Competition will bring prices down



Any shopper who has travelled abroad has noticed sharp differences in the prices of luxury goods between the UAE and other countries.

No wonder many people often buy shoes, bags and other leather goods, fashion accessories and the like when they are overseas, on business or on holiday. Some people choose to frequent foreign-based shopping websites.

The problem is that a good deal for consumers represents a loss of millions of dirhams a year to local commerce; this money is no longer circulating inside the country. Members of the Federal National Council expressed concern over this trend last week, in a meeting with Minister of Economy Sultan Al Mansouri.

As The National reported yesterday, FNC member Afra Al Busti of Dubai told the minister that high prices on luxury goods are illogical, considering that the UAE is a tax-free country. "Even with tax on the goods in other countries, the price in the UAE is still greater by Dh500 to Dh3,000 in one single product," she told the minister.

The issue is more complicated than it might seem; there are some justifications for our bigger price-tags. The minister blamed elevated prices on the high cost of rent in the UAE's malls. Patrick Chalhoub, a joint chief executive of the Chalhoub Group, which handles wholesale and retail distribution of many top luxury brands, also cited to The National some other factors: such as the costs associated with having a local partner, the need to add Arabic labels, and higher marketing costs.

It is a problem that demands more attention. As the price gap becomes more widely known in other countries, there is an increasing danger that the "shopping tourism" that fills our malls at some times of the year will dwindle away.

Considering all the effort that has gone into attracting visitors to this country, from the region and the rest of the world, that would not be a welcome outcome.

The FNC called for a greater oversight over retail prices, but regulation of retail prices for luxury goods is not a proper role for official action.

It is also probably unnecessary. If prices here are unsustainably high, then domestic and tourist consumers will no doubt choose to shop elsewhere, thus putting pressure on retailers to moderate their prices.

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