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Thu 26 May 2011 05:49 PM

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UAE supermarkets to fix costs on hundreds of food items

Major retailers Carrefour, Spinneys sign on to price-fixing scheme for 400 food, household items

UAE supermarkets to fix costs on hundreds of food items
Retailers in the UAE have agreed to slash costs of hundreds of items

The UAE will fix the prices of 400 basic food and household items across 70 retail outlets in the Gulf state in a bid to combat rising commodity prices, the ministry of economy said Thursday.

The initiative, which is effective from June 1, has been backed by retailers Carrefour, Lulu Hypermarket, Spinneys and a number of cooperative societies that together hold 75 percent of the UAE’s retail market.

Mohammed Al Shihhi, undersecretary at the economy ministry, said the voluntary scheme had been announced in a meeting with the country’s major retailers in March.

“We left it up to the different retailers [to decide which commodities to reduce]. They each have their strengths, good contracts with certain suppliers and their own strategies,” he told reporters at a press event in Dubai.

“This is a continuous process. The consumer is very important.”

Soaring food prices played a key role in the political unrest that toppled leaders in Egypt and Tunisia. The UAE has largely sidestepped the Arab Spring revolts, but has made a series of moves to cut living costs and subsidise basic items.

In March, a government scheme saw major shops agree to cut the price of essential items by up to 40 percent to combat a spike in commodity prices. The UAE has also pledged to spend $1.6bn to overhaul key infrastructure in the less developed northern emirates.

In neighbouring Saudi Arabia, the most populous Gulf state, King Abdullah has unveiled more than $100bn in social handouts since March.

According to the World Bank, staple foodstuffs have seen the largest price increases this year since the 2007 food crisis. Key increases this year compared to 2010 include maize (up 74 percent), wheat (up 69 percent), soybeans (36 percent) and sugar (21 percent).

In many countries, the cost of vegetables, meats, fruits and cooking oil have also jumped.

Asked whether the government will provide any subsidies to UAE retailers to help them absorb the costs of price fixing, the undersecretary said: “There are no incentives coming from the government. [Retailers] have been our partners for the past four years. We have been working together to tackle any price hikes and we have been very effective.

The government has not approached smaller supermarkets and grocers to participate with the scheme but Al Shehhi said they would automatically drop their prices in a bid to compete with their larger rivals once the cost fixing came into effect.

 “Other big retailers cannot continue trading at their current prices. We didn’t go for 100 percent [agreement], because we know from our experience... that they will automatically react to the price decrease of the major retailers.

“If Carre Four, Spinneys and Lulu all decrease their prices, the next day, the other ones will too.”

Referring to smaller, family-run firms which could struggle to survive such price wars, Al Shehhi said: “They have their own market share, their own people, and they can take advantage of this offer themselves. If they can’t take the heat, then get out of the kitchen.” 


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Najla 8 years ago

I think this is a very good move and thank you for thinking of the consumer. One major thing that i think everyone notices and wondering why nothign is done about, is why are we charged in fils figures that we don't have coins for? for example my total bill comes to 190.80. The supermarket doesn't have the 20 fils to give back to me so they keep it in their bank and they are the ones benefiting. How can a product be price at something .30 fils? where do we get the 30 fils from if the country does not have such coins in place? Supermarkets should round this off to coins we already have. It's not only supermarkets, Ikea is doing the same. I understand they have taxes and discounts but this should be rounded off logically.

It's all just opinions 8 years ago

Spinneys is just ridiculous. I paid AED 70 for a watermelon, yet rubbish like McDonalds and Burgerking cost AED 20... It's getting harder and harder to eat right nowadays....

I wonder, if all these supermarket giants cannot increase prices on certain items, they are businesses at the end of the day, they'll just hammer us all on other items... discretely... a few fils here and few fils there....

Shift items around at the supermarket so you end up buying stuff you don't need while you look for what you actually need

...Or like spinneys (motor city) and waitrose (dubai mall) have all counters on only one side of the supermarket... making you walk through aisles and aisles and kinda making you buy what you don't need! lol...

kelly 8 years ago

I am so tired of never getting change back from Carrefour when my bill reaches an odd number. Last saturday the check out staff member at City Centre Carrefour said HE would have to pay me persoanlly as it was his company policy not to. The bill was for aed 128.62. I gave him aed 129. Why do they continue to charge us prices in fils which we dont have coins for. This is a sytem that is abused by the all the supermarkets every day and needs to be stopped.

keenObzerver 8 years ago

In the USA/UK the above scheme would be considered illegal and called "price fixing" and would require antitrust investigations. This practise is against free market rules of supply and demand. Any govt interference should be applied to ALL market players.
I understand the intention of the Min of Economy to control spiralling prices, but a more fair approach would be to reach an agreement with the Importers & Suppliers of the food materials so that they supply with reduced prices to ALL of the retailers not just the hypermarkets. A voluntary alliance of competitors who sat around a table and conspired to fix prices would put smaller supermarkets at a disadvantage as they could never buy in bulk or compete at these levels. Min of Ec. should support SMEs

Concerned 8 years ago

Is it possible to use Credit or Debit cards? I believe no charges if you use Debit card. In Kuwait most of the shops give you coins back which is too heavy to carry.

BNK 8 years ago

This is just a eye wash, all the prices of food items went up substantially in last few weeks.

It is funny but true to see these kind of measures. A 25 fils price rise on a commodity of AED. 5 is 5%. General public normally don't realize these small rises now and then, and suddenly the authorities and the supermarkets come up with this charity show of 'fixing the prices' after rising the price by 25 to 30 percent in last few weeks.

Jack 8 years ago

I use the copper 5 and 10 fils coins. I get funny looks but they are legal tender and coin of the realm.

marriot 8 years ago

I agree with you, and I NEVER let these stores keep my change. I always ask for it, and if they owe me 40fils, i'll take 50. they deliberately price items in a way that will result in a discrepancy in the end.

Some people may be ashamed of asking for a few fils back, but it is these fils that have saved me from numerous parking tickets.

Count your pennies and the pounds will come. Don't let Carrefour and the rest take your hard earned money.

Malik 8 years ago

Price of items in "Apna Pakistan Super Market' is too high as compare to other markets. They sell one Qarshi Johar Joshanda single packet at One Dirham and all other markets in Dubai sell on FIFTY Fills. Plz try to make their prices under control

Telcoguy 8 years ago

In the USA/UK many of the things that happen in this region would be illegal, and the other way around.
I find a much bigger concern that price fixes are touted as the solution in spite of all the evidence (both historic and theoretic) against them.
Oh well.