UAE | General
Dirham fall forces hunt for cheaper alternatives to European products
UAE retailers are sourcing cheaper alternatives to products imported from Europe in response to the sharp decline of the dirham against most global currencies.
- By Robert Ditcham, Staff Reporter
- Published: 00:24 September 24, 2007
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Residents feel the pinch as dollar loses its sheen
Residents feel the pinch as dollar loses its sheen
Dubai: UAE retailers are sourcing cheaper alternatives to products imported from Europe in response to the sharp decline of the dirham against most global currencies.
Leading retail chains such as Spinneys, Lulu Hypermarkets and Al Maya say the increased cost of importing products from Europe - and therefore the final purchase price -has forced them to stock cheaper alternatives, should shoppers reject pricey European goods.
However, they have reported no change in consumer buying patterns, with European products maintaining a steady sales performance despite the price hike.
Ashraf Ali M.A, executive director of Lulu Hypermarket Group, told Gulf News that prices of products imported from Europe have been increasing gradually over the last year due to the decline in the dollar. The main products that Lulu Hypermarket group are importing are fruits, vegetables and frozen meat.
"Our costs for products imported from Europe specifically have increased by some 20 per cent as a direct result of the devaluation of the dollar," he said. "But people who want products from Europe continue to buy them."
Kamal Vachani, director of the UAE-based Al Maya Group which runs Al Maya supermarkets, said the company is sourcing items such as meat, dairy products and fresh fruit and vegetables from countries such as the US, Australia, New Zealand and India to counter the effects of currency trends.
"European products are becoming more expensive and our teams are constantly looking for the best prices to counter this," he said.
"We will continue to sell European imported goods as these are required by shoppers and have shown no decrease in sales, but where possible we will offer a cheaper alternative."
According to Johannes Holtzhausen, CEO of Spinneys Dubai LLC, retailers are doing everything they can to lessen the impact of currency trends.
"The fall in the currency certainly has an impact on the cost of products. It's not always an immediate effect as we do our best to take forward cover, but this will only assist us for a short period, and then the effect takes place," he said.
"When the prices of products increase, we evaluate every instance on its own merits. We will decide whether we can absorb the increase, for how long we can do so or whether we discontinue the product, increase the price or source a similar product from another source like the US, South Africa and Australia."
Holtzhausen said meat products have shown the biggest price increases and predicted that the cost will stay high for some time.
Asked for possible solutions to the issue, Holtzhausen argued against price controls. "Maybe the time has come to look at the dirham," he said.
- With inputs from Wafa Issa
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