Retailers urged to cut prices to boost tourism

Tourism will suffer if Gulf retailers don’t cut their prices, one of the region’s leading experts has warned.

There is no justification for prices being higher in the Gulf than they are in Europe, and retailers need to rethink their pricing structures or tourism will be hit, according to Simon Thomson, owner of retail consultancy Retail International and a founding member of the Middle East Council of Shopping Centres.

Following an article in Arabian Business that revealed prices in Dubai’s malls to be up to 50 percent higher than in the UK, one industry expert said on Sunday that a price discrepancy of 10 to 15 percent is justified, if exchange rates are unchanged.

“This is just the sort of publicity that tourists planning a shopping trip to the Gulf do not need to read,” Thomson said.

“Given that most goods - especially clothing - is sourced outside both the GCC and Europe, often from countries closer to the Gulf than say London, the suggestion that prices in the Gulf should be higher in the Gulf than Europe seems rather odd.”

After factoring in taxes, VAT, minimum wage levels, social security fees, health and safety legislation and the higher cost of energy, it is a wonder that Europe can compete with the Gulf at all, Thomson argued.

“But compete it does and my guess is that like for like items can now be bought in London cheaper than in Dubai,” he said.

“It is somewhat surprising to read that prices should cost 10 to 15 percent more in the Gulf. With no VAT to pay, this would make a mark up in the Gulf of around 30 percent over European price tags.”

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