Dubai: The decision by the government of the UAE on Wednesday to “deregulate” fuel prices has met with mixed reactions from consumer electronics retailers.
Nadeem Khanzadah, head of omnichannel retail at Jumbo Group and Ashish Panjabi, COO of Jacky’s Retail, said that consumer electronics retailers are going to be unfazed by the decision.
“It does not impact us this way or the other. The diesel prices going down will not affect the overall supply chain of the products. On the other hand, rise in petrol prices doesn’t really mean that customers will reduce their trips to the shopping malls,” Khanzadah said.
Panjabi also added that it will never have an impact and he does not think it will be a “major factor” for the retailers. The cost of online shopping may go up as the transportation cost has to be carried by the buyer.
“Cost of transportation was always at the low end of the supply chain,” he said.
Generally whenever there is a price rise, Khanzadah said that customers will chatter or complain about the prices for a few days but after that it will be business as usual.
When asked whether rise in petrol prices will give a boost to online sales, he said that he does not expect the rise in fuel will give a boost to online sales.
“As a trend and change in customer behaviour, it is yes. One segment of the people is looking at the convenience by going online to get the product delivered either in office or home but the other segment prefers to enjoy the shopping experience inside the malls and the stores,” he said.
But Sheriff Rizwan, CEO of AlShop.com, said that it [fuel price hike] will have an impact as the prices will go up and convenience will come down. “Our operational costs will go up as most of the small transportation vehicles run on petrol and not diesel. Only trailers and big trucks run on diesel,” he said.
It is good for eCommerce as many people will prefer to “stay indoors and buy online”.
“We do have an advantage. Even though our operational costs go up, it gets adjusted as the volumes go up. The increase in petrol prices on the other hand will discourage people from using their cars,” he said.
Regarding increasing the product prices, he said it is too early to talk about as nobody knows how much the petrol price is going to be from next month.
“I don’t think the government will increase the fuel prices to the maximum at one go and make it unaffordable. It will be a gradual process, like done in India,” Rizwan said.
Mujeeb Rahman, a shopkeeper at Dubai-based Al Roozuki Electronics, said that it may or may not have an impact and it all depends on how much it is going to increase.
“Even if petrol prices go up, it is unlikely to reflect on the product prices as the market is very competitive. We will try to keep the same prices and may cut down on the discounts and offers,” he said.
