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How UAE retailers are limiting inflation impact on customers

Vendors launch aggressive promotion campaigns, set up independent supply chains

Published: Sat 23 Jul 2022, 4:47 PM

Updated: Sat 23 Jul 2022, 10:32 PM

  • By
  • Dhanusha Gokulan

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Top retailers in the UAE have announced plans to launch aggressive promotion campaigns and set up independent procurement offices across the world to limit impact of price rises in the Emirates.

Retailers such as Lulu Group International and Al Maya Group have adopted robust measures to ensure customers don't feel the pinch as prices for commodities spike across the globe.

V Nandakumar, director of marketing and communications at Lulu Group International, said the company has set up independent procurement offices in food hubs such as the USA, UK, Turkey, Italy, Spain, Egypt, South Africa, India, the Far East, and Colombo. He said the group set up the infrastructure to minimise the cost impact caused by the third-party involvement of distributors and importers.

"These are key countries where food is imported from, and we have established our infrastructure within the supply chain, so we get the best price and enjoy an uninterrupted supply of products," said Nandakumar.

Similarly, Kamal Vachani, group director of Al Maya Group, has said they are working with administrative associations, such as the Food Corporation of India (FCI), Agricultural and Processed Food Products Export Development Authority (APEDA), and organisations within the UAE government to ensure the supply of food.

"We are also looking for alternative sources of products in case of supply chain disruptions. For example, since there is an ongoing wheat ban from India, we are looking to import wheat from Turkey instead. We are working very closely with the UAE Ministry of Economy to ensure there is no direct impact on customers," stated Vachani.

Food prices in the UAE and worldwide have been rising mainly due to high freight rates, oil prices and the ongoing Russia-Ukraine military conflict.

In the first quarter of this year, the UAE's inflation increased by 3.35 per cent amid higher prices in 11 main sectors. The country's Consumer Price Index (CPI) jumped to 102.70 points in Q1-22, compared to 99.37 points in the year-ago period.

Two days ago, the UAE Minister of Economy Abdullah bin Touq Al Marri said the country is doing all it can to limit the impact of global price rises and inflation. He said commodity price hikes are a worldwide challenge and that the ministry has "well-studied policies and plans" to contain unjustified increases in the country's markets.

He said the ministry handles the issue by "trying to balance the consumer's interest in obtaining goods at reasonable prices on the one hand and ensuring the sustainability of supplies" on the other.

Nandakumar added, "We are working very closely with authorities to ensure we have enough stock of essential supplies for six months to one year."

"Moreover, we are always looking at ways and means to control the prices so that consumers are not taxed for commodities, especially essentials," he added. The company is also heavily promoting its private label products, which are more economically priced than competitive brands.

"The products that sell under the Lulu brand are 25 per cent less than other brands. Moreover, we run daily, weekly, and monthly promotion campaigns for high-quality products," he said. Buyers can shop during these promotions to get the best deal.

A similar approach is being adopted by mid-size vendors and supermarkets as well. Abdul Rasheed Parakkal, the managing director of Azhar Al Madeena Hypermarket, said, "We haven't increased our prices at all. Instead, we have launched weekend promotional campaigns where bulk products are sold at an economical price. Moreover, all our procurement takes place locally. The global supply chain disruption does not impact us as much."

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Vachani also said, "We are working per instructions and guidelines issued by the Ministry of Economy. We want to see our customers happy and satisfied, and for this to happen, everyone has to take initiatives to reduce price impact."

He added, "One of the major challenges we are facing is the supply of oil and wheat products. India is one of the biggest suppliers of food grains to the UAE. Since we are currently facing a disruption, we took immediate action to ensure supplies come in from other countries. We do not take such issues lightly."

- dhanusha@khaleejtimes.com



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