UAE price freeze branded unfeasible for smaller retailers

Abela, the Abu Dhabi convenience supermarket, cannot sign up to the Government's pricing fixing campaign - with video & price compare.

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An Abu Dhabi convenience store says the Government's new price freeze campaign is unfeasible for smaller retailers because the cost of goods are fixed by manufacturers.

Shopping List: Are you paying too much at the tills?

Last Updated: May 29, 2011

Check-out check Here are 80 sample goods from Carrefour and Al Ain Co-op the prices of which have been fixed under the government scheme. Click here to compare

In a bid to contain inflation, the Ministry of Economy announced last week a major scheme to reduce or fix the prices of food and house hold goods across 70 outlets in the UAE. A number of major supermarkets agreed to fix prices of hundreds of basic goods, but many smaller supermarkets were not asked to participate.

David Derrick, retail general manager, for Abela's three stores, said the company could not sign up to such as scheme because the store did not have the flexibility to cut prices or provide products at the wholesale cost.

"Our retail prices are driven by the distributors, so I cannot really see how [supermarkets] are going to reduce or fix their prices," Mr Derrick said.

Although prices of basic goods, such as flour, rice, milk, pasta and tea, will be cheaper at Abela's larger competitors, Mr Derrick is confident customers will not switch stores.

"We would not expect this to affect us, we have a very loyal customer base," he said. "To be honest I think customers think it would be far better if the government was to fix a minimum increase in rents or education rates, rather than a bag of flour."

Lulu Hypermarket, Spinneys, Carrefour and the country's co-operative societies have all signed up to the Ministry of Economy price fixing plan, which will run until the end of the year. Some of the retailers have agreed to lower prices to the same level as the wholesale cost, while others will cut prices by up to 50 per cent, the ministry said.