Retailers warn high overheads may spur price hikes

Retailers in Dubai have called for an overhaul of visa and business costs, warning that escalating overheads may force an increase in the sale price of goods in the emirate. Businesses are running up significant tabs to absorb the cost of retail space and of hiring new employees, CEOs said at a Chamber of Commerce event in Dubai. “I want to make the retail business more flexible, easier to operate, and less money,” said Mohi-Din BinHendi, president of BinHendi Enterprises. “Doing business is getting more and more expensive, and we have to look at that. I think everyone knows how expensive it is to get your employees across. Bringing a person here costs me AED9,000, and I have almost 1,800 staff.” Measures such as allowing retailers with significant staffing needs to buy visas “in bulk” could come some way to offsetting the cost of doing business in the city, he said, and avoid passing on costs to shoppers. “If we are seen to be playing games with our prices, [shoppers] won’t forget. They do the calculations,” he said. Dubai has spent billions of dollars establishing itself as a prime shopping destination. Retail accounts for 30 percent of gross domestic product in the emirate, home to about 40 malls, Standard Chartered Bank estimates. Dubai’s malls feature an indoor ski slope, an aquarium, ice rink, and a ‘dancing’ fountain, similar to the Fountains of Bellagio in Las Vegas. The city is the second-most attractive emerging market for retailers after China, in part because of its high disposable income, says AT Kearney. Rents in Dubai’s largest malls are among the Middle East’s highest, Colliers said this month, deterring smaller brands from expansion in the market. Colm McLoughlin, CEO of Dubai Duty Free, the world’s largest airport retailer, said the city was in danger of giving a “bad impression” to shoppers if the price of goods continued to rise. “The value aspect is being eroded,” he said. “I think management are crazily high in their ambitions. It’s too simple just to blame the mall owner just because rents are high. “If you go into hotels here and buy a bottle of water, you’re going to pay AED10-15. We buy that in Dubai duty free for 47 fills. When I go into a hotel like a tourist and I buy one bottle and I’m charged [that] I think that’s crazy.” Khalid Al Tayer, CEO of Al Tayer Retail Group, said the cost of managing a retail business, and the price of visas in particular, had become a significant burden. “Unfortunately over time, the costs do seem to get out of hand and [they] need to be monitored very closely,” he said. “We need to start renewing [visas] every three years, and our retail operation has close to 3,500 people. That can become quite costly.”