Suppliers turn screws on prices

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Caline Malek and Nadeem Hanif  www.thenational.ae

ABU DHABI // Supermarkets are facing growing pressure from suppliers to increase their prices, despite several warnings from the Ministry of Economy.

  Fruit and vegetables at the Waitrose supermarket in Dubai Mall. Suppliers are increasing pressure on large retailers to increase prices.  Pawan Singh / The National
Fruit and vegetables at the Waitrose supermarket in Dubai Mall. Suppliers are increasing pressure on large retailers to increase prices. Pawan Singh / The National

Last week, the Cabinet ended import monopolies on more than 12 essential commodities including honey, eggs, fruit juices, salt, yeast, animal feed, dairy products, detergents and hygiene products.

But while the Government had hoped the move would boost competition between suppliers and allow shops to offer lower prices, the result has been greater pressure from suppliers to raise prices.

“The daily conversations going on between retailers and suppliers revolve around the increase of prices,” said Peter Lonsdale, the retail operations manager at LuLu Hypermarkets in Abu Dhabi. “We get pressure from these retailers all the time.”

Mr Lonsdale said in general, suppliers increase their prices by between 5 and 15 per cent, but LuLu would not give into the pressure.

“We have to abide by the ministry and not increase our prices on a range of commodities without their authorisation,” he said. “We can’t just go and increase prices until we get the ministry’s approval.”

Fahmi Al Shawa, the managing director of Convenience Arabia, which is based in Dubai and owns the Circle K brand, said his company’s prices were also subject to ministry approval.

But Mr Al Shawa said 95 per cent of the price of luxury items and basic commodities was dictated by suppliers.

“We fight with them regularly to maintain prices,” he said. “At the end of the day it all depends on them.”

Mr Al Shawa said prices tended to increase by a few percentage points each year. More info

Suppliers turn screws on prices