UAE’s Lulu boss risks huge financial burden

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Yusuffali M.A. (centre) urged the industry to introduce “inflation-curbing mechanisms.”

UAE-based Lulu Hypermarket Group's MoU with the Ministry of Economy to crack down on price increases should encourage more retailers to pursue initiatives, according to managing director Yusuffali M.A.

"We are fully aware of the huge financial burden this decision will have on our bottom line, but at the same time we are also fully aware of our commitment towards Government policies and UAE residents in times of need," he told Retail News.

The group has entered the first phase of a program to preserve last year's prices on more than 32 basic food goods throughout 2008. "We believe that a local retail chain like ours should be the first to take these kind of initiatives, which is part of our CSR policy."

Products will also be sold at cost price and below cost as part of its policy, he revealed, describing the move as a "small gesture that will help more and more retailers to follow suit and come up with more inflation-curbing mechanisms."

Yusuffali revealed the company could confront non-availability of some products, particularly rice. "Though we have enough stock, we are in the process of discussing this issue with Indian Government officials to ease the ban imposed on the export of rice.

The involvement of the UAE's Ministry of Economy is part of a string of partnerships in recent weeks, which will also see MAF Hypermarkets Carrefour keep the 2007 prices of up to 52 prime commodities at its stores in the UAE. The products affected will include rice, eggs, milk, meat and tomato paste.

According to undersecretary H.E. Mohammed Bin Abdul Aziz Al Shihhi Al Shihhi, the MoU is "part of a series of initiatives implemented recently by the Ministry that aim to encourage private sector companies and cooperative unions to support the Ministry's call to fix prices of basic food products and sell them at cost prices."

"Some individuals and companies tried to exploit the present situation by forming monopoly groups in the market, which is against the spirit of fair competition that characterises the UAE market. This does not correspond to the nature of the national economy and negatively influence the principle of free economy, which the country is adopting."

The Ministry recently signed an agreement with Dubai's Union Cooperative Society to hold the prices of 16 basic goods at 2007 levels throughout 2008, including oil, rice, flour, eggs, sugar, powdered milk, tea, meat, chicken, fish and bread.

Dubai's Union Cooperative Society also recently announced plans to hold the prices of 16 basic goods at 2007 levels throughout 2008, including oil, rice, flour, eggs, sugar, powdered milk, tea, meat, chicken, fish and bread.

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