Revealed: The cost of shopping in the Gulf

RETAIL COST: An expert says shoppers in the Gulf can expect to pay up to 15 percent more for goods compared to their country of origin. (Getty Images)

Products at international retailers in the Gulf should cost 10-15 percent more than in their countries of origin, but currency shifts could widen that difference, a leading expert has said.

Readers of Arabian Business have been expressing their outrage over the price of many goods at well known retailers, who sometimes charge 50 percent more for a product in the Gulf than they do in places like London, Paris and Singapore.

“The price difference between the UK and this part of the world should not be more than 10-15 percent,” said Naeem Ghafoor, chief executive of Skyline Retail Services in Dubai whose calculations included the UK's VAT levels.

One of the reasons it’s not is the strengthening of the dollar against most other major currencies over the last few months. All GCC currencies are pegged to the dollar, except for the Kuwaiti dinar, which is pegged to a basket of currencies.

Six months ago, sterling was worth just over $2. On Friday the exchange rate stood at $1.52.

Retailers in the Gulf typically pay for their goods six months before they appear in the shops, meaning that any price comparisons need to be based on the exchange rate that applied half a year ago.

In addition, retailers have to pay for transportation, royalties to the brand and an import duty of around five percent.

“Duty and freight could be anything between 10 and 15 percent,” Ghafoor said.

The wholesale price a franchise holder in the Gulf pays for a product from an international brand is also likely to be higher than what the brand charges its own stores.

“That’s a hard one. You wouldn’t be able to put a figure to that,” he said.

Some believe international brands may be raising that charge for Gulf franchisees in a bid to recoup losses elsewhere.

The rising dollar has stoked manufacturing costs for companies trading in sterling and euros, but retailers in places like the UK are unlikely to pass on those costs to British consumers in the current economic climate.

“It is very well possible that [this results in] some modest price increases in foreign markets such as the UAE,” Shuaa Capital retail analyst Laurent-Patrick Gally said.

“Although retail consumption here might have slowed down, we are still in a region where growth is going to be among the strongest in the world. Retailers know this.”

Inditex, owner of the Zara, Massimo Dutti and Pull and Bear brands, admitted that it considers the purchasing power of each market before pricing its goods.

“Inditex chains fix their prices in line with the commercial positioning of its products in each different market, taking into account the purchase capacity of its clients and the competitors’ level of prices,” the company said in a written statement.

“Also, we must to consider the different level of costs of each individual country (labour, space rents, services, etc.).”

The Alshaya Group, holder of the GCC franchise for brands such as Debenhams, Next and Topshop, declined to comment on the pricing of its products.

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READERS' COMMENTS

Will only purchase essentials while in the Gulf
Posted by Cutter, Doha, Qatar on Sunday 18 January 2009 at 09:20 UAE time


I work in Qatar and can't believe the mark up on everything here. I only buy essentials while working and living here and do all my shopping at home in Canada for clothing and electronics and save anywhere from 30-50%.

Challenge Al Shaya and we will get to the bottom of this!
Posted by Katherine Shannon on Thursday 15 January 2009 at 17:57 UAE time


Well, there we go. As I suspected, Al Shaya refused to comment. Maybe they will take into account the purchasing power of their UAE expatriate target audience in the future. Well, I am an optimist. Very few people these days have the disposable income that was once bragged about in the UAE - for obvious reasons. Al Shaya (and a few others) are clearly overpricing - even with additional costs included. I and everyone else want them to account for this with transparency and honesty. That is all. Your customers want to know!!! Spill. You see, hiding your head in the sand, like an ostrich, is not the way to impress the very people that ultimately line your pockets.

My wallet is staying closed in Dubai
Posted by Jessica H., Dubai, UAE on Wednesday 14 January 2009 at 14:57 UAE time

The holiday season of 2008 saw scores of UAE residents choosing to purchase their christmas presents over internet shopping sites such as Amazon.com. DVDs and books in particular are often sold at more that double of the price for the same item sold in the UK or Europe... and finally we are no longer willing to be exploited. I went to a well-known book store in Dubai and asked for the prices of about 12 books of various sizes and fields of interest. Without fail, every single book was exactly 110% more expensive than on the internet. And last summer I visited the UK for the very first time and was shocked at how CHEAP items such as clothing, DVDs, over-the-counter medicines, etc. are compared to Dubai!

And don't get me started on clothes: I've been in Dubai since 1998 and even with the arrival of hundreds of thousands of Western expatriates and tourists, the stores are simply not adjusting to decent clothes sizes! I'm sorry, but hardly any European women I know have the same shoe size as Chinese women. So, for sizes that actually fit and prices that are affordable, PLUS good customer service: Europe for shopping it is!

UK half the price
Posted by Murray, dubai, uae on Wednesday 14 January 2009 at 12:00 UAE time


Price of Nikon D60 VR in Dubai: 2800 Dhs.
Price of same in UK: 1600 Dhs.

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