the online grocery market will generate upward of $11 billion by 2025. Careems foray into dark store e-commerce for groceries will bring the Middle East into the already burgeoning shift in shopping that was turbo-charged during pandemic lockdowns. By April 2021, investors had already poured more than $14 billion into on-demand grocery delivery services globally, according to PitchBook Data. Within the first four months of 2021, venture capital investment in rapid delivery apps had already exceeded the entire investment volume into the sector for 2020. And that investor appetite for delivery services is still growing. Turkish start-up Getir, which promises grocery deliveries in as little as 10 minutes, is currently valued at $7.7 billion following its announcement to acquire British rival Weezy, which had previously raised more than $25 million from venture capital firms. Getir has raised more than $1 billion as of November from investors including Silver Lake, Mubadala and Sequoia. Europe is also buzzing with start-ups competing with brick-and-mortar supermarkets like German food delivery giant Delivery Hero, which recently purchased a minority stake in online grocery start-up Gorillas. American grocery start-up Gopuffs acquisitions of British firms Dija and Fancy represent yet more deals in the heated market, which is now seeing increasing consolidation as the numerous start-ups struggle to differentiate what they can offer. The launch of Careem Quik comes amid reports that Uber is currently in talks with Careems senior management to bring outside investors into the business, and allow greater decision-making by the Middle East subsidiarys leaders over its strategy. Careem has not commented on the reporting. Careem is a super-app, meaning its range of services from ride hailing to item delivery, bike rental, food and grocery delivery, transferring money, booking a cleaner or even scheduling a PCR test can all be ordered on the same app. The Dubai-based company was acquired by Uber for $3.1 billion in 2019, and operates in 13 countries and over 100 cities across the Middle East, South Asia and Africa.

1.2 Discuss the relative strengths of Careem and Uber. Do you think Careems services and brand should be integrated with Uber in the Middle East region? (20 marks )