Small gold sellers resisting Shopping Festival discounts

DUBAI // Dozens of small gold retailers say they cannot afford to offer additional discounts at this year's Dubai Shopping Festival, despite what they say is pressure from festival organisers to do so.
Retailers cut prices sharply last month and were sent a letter saying they had to pay a Dh6,000 (US$1,630) annual fee to take part in the festival, which begins today and runs until Feb 15, and four other promotional events.
"We have already discounted our prices by more than 50 per cent on all items," said the owner of a shop at the Dubai Gold Souk. "Taking part in this programme is just more money lost."
The festival is organised by Dubai's Department of Economic Development. Part of the Dh6,000 fee goes to the festival's global media campaign to bring more people to the emirate and part covers membership fees to an industry association, the Dubai Gold and Jewellery Group. All merchants taking part in the festival must offer up to tens of thousands of dirhams worth of discounts in the form of coupons distributed to customers.
"In order to have compelling and effective promotions for 2009, it is imperative that the entire Dubai gold and jewellery trade come forward and promote the trade collectively," said the letter to retailers, which was signed by Laila Suhail, the chief executive officer of the office of the Dubai Shopping Festival.
Many small retailers said the new fee and further discounts were too much, but some worried their licence might be revoked if they did not participate. Muhand al Awadi, the store manager at Al Ansari Jewellery at the Dubai Gold and Diamond Park, said: "There is hardly any business and getting this is an additional burden. People just don't have the cash any more and anything that's over $1,000 simply does not sell any more."
Shopping festival officials said their letter was not meant to pressure merchants to take part in the festival. "It is not mandatory to be part of the group and retailers that don't want to be part of the group will not be penalised," Ms Suhail said.
Swapna Naiar, the general manager of the Dubai Gold and Jewellery Group, declined to comment.
This year's Dubai Shopping Festival, which includes thousands of the emirate's retailers, comes amid one of the worst global economic downturns in decades. The festival has been one of the emirate's premier marketing tools, offering weeks of duty-free shopping for visitors.
Some observers say that given the fall in consumer spending with the economic downturn, especially deep discounts are needed to stir interest in shopping this year.Larger jewellers agree and say they will be able to absorb further discounts. "We are basically encouraging more visitors to the emirate, which will help us in the long term recover from the short-term losses during that time," said Sheikh Mustafa, the operations manager at ARY Jewellery, one of the largest gold retailers in the country.
Retailers hand out coupons on every sale and pay the winners from their own pockets which, according to some smaller gold retailers, is "cruel under the circumstances".
"This is a publicity exercise," one said. "Nowadays business conditions do not allow us to bend backward to do this."
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