Co-operative puts a check on bulk buying

Dubai: The Union Co-Operative Society has moved to prevent small grocery stores from taking advantage of its cheap products.

New procedures have been introduced to restrict bulk-buying of certain items following the Co-Operative's decision to freeze the prices of 16 basic commodities at 2007 levels.

Khalid Al Falasi, Director General of Co-Operative Societies in Dubai, told Gulf News the company was forced to take action to keep sufficient storages.

"We have stopped selling particular items in bulk. Small grocery stores come to the Co-Operative and try to take advantage of the low prices by buying 20 or 30 packets of rice at a time. We have now limited them to two packets per visit," Al Falasi said. The market price of 40kg of rice is currently Dh169 but the Co-Operative is selling the same product for Dh145.

The company is also facing increasing pressure from local suppliers. It is not facing any shortages at present but it is relying more and more on products imported from abroad.

Some local suppliers are reducing the amount of stock they distribute to the Co-Operative in protest at a deal it signed with the Ministry of Economy to stabilise food prices and reduce inflation.

Pressure from suppliers

Al Falasi said other retailers were putting pressure on suppliers and in turn the Co-Operative was coming under fire.

"Some of the suppliers agree with our move but others are unhappy. People's pockets are really being hit and we had to take some kind of action. We are now importing large quantities of certain products from abroad to maintain demand," he said.

"Some local suppliers have stopped providing us with powdered milk, oil, rice and sugar. But we are not facing any shortages at the moment; so far, so good."

Al Falasi said the reason suppliers were taking strong action was because the Co-Operative was trying to encourage market competition by selling particular food items at below the cost price.

"We have no intention of backtracking on our decision. We promised the government that we would keep prices low until the end of the year. Then we will analyse the situation again and take it from there," he said.

"The suppliers are saying customers care about availability of produce and we are saying that price is their primary concern. They are trying to prove their point and we are trying to prove ours," he added.

Other UAE-based stores are keeping an eye on developments at the Co-Operative. Kamal Vachani, Director of Al Maya Group, said: "We are not facing shortages of any food items; we are in full supply.

"If the prices of certain commodities continue to rise globally then they will obviously rise in the UAE. Nobody wants to freeze prices unnecessarily because everybody wants business."